5 Questions for Author and Investor The Financial Lexicon

I recently finished The Financial Lexicon’s new book The 5 Fundamentals of Building a Retirement Portfolio, and wrote a review on it which you can find here.  I asked hm if he would mind answering a few followup questions that our audience would find interesting and he agreed.


1. What made you start writing about the markets and why did you decide to write this book?

Over the past decade, I’ve lived and breathed the financial markets, acquiring a lot of knowledge about and experience in all sorts of financial topics.  For quite some time, I’ve wanted to share the things I’ve learned with investors because I think my take on things provides a fresh perspective that could be very helpful to many people.  But rather than manage money professionally, I prefer to share my knowledge through writing.  Writing has long been something I’ve enjoyed doing.  By writing about financial topics in a format that I view as teaching rather than providing financial advice, I think I can help investors become better informed and better able to think through how to handle the various financial challenges they will encounter over time.  There came a point in 2011 when my schedule finally permitted me to begin writing about the markets, and I jumped at the opportunity.  I decided to write the book because I wanted to create an investing resource that covers a wide variety of topics and provides unique perspectives in an easy-to-read format.  I also wanted to create an investing resource that will be relevant to people for many years to come.


2. Who is this book written for?

The book is meant for anyone who takes an interest in his or her investments beyond simply looking at a portfolio statement once in a blue moon.  Whether you manage your money yourself or plan to have a financial professional manage it for you, there is something in this book for you.  I am guessing that many financial professionals will even find some of the insights to be of interest.  Over the years, I’ve spent plenty of time reading financial books and articles.  Some of the insights I’ve included on the debt ceiling, buy-and-hold investing, taxable-equivalent yields, and the use of Treasuries as collateral are things I have yet to find in publications.  And I think they are important for every investor to understand.


3. Who are some of the people that have shaped your investment philosophies over the years and how did they do so?

Over the years, I have enjoyed reading a variety of investment research and articles from many different investment professionals.  But when I read or listen to people who are well-known in the financial industry, I spend my time attempting to separate the facts from what I perceive to be the person’s cognitive biases and the person’s agenda.  I then let facts and my investing experiences shape my investment philosophy.  When you combine this with the fact that I am not trying to win anyone’s business or push any investment agenda, I think it makes my writing a worthwhile and unique resource for many investors to consider.


4. How much time and energy do you think the average investor needs to give in order to be able to manage his or her own portfolio successfully?

The short answer: as much time as it takes.  It all depends on the type of portfolio an investor wishes to create and the times in which one lives.  I think today’s financial and political realities are such that more attention toward managing a portfolio is warranted.  That may change in the future.  If you realize you simply do not have the time or energy it takes to manage your portfolio in the way you want it managed, then it may be necessary to have someone else do it for you.  But even when delegating the responsibility of your portfolio’s management to a financial professional, I think each investor should be able to clearly articulate what it is he or she is looking for from the manager.  With that in mind, I think my book can be quite useful even for investors who rely on others to manage their portfolios.


5. In your book and articles for places like Seeking Alpha and Learn Bonds you focus much more heavily on individual bonds than pretty much any other author.  Why?

There are a few reasons I focus on individual bonds to an extent that few others do.  First, the lack of coverage of individual bonds combined with what I view as a general lack of knowledge about individual bonds leaves a huge opportunity for teaching people about something that can help them to better manage their bond allocations.  By “people,” I am not only referring to everyday investors, but also to financial professionals.

Second, in a world of historically low yields, plenty of fixed income investors are reaching for yield by extending durations or lowering credit quality in their portfolios.  These investors might also be interested in ways to avoid giving up some of their yield (in the form of fund expenses) to fund managers.  Individual bonds can help investors do so, and I enjoy helping people generate ideas about which individual bonds to research further.

Third, I’ve always found it quite curious that some investors are willing to buy the stocks of certain companies but fearful to purchase the individual bonds of those same companies.  There are likely plenty of times when investors focusing on a company’s equity could have achieved their financial goals with much less volatility and risk by looking further up the capital structure at the bonds.  I like to make people aware of those possibilities and challenge investors to think outside the [equity] box when making allocation decisions.

For more from The Financial Lexicon see his articles here at Learnbonds as well as on Seekingalpha.

To order his book The 5 Fundamentals of Building a Retirement Portfolio go here.

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