Financial Bonding: A Father-Daughter Journey in Investing

Alex woke up at 2 am, checked the market, saw a headline, “EV Bloodbath…” He thought, it's time to look into TSLA. He scribbled a half-page of notes for Anne, drank water, then went back to bed. Later that morning, Alex pointed to the article and said, “You see this headline? Propaganda is rampant in the US.”

“What is propaganda?” Helen asked.

“It’s when you are being sold a narrative or a version of the truth.”

“You mean, it’s a lie?”

“It’s usually a distorted truth, a bit of the truth to make it believable.”

“Like me trying to convince you that I did my homework?”

“Yes, it’s powerful people’s way to control your point of view. They control the media.”

“Just don’t watch the news.”

“Well, don’t believe, but find out what people believe.”

“You don’t have to be angry about being manipulated; it’s called marketing or propaganda. Use it to make money. Noam Chomsky’s book, ‘Manufacturing Consent,’ explains it.”

“You watched him all the time. The book tells you how to make money?” Helen asked.

Alex explained:

“Yes, at one point, I watched him all the time.”

“The book doesn’t tell you how to make money.”

“It tells you how powerful people make money.”

“When there's lots of bad or good news about something, it’s a clear sign the market makers are trying to increase or decrease their inventory.”

“It’s a sign for you to start looking into things. Don’t rush into action.”

“You have time.”

“It takes time to move the market. Don’t charge too early. Take your time.”

“I have to go, Daddy,” Helen said, going down the escalator towards the trains and to school.

Alex got to the office, wrote to Anne, "Give me a snapshot of what you have in your portfolio. I want to take a look.” Later, he opened his inbox and found the portfolio of stocks his sister bought. It had BYON, SQ, COIN, PYPL, TCEHY, and WU. Three more were on the flagged list. He forwarded a copy to Helen. He did not know much about BYON.

Alex called Anne and asked, "How much money do you need to have for your expenses every month?"

“I don’t know. I don’t need much. I don’t spend much. I want what mom has.”

“You mean the Hermione Handbag?” Anne looked puzzled.

Alex added:

“The Harry Potter character Hermione.”

“She has a magic handbag where she pulls unlimited things out.”

“For mom, it’s unlimited money, well, not unlimited.”

“She can pull money out every year, enough for her to spend, and the original sum would still be there.”

“Yeah, I want that.” Anne said.

Alex continued:

“That is the Hermione Income Fund.”

“We have to figure out how much money you have right now, how long you have to work, how much you have to put away every month, and what is the income you need after you stop working.”

“The idea is to get you to a point where your money grows enough to match your monthly expenses.”

“You should have enough money for you to live forever. How much do you need?”

“I don’t need a lot, maybe $1500 a month.”

“Well, that is very little.”

“The last time we spoke, you said that you wanted to have about $500 thousand so that you can retire.”

“It is easy; for every $100 thousand, you can withdraw $1000 to $1500 per month, and the money should be there perpetually.”

Anne passed the phone to Bill. He said, “I’m old; I need to make more than that.”

“How much are you making in your 401K?”

“I’m not making that much. It is like a savings account.”

“You should never let people manage your money. They don’t care about you.”

“Ha, it’s true, but I work hard, and I don’t have time to manage my own money.”

Alex said:

“Well, you know that fund managers don’t work for you.”

“They have to manage their own job security.”

“The way it works is for them to make money and not get fired.”

“They do this by avoiding anything that is potentially risky to their lifestyle.”

“Now that is a problem because risk is subjective.”

“You are in the flower business; if you ask me to open a flower shop, I think that is really risky.”

“I might not do it.”

“However, to you, it is easy and safe.”

“You have the domain expertise in that area.”

“The fund manager’s expertise is in making themselves rich.”

“They do this by avoiding any investments that could go wrong.”

“This is their job, and they are very good at it.”

“This strategy is good for the wealthy, where their main objective is to protect the money they have, not to grow it and not to lose it.”

“Ha, I don’t know anything about managing my money.”

“You have to do it yourself. Risk should be measured not from the fund managers' perspective but from the point of view of how an investment is making money through the lens of the manager or the operator.”

“What do I do?”

“Do what Anne did 14 years ago. She opened a brokerage account, moved money that she didn’t need, and started investing.”

“Is it safe? I mean, to keep money there? Is it protected by the government?”

Alex continued:

“Our society is based on the premise that these institutions will be around, and they are backed by the government.”

“You just need a few hours a month. I will do the research and send you what I have.”

“You can look into those companies and buy what you are comfortable with.”

“If you evenly distribute the money among those stocks, you will be fine.”

“Make sure you have fifty percent in cash.”

“The cash will be used to increase your positions over time.”

“I have a few hours a month. Can I get the money out if I need it?” Asked Bill.

“It is like your savings account; you have total control over it, no one has access to it other than yourself.”

Anne got the phone back and said, “I started with one thousand. I would be sitting good if I had more to start. If you had 100 thousand fourteen years ago, you would have more than 1.2 million today.”

“You have a few questionable stocks, but I will get back to you. I need to discuss this with my partner. I was looking at your list.

“I’ve sold all of my holdings of companies in support of the genocide,” Alex said.

“Can’t I worry about that after I’m rich?”

“I don’t want blood on my hands. So I’ve sold them all. It is up to you. You have to decide.”

“I volunteer and donate to causes. I’m trying to do good; let me tell you what I will do next time.”

“I want to be able to sleep at night,” said Alex. He added, “Do you think Bill is serious and do you think he can do it?”

“I will help him, but I’m not sure.”

Alex has been thinking of how to make things simple for Anne.

He took out the note, it read:

‘40/60 cash to assets, 10 assets, 6 percent each.’

‘Phase 1 has 8 trades, 0.25 percent of total.’

‘Phase 1 & 2 have 1 trade after a 4 percent increase from the previous phase.’

‘Sell 50 percent when doubled, sell the rest when the trend is against you.’

He thought:

The big picture looks easy. Can I really get Anne to do these simple tasks? The point is to keep things simple, I guess. Let me go over the details with Helen. How can I explain the note?