Please don’t judge me.
Listen, I’m not ashamed to admit that I am a reality TV connoisseur. True, I am a nerd through-and-through (and not the cool-yet-awkward, tech-savvy, Lena Dunham kind). I get excited discussing the value of credit shelter trusts or whether the AMT should be repealed for Pete’s sake! But on the other hand, I will get super passionate and opinionated when debating whether it was cool for “Housewives of the OC” ladies Tamra, Vicki and Lydia to ditch Gretchen and Heather after dinner on their recent trip to Cabo San Lucas. (By the way, it was. Gretchen and Heather are just a couple of sticks-in-the-mud with veneers.)
I also watch “Keeping Up With the Kardashians” on E. It’s not because I like watching rich people lay in bed all day in fluffy white robes talking about how stressed out they are, or go on long extravagant family vacations to foreign lands where they lay around in bed all day in fluffy white robes. And while I am fascinated (and confused) by the imagination of Bruce Jenner’s plastic surgeon, no, I don’t tune in to the show just to get a glimpse of Bruce’s Farrah Fawcett hair and high cheekbones. And maybe others are but I am not watching for cracks in the relationship between Kourtney and baby-daddy Scott Disick.
I guess I watch the show because it serves its purpose. Once in a while I want to relax and settle in for completely mindless, unuseful, brain-cell murdering entertainment–and I’m never disappointed!
Well this week was a big week for the Kardashians because Kim and Kanye who’ve been dating since early last year, finally had their baby. The baby girl came a few weeks early, and while reporters had hovered around Kim throughout her pregnancy and reported her every outfit flub, extra pound gained and every Kim outing sans Kanye, since the birth of Baby K, the family has been very private.
Since I follow the media-hungry Kardashians, I know the eery silence is intentional, even strategic. Both Kim and Kanye know how to make a ton of money by being in the limelight. Kim is worth about $40 million while Kanye’s net worth is estimated at $90 million. Between the two of them, they have been paid millions for sex tapes, law suits, clothing and fragrance lines, appearances and more. If anyone knows how to turn the birth of a baby into millions of dollah-bills, it’s Kimye.
So while Baby North or Kaedance or Kris, Jr. is still only about 6 days old, we know she’ll be well taken care of and will likely be financially savvy and earning her first millions before age 5. Here are some investment lessons we can learn from the newest edition to America’s Royal Family:
1. Timing is everything
Baby K arrived five weeks early but right before Kanye’s new album Yeezus dropped (ugh). As a result she secured the time and attention of both mommy and daddy. If she’d been born around her due date in July, Kanye would’ve been on tour and may have missed the birth and corresponding media circus. Not to mention Baby K beat out the arrival of a real Royal (Prince William and Kate’s) Baby.
Similarly when investing in the market, it’s important to know when to get in and when to sell. While a typical buy-and-hold strategy (investing in a mix of assets for a long period of time) can be smart over the long-term, there is value in watching specific companies or sectors for the right time to buy in or cash out. Most of us are not financial professionals so it’s wise to team up with a trusted advisor who does watch the market, and can guide you in reaching your goals. And make it a point to learn about investing yourself. The more familiar you are with the market, the more equipped you’ll be to take advantage of market movements.
2. Sell High
Has anyone seen a picture of Baby K? No? Seems odd, doesn’t it, that a family that makes millions from having cameramen documenting their every move (weddings, births, fights, drunken escapades) hasn’t yet thrown open the doors of the NICU to let the cameras in. Obviously, Kimye–or more likely momager Kris–is shopping around exclusive photos of baby K to the highest bidder–and will likely get millions!
This rule of thumb seems like a no-brainer when investing in equities but it’s hard to determine when the market has peaked and when is a good time to sell off certain positions. Many investors learned this the hard way back in March 2000 when the tech bubble burst and tech stocks that plummeted. A similar thing happened when the housing market collapsed in the fall of 2008, leaving stocks, property values and retirement plans at historic lows. Yet all along, many experts had warned about the markets collapsing–as the market was skyrocketing– but the general consensus was that the market will only go higher, culminating in what former Fed Chief Alan Greenspan warned was dangerous and “irrational exuberance.”
To take advantage of market highs but minimize risk, consider investing in an ETFs (exchange traded funds) which combine a group of stocks in a specific sector to mimic a particular index. An ETF can be a low-cost strategy that gives you exposure to a particular area of the market. It offers diversification so if one position loses value, the value of the ETF doesn’t necessarily plummet. In addition to ETFs, many investors appreciate the simplicity and diversification of a traditional balanced mutual fund that leverages equity exposure for higher returns along with consistent returns from government bonds and cash.
3. Acquire an entourage
Have you ever seen photos of Kim or Kanye walking to their car or through the security line at the airport? True, they are usually mobbed by the paparazzi but look closely and you’ll see a gaggle of handlers behind them. Baby K is sure to have her share of men-and-ladies in waiting to handle her every whims–and when it comes to investing, so should you!
A financial entourage can include anyone from a financial advisor to an investment club that meets every month, to an online community, a group of friends or an investment buddy, to a collection of trusted websites and television shows that helps you keep up on the markets and the economy. To find a fee-only financial advisor, try http://www.napfa.org to find someone in your area. For advisors who work on commission, check out http://www.fpanet.org. Many websites are available to help you learn about and undertsand the markets like http://www.bloomberg.com,www.Wealthwatch.com, http://www.yahoofinance.com and more.
4. Don’t be afraid to go international
I’ve read that when Kim went into labor, Kanye was just stepping off a plane from Switzerland. In fact, many credible sources (ummm…US Magazine) reported that Kanye was abroad during much of Kim’s pregnancy, and that after the birth of the baby the couple plan to move to France. Whether for more privacy or for the fine wine and decent coffee, the couple may decide that living in Europe provides a better lifestyle for their family.
While world markets have all experienced their share of ups and downs over the past few years, many investors have seen strong returns by diversifying their portfolio and including international and emerging market funds. Countries like Brazil, India, China and Russia have seen positive earnings in their markets, and emerging markets like Indonesia, the Middle East and Chile are also benefiting from cheap labor and strong demand. While an overall portfolio of international and emerging market stocks may not be wise, consider adding exposure to overseas funds as a way to increase returns. Most of the top fund companies like Vanguard, Fidelity, Franklin Templeton, etc. offer international and emerging market funds so check out how the funds rate on http://www.morningstar.com before investing.
5. Don’t always believe what you hear
It goes without saying that Kanye West talks a big game. In recent interviews and song lyrics, he has compared himself to God, Andy Warhol and Steve Jobs, among others and made references to his superior artistic and leadership abilities. The guy is anything but humble and whether his proclamations are accurate, that’s up for debate. That’s why, as Baby K grows up, she must use good judgement and scrutiny when taking advice from everyone around her. While her father may announce that he is the king of rap or whatever, and her mother brightly responds with, “That’s AMAZING!” Baby K would be wise to keep critical eyes and ears open and continue searching for the truth.
As investors, we’re inundated on a daily basis with information, facts, opinions, analyses and rhetoric on the market, how it’s doing and where it’s going. At the office water cooler, there’s always that guy that goes on about his friend’s “genius” start-up. Turn on the TV at dinnertime and you have red-faced Jim Cramer hollering at a caller from Long Island about why he thinks Home Depot stock is sinking. Turn to MSNBC and you’ll watch a White House spokesperson clumsily attempting to explain the benefits of the health care legislation. Change to FOX News and you’ll likely hear a doomsday scenario of where the market –and basically the world–is headed.
All this information can have negative effects on investing if you let it. On the other hand, tuning into these shows once in a while can provide perspective as long as you continue to work with a financial advisor, pay attention to investment accounts and how they’re moving, maintain a daily routine of reading about the markets (like reading a financial article per day) and discussing your thoughts with your advisor or trusted investment buddy. It’s important not to give in to the confusion and make investing decisions based on that.
Welcome to the world, Baby K! May your future–and ours– be filled with bling!