What I’ve Been Reading (August 1)

Different Customers, Different Prices, Thanks To Big Data (Forbes) by Adam Tanner

Adam Tanner brings us an interesting application of big data as it relates to price differentiation online. I’ve argued many times that firms, both offline and online, should be more proactive with this, but there is clearly a lot of hesitation.

Why a Soaring Stock Market Is Wasted on the Young (The New York Times) by Neil Irwin

Next, Neil Irwin discusses why the timing (or sequence) of investment returns can have a huge impact on the experiences of different investors. It may seem counter-intuitive, but if you’re young, you don’t want a “good stock market.” Rather, you want to make and and save a bunch of money in a bear market so that you can invest a lower prices. Retirees who are generally done contributing to their retirement accounts, on the other hand, could be devastated in a bad bear market unless they have properly saved and have a clear financial plan.

Money Isn’t the Point (Fizzle) by Corbett Barr

Corbett Barr then brings us some great perspective on why you better have another goal besides just money (or growth, or followers, or whatever it may be).

Preparing Small-Business Owners for Retirement (The Wall Street Journal) by Veronica Dagher

As someone who used to value privately-held businesses for a living, I enjoyed reading Veronica Dagher’s article about small business owners who may be relying too heavily on the sale of their company to fund their retirement. As a business owner myself, it’s easy to overestimate the value of your baby. However, aggressive assumptions do not a good plan make. A formal valuation can help provide some clarity of what a business is worth. You can also sanity check it by reviewing transactions of other businesses to see what they sold for. At the end of the day, your business is only worth what a buyer is willing to pay for it. In addition, it’s far better to plan conservatively and be pleasantly surprised, than plan aggressively and be sorely disappointed.

Philip Seymour Hoffman and Sting Highlight Five Myths About Trusts (Forbes) by Danielle & Andy Mayoras

There are a lot of misconceptions about estate planning. For one, most people assume that estate planning “is only for the rich.” It’s not. If you have investments, real estate, personal property, or kids, you very likely need to do at least some estate planning. This article discusses several more myths about estate planning (and specifically trusts). While a trust certainly can lead to “entitled trust fund kids,” it certainly doesn’t have to. Even more importantly, if used correctly, a trust can save you a lot of time and money down the road.

If you’ve read something particularly worthwhile recently, please let me know. I always enjoy perspectives from writers, authors, and academics who might be outside of my typical reading circle.

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