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Posted by on Dec 29, 2014 in ETF Strategist

Holiday Randoms

Holiday Randoms

By: Roger Nusbaum, AdvisorShares ETF Strategist

 
Business Inside posted an article a few weeks ago that recapped the Black Swan concept using Nassim Taleb’s example of the Thanksgiving Day Turkey who is well fed and treated well until the day before Thanksgiving and then the ax falls…literally.

I won’t try to predict the next Black Swan as the definition says that is impossible but there will be Black Swans large and small that come along and the key to successfully navigating them is the awareness to recognize them in real time and not succumb to emotion when they do occur.

An example of a large Black Swan would be something like the financial crisis which very few people saw coming, had far reaching impact and likely (hopefully?) will be the biggest financial incident in most of our lifetimes. For a small Black Swan I would use the example of the large biotech company that recently fell 10% as an initial reaction to news that one of its drugs would not be covered by one of the larger health insurance companies. After the initial 10% it fell a little bit more. For such a big company to fall that much leads me to think the market didn’t see it coming and even if that is wrong, it is reasonable to conclude that this news was a small Black Swan to whoever sold it after that large drop.

MarketWatch had a listy post about the habits of people who are debt-free. Most of the items on the list you have seen before but there was one that has been getting talked about a lot more lately which is valuing experiences over stuff which is obviously a don’t be materialistic argument.

One example that I think fits is the RV experience. RVs are neat, the bigger and fancier they are the neater they are and obviously the more expensive they are. The idea of taking an RV trip now and then holds a lot of appeal, something my wife and I would like to do to see the parts of the Mountain Time Zone we haven’t been to yet.

For some folks RVing is a way of life and that’s not who I am talking about here. I did some research at Cruise America’s website. A two week rental in May, 2015 that we would pick up in Flagstaff would cost $1106 for a Standard and $1246 for a Large plus $476 for miles and who knows what for gas.

Buying a new RV can range from $100,000 (maybe less, correct me if I am wrong) to unlimited. I found a used one on the Cruise America site for $20,485. Buying it plus whatever the cost for upkeep versus what is maybe $2500 all in for a two week rental. Obviously this is about a tradeoff between owning your own RV versus the experience of the road trip and even if this example doesn’t resonate there will be other examples that will.

Finally, the Tiny House Blog had a post with income ideas for tiny house dwellers related to their tiny-living experience including blogging about it. Most of the ideas in the article aren’t too unexpected although renting space to other tiny-housers if you own land is pretty good. At a higher level this about monetizing a hobby.

The interest here in tiny houses and smaller houses is about finding ways to relieve the burden that most of us will put on our investment portfolios at some point in our lives and lowering overhead, one way or another, seems like an obvious path.

david@mediaworksllc.com

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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