Oh, and in case you are wondering about Hotel California yes, I am listening to this right now while

Originally we had planned to stay here in Michigan until the very end of August, but home is calling, I have much to do for you here at Kung Fu Finance and it needs to be done in California, and the Kung Fu Kids start school in just 2 1/2 weeks!
Summer here in Michigan has been amazing, but it s time to head home. So, after spending all morning on the phone with United budget car rental uk and Delta (you can only imagine how that went — it must be time for a drink ) and crazy California summer camps, the Kung Fu Kids and I are heading home this Sunday (Kung Fu Guy is already there yet another reason to go home!).
Now, I know you might think I m crazy for calling California home , seeing as how it has the rather budget car rental uk dubious distinction of being the most messed-up state in the Union right now with three large cities having declared bankruptcy already and many more on the precipice. The latest to fall was San Bernadino last week — it had a $46  million  budget shortfall (and you thought you had budgeting troubles ) and it finally threw in the towel on August 2nd, joining Stockton and Mammoth Lakes in the latest wave of debt and balance sheet insanity.
So in honor of my homecoming and return budget car rental uk to technology central (I actually live down the street from Mark Zuckerberg — true story), I want to bring you the final installment of my interview with Alex Daley of Casey Research today. I hope you enjoy it!
Oh, and in case you are wondering about Hotel California yes, I am listening to this right now while I write to you, and there are oh-so-many aspects of that song I could cover here today and relate to the current fiscal insanity, if only I had more time! I will have to write a full article on it one day. ( You can check out anytime you like, but you can never leave Time to get that second passport?)
Instead of taking 100% of someone's budget car rental uk 401(k) and throwing it into the stock market and diversifying it across materials, textiles, consumer packaged budget car rental uk goods, resources, etc., I look at it as equities, real estate, and alternative investments.
I think it is important to have some speculative budget car rental uk stuff in your portfolio because instead of risking 100% of your assets for the historical stock market gain over the last 50 years of 6.6% or something in that range, before taxes (and we've seen in any given year you might lose 30 – 40% 1987, 2000, 2008 have proven out that stocks are highly volatile).
So instead of risking 100% of your assets for a 7% gain, I would rather take 10% of my assets and reasonably swing for a 100% gain, and if I happen to lose it all, I've lost far less than I would in any particular bad year in the stock market, maybe a third or a fourth of what I would have lost otherwise.
I try to invest in many things that are not going to follow the market…2008 proved to a lot of investors that we are heavily over-invested in ETF's of stocks, and they all tend to "correlate to one", to use the geeky mathematical term for "they all go down at the same time".
Then I have a slice of my portfolio dedicated to index funds and trend investing, a slice toward bonds, a slice toward real estate, a slice towards alternative income like peer-to-peer lending and hard money lending, and across the entire portfolio I think you will find a place for speculative stock investing.
The IPO is an interesting animal. It serves a very, very important space in the market, because it's the one place where you can raise very large amounts of capital across very large numbers of investors.
When you're dealing with a company like a Biotech company, the average drug takes about a billion dollars in investment to get to market. And it's very hard to find five investors or ten investors or even 100 investors willing to pony up a billion budget car rental uk dollars for a company to make it to market, but if you spread that risk across thousands of investors with small investments each, you can easily raise that kind of money over the course of a few years.
However, budget car rental uk not all IPO's are created equal, and as bankers do, Wall St. has managed to turn a lot of what we call IPO's into something entirely different, which I consider budget car rental uk "Owner Enrichment Events", and these events are very, very different.
If you look at an IPO like Facebook, we recommended to our investors to stay as far away from the IPO as possible. Not because of all of the valuation considerations budget car rental uk and those things, although of course those were there in the background, but the primary reason was because the overwhelming majority of shares in the Facebook IPO were being sold by insiders. They were individual managers, directors, early investors, who were flipping their shares out in the public market in order to enrich themselves, but weren't financing the growth of Facebook.
The company already generates budget car rental uk billions of dollars a year in revenue, and nearly a billion dollars a year in profits in order to finance its own growth. It didn't need investors' money to keep growing, it only needed access to the public markets to enrich its owners, and so to me that spells disaster, where the interests of the company and the bankers are not aligned with the interests of stock market budget car rental uk investors.
So I recommend focusing first on IPO's that are raising money for companies to grow – companies that have a smart business plan, a great management team, and whose interests are aligned with shareholders.
If you see 5% or even 10% of an IPO, especially for a small upstart, like a biotech company that's budget car rental uk not making any money, dedicated towards insiders, that's usually actually a good thing, because you've generally had people working for 5 years or 7 years for sub-poverty level wages in the hopes that someday the company would go public and eventually start selling a very profitable product.
So to give a little bit to those scientists and managers who have been toiling away for very low wages to keep them incentivized and to keep them working is smart, and a good Board of Directors budget car rental uk will manage that level of compensation effectively such that you reward people budget car rental uk in the short-term, but you keep their long-term incentive aligned towards having the company grow profitable products.
When you're simply cashing out all of the managers and investors and providing them with so much money that they are all going to quit, buy their yachts, and move to Singapore, budget car rental uk a la Eduardo Saverin, then you're definitely not aligning those interests.
All that information is in the prospectus – the prospectus has to tell you where the source of the shares are coming from, so you can just crack open any IPO prospectus and you can see where they're coming from, who's selling how much, how much of the company budget car rental uk they'll retain afterwards, etc….it's all in there.
A lot of them came to public light during the Facebook IPO, things like green shoe allocations, where the investment bank has an incentive, where if they can get a high enough price for the stock they can actually buy a bunch of stock from the company at a discounted price and immediately flip it onto the market for a very large profit, and companies generally exercise a good amount of caution in that space and use them effectively…but ultimately it's a tool just to make the bankers richer and to stabilize the prices for existing owners.
So instead of getting involved in IPO's, I usually recommend to investors that they just wait even a day. If you're really that excited, wait a day, if you're not, wait a few weeks until after the company is trading and look to buy it then.
Oftentimes your patience is rewarded with a post-IPO dip, when the initial heyday wears off and a lot of investors will be willing to sell their shares for considerably less than it was going at the IPO, especially those insiders who were looking to make a little bit more money, and you can generally get that company a discount…it's not always the case, sometimes the stock takes off and running, like LinkedIn did, but even then, you're not missing much of LinkedIn's growth if you waited two weeks post-IPO to buy.
That doesn't necessarily have to mean that you are an expert in technology—Warren Buffet is famous for not having ever invested in any technology companies because he says he doesn't understand technology, but you know what, when it came down to push come to shove he bought into IBM.
He bought into IBM because he understood their business model . The services business, and what they brought as a consultant to the government and large businesses was obvious to Buffet, and so he was willing to buy into a technology company.
What matters is that you understand the management team, that you understand the business model, and that you understand the technology reasonably well enough that you can make a judgment about its success on the market.
Too many people fall in love with the potential of a technology instead of its reality, so I would say focus on either doing the research yourself, budget car rental uk or having a great advisor, be it a newsletter budget car rental uk publisher or another independent researcher, who's not a broker, who's not a money manager, who's not a Wall St. firm — someone independent to tell you whether or not it's a good company, a good buy, and then do your own due diligence and follow up from there.
But definitely make sure you understand what you're investing in well enough to make an informed decision about whether or not it's a good investment—don't take any one analyst's word for gospel and certainly be careful knowing the incentives of the people budget car rental uk you are taking advice from, because many of the people dishing out advice in this industry are working for the companies, or for the banks that represent the companies, and not for you.
And speaking of one more cool thing in California, it s the upcoming Casey Conference  in beautiful Carlsbad, California, where you can meet Alex (and yours truly) in person and pick his brain on your own he is a very nice guy, and very, very smart! I just learned tonight in the Casey Daily Dispatch that there are only 30 spaces remaining, so if y