What should everyone know about economics?

September 22, 2014

Answer by Davd Williams:

Economics is the ultimate study of human behavior. It looks at why people do what they do. While you may not think that from the study of macro economics, which is initially about perfect systems and theory. All the really matters in economics is what people do with their time and money.
Economics is woven through every aspect of human activity from science, marketing, politics, sports, health care and food.

To get an idea of where the study of economics can leads, check out the Freakonomics books.

What should everyone know about economics?

What are the main differences between Wealthfront and Betterment?

September 21, 2014

Answer by Andy Rachleff:

Wealthfront is the largest and fastest growing automated investment service with over $1 billion under management. We're the least expensive service for accounts below $100k, and by far the most tax-efficient service over $100k.

 Based on SEC filings, our assets under management are nearly double the assets managed by any other automated investment service.  Our unique service is made possible by combining a team of world-class financial experts, led by Dr. Burton Malkiel, renowned economist and author of A Random Walk Down Wall Street, with some of Silicon Valley’s best technology talent. We believe we have been able to grow much faster than our competition for the following reasons:
 
1.    Burton Malkiel is our Chief Investment Officer: Dr. Malkiel is an emeritus professor at Princeton University and the author of A Random Walk Down Wall Street, which played an important role in encouraging the use of low-cost “index funds” by institutional and individual investors. Dr. Malkiel, a Vanguard Group board member for 28 years, joined our team because he, like we, believes everyone deserves sophisticated investment management. Having Dr. Malkiel on our investment team enabled us to attract a world class research and development team that has resulted in a suite of innovative services not offered by any other automated investment service.

2.    Innovative investment services: When you hire an automated investment service you're not only buying into what it offers today, but what it will offer in the future.  Wealthfront has distinguished itself by consistently being the first to offer to everyone investment management services previously only available to high-end private wealth management clients. Being the first affords you an incredible opportunity to learn from experience and continuously improve your service. Examples of services we were the first to offer broadly:

     a. Tax-Loss Harvesting:   Tax-loss harvesting is a technique used to lower your taxes while maintaining the expected risk and return profile of your portfolio. 

http://youtu.be/rCykSD-nTac
          i. Daily Tax-Loss Harvesting: Our Daily Tax-Loss Harvesting captures previously unrecognized investment losses to offset taxes due on your other gains and income. You can reinvest these tax savings to significantly grow the value of your portfolio.

Wealthfront developed software to make this service, traditionally only available to accounts in excess of $5 million, available to taxable accounts with at least $100k. Between 2000 and 2013, our research shows tax-loss harvesting would have increased your after-tax returns by more than 0.92% a year. Over the next 20 years that could add more than $53k to your $100k portfolio.

          ii. The Wealthfront Tax-Optimized US Index Portfolio: The Wealthfront Tax-Optimized US Index Portfolio is Wealthfront’s replacement for the US stock investment piece of a diversified portfolio that permits for an enhanced form of Tax-Loss Harvesting. Instead of using a single ETF or Index Fund to invest in US stocks, the Wealthfront Tax-Optimized US Index Portfolio directly purchases up to 501 individual securities on your behalf—all the stocks in the S&P 500 index and single ETF of smaller non-S&P 500 companies. The rest of your Wealthfront portfolio continues to own the index ETFs recommended by Wealthfront.

This allows us to take advantage of the countless opportunities for tax-loss harvesting presented by the movement of individual stocks, to further improve your investment performance. Combined with our Daily Tax-Loss Harvesting service, we believe this could add as much as 1.62% to your annual investment performance. Companies like Aperio and Parametric have offered this kind of service for years to clients with at least $5 million.  We reduce their minimum by 10x and eliminate the typical 0.35% – 0.50% fee they charge and we do it with no transaction fees.  To learn more about our tax loss harvesting services, please watch our short video or read our white paper on the subject.

     b. Differentiated Asset Location: For all our clients we recommend a different investment mix for taxable vs. retirement accounts that takes tax efficiency of different asset classes into account.  Our research shows our Differentiated Asset Location could increase your after-tax returns by more than 0.5% per year relative to a one size fits all approach.  Assuming you invest $100,000 over 20 years, this could add approximately $28,000 to your account’s value. To learn more about this capability please see Wealthfront’s New Investment Mix

     c. Single Stock Diversification Service: This service automates the process of selling your stock options or RSUs gradually and consistently over time in an easy, commission-free, and tax-aware manner.

https://www.youtube.com/watch?v=t4RboQ7uEV8
Your shares will be sold every single day your trading window is open so you can benefit from dollar cost averaging. Once your taxes and other short-term needs are set aside in a fee free cash account, the remaining sales proceeds are invested in a less-volatile Wealthfront diversified portfolio that is suitable for your long-term needs.
 
Tax Loss Harvesting, Differentiated Asset Allocation, and the Single-Stock Diversification Service are three examples of services we implement to maximize your net of fee, after tax returns.
 
3.    Fee Structure: Wealthfront believes everyone deserves sophisticated investment management, so we charge no fees on accounts below $10,000.  We then only charge 0.25% on assets above $10k. Our clients do not incur any expenses beyond our advisory fee (i.e. no commissions, exit fees or other hidden fees).  We also built an invitation program that gives you the opportunity to further lower your fees. For every friend who accepts, we will manage an additional $5k for free, for you and for your friend. We model our pricing after Dropbox, a company we admire greatly.
 
All our aforementioned premium services are available for no extra charge. We believe the benefit of our free premium features (0.9 – 1.6% after tax per year) is far greater than any volume based discount we could offer.
 
4.    Account Size: Our minimum account is $5,000, and our largest account is in excess of $10 million. Our average client starts by investing about $40k with us. The average amount invested per client has grown to more than $90k as people have added funds to their accounts. We make it easy to add funds.  You can add up to $500,000 via electronic bank transfer (ACH) each day and we allow you to dollar cost average into your portfolio through scheduled deposits.

Based on SEC Form ADV filings we believe our average account size is at least 7 times larger than alternatives due to our superior client satisfaction.
 
5. The Way We Determine Your Risk Tolerance: Behavioral economists have demonstrated that people consistently overstate their risk tolerance, which frequently causes them to sell when markets turn down, thereby significantly reducing their return. That’s why we’ve built algorithms that help us determine what your risk tolerance actually is – a determination that is the critical input to determine your optimal asset allocation. For more on the thinking behind our approach to risk tolerance, take see our blog post:https://blog.wealthfront.com/wha…. We believe by accurately assessing your risk tolerance, we are likely to recommend a portfolio that you are less likely to sell when the market declines. DALBAR, a respected research firm, found that selling when the market declines typically costs the individual investor on the order of 4% per year (http://www.dalbar.com/ProductsSe…).
 
6.   Our Approach To Transparency: We believe information wants to be free, and that you should only pay for convenience. That's why we tell you what your allocation is going to be before we ask for your email address. We tell you why we selected each of the ETFs we recommend and which ETFs would have been our second and third choices. If you’re a “Do it yourself” investor, you are welcome to use that info to buy our recommended ETFs in your own brokerage account without paying us at all. We give away that information for free, because we believe people will find the convenience of periodic rebalancing, optimized asset location, daily Tax-Loss Harvesting and single stock diversification worth our small fee. Most importantly we believe in under promising and over delivering. We work hard to limit our claims to what is truly achievable.

What are the main differences between Wealthfront and Betterment?

What are the common misconceptions about the entertainment industry?

September 21, 2014

Answer by Michelle Monaghan:

"That all we care about is Hollywood". To the contrary, I have met and worked with some of the most charitable, thoughtful and socially conscious people. I am so proud to be a part of a creative community that extends its resources outside of our little "bubble".

What are the common misconceptions about the entertainment industry?

How did Chamath Palihapitiya learn to play poker?

September 21, 2014

Answer by Chamath Palihapitiya:

I learned poker from my first boss out of school. We used to play bridge but then abandoned it because there was so much cheating (in bidding etc). So he taught me poker, I fell in love with the game and then have spent much time and money since unsuccessfully trying to master it. It is an amazing game and I would highly recommend everyone learn to play it. It's a great blend of risk, psychology and game theory.

How did Chamath Palihapitiya learn to play poker?

What is Ashton Kutcher doing next?

September 21, 2014

Answer by Ashton Kutcher:

  1. I'm about to be a father.  I think this is the most important job a man can have in life.  Carlos Slim once said, "Most people try to make a better world for our children when what they should be doing is making better children for our world."
  2. I'm shooting the final season of Two and a Half Men.
  3. Building a new media platform called aplus A+ News & Stories with the mission of telling stories that Make a Difference.
  4. Continuing to support Entrepreneurs through my investment vehicle.
  5. Building my foundation Thorn in an effort to continue to create technology tools to fight the sexual exploitation of children.
  6. Exploring other acting and directing opportunities.
  7. Looking for talented people to help with these endeavors

What is Ashton Kutcher doing next?

What You Can Learn In The Next Ten Minutes That Will Make Your Entire Life Better

September 21, 2014

: It will take you 1 year of serious-study to be in the top 60% of anything in life. 
It will take you 2 years to be in the top 50% (the learning curve slope starts to flatten). 
It will take you 3 years to be in the top 30% (where you will start making money at your passion). 
It will take you 4 years to be in the top 10-20% (where you will start to make real wealth). 
It will take you 5+ years to be in the top 10% where you will make real wealth. I've switched careers many times.

Post by James Altucher:

What You Can Learn In The Next Ten Minutes That Will Make Your Entire Life Better

What You Can Learn In The Next Ten Minutes That Will Make Your Entire Life Better

What would be the advantages and disadvantages of Hillary Clinton becoming president?

September 4, 2014

Answer by Mike Garrow:

Believe it or not, the biggest advantage she would bring is that she is a politician, not ideologue. The Chief Executive has to be able to work with ALL of the legislature. There is a necessary give and take to the job of building consensus, and it takes a skilled politician to do this. Hillary is politician, in that her agenda is centered around her, not around the ideals of a Party. It's going to take that kind of skill to get the Congress and the government working again.

Her primary disadvantage is all of the baggage she will bring. Everything from Whitewater, Vince Foster, and Bill's women to Benghazi.

In this case, an experienced politician with baggage is definitely better than a clueless ideologue.

What would be the advantages and disadvantages of Hillary Clinton becoming president?

How can I become an asshole?

August 31, 2014

Answer by Anonymous:

I believe the biggest selling point of "being an asshole" is the ability to absolutely NOT give a fuck.

This leads me to believe once you stop paying attention to others' opinion about yourself then only one can truly start finding your place in the world.

Sometimes it breaks your self-esteem but if you are a strong person, that compels you to work harder to overcome your discrepancies.
OR,
It boosts your self-confidence — in which case, your belief in yourself (in terms of skills, depth in the water) is reinforced.

Either way, I believe becoming an asshole is a great thing.

How can I become an asshole?

How can I become an asshole?

August 31, 2014

All my life I've been a nice guy and it has got me nowhere.

With most people I know, I've found the bigger the asshole they are the more successful they have become. So how can I become an asshole so I can be successful too.

How can I become an asshole?

Would the world be safer and better if men didn’t have sexual desire?

August 26, 2014

Answer by Daniel Super:

It would be a world without life as we know it.

You're talking about getting rid of the biological drive to reproduce.

If I want to think about a pretend fantasy world I'd much rather imagine one where humans weren't so stupidly puritanical about sexuality.

Would the world be safer and better if men didn't have sexual desire?


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