Should You Buy Uber? You Probably Won’t Have a Choice

Tyler Linsten Investing, Seattle Mariners Shaming

Uber shares for everyone!

Uber-large black banner.

Love them, or hate them, Uber is out of the gate and now trades publicly on the New York Stock Exchange. It was the ninth-largest IPO ever.

As with any hot new public offering of shares, many investors want to know if they should get a piece of the action. The verdict: If you own any kind of passive index fund, you’re going to own it. (And if you choose not to own index funds, then I wish you luck in your uphill battle)

The same goes for any other mega-IPO. These companies debut at huge valuations and will be added to indexes, like the S&P 500, within their first year of trading. Remember Facebook a few years ago?

We generally think of IPOs as being a young, unknown companies making their first splash on a grand stage, but that isn’t the trend as of late. We’re now seeing more mature, nationally-recognized firms emerging from private status much later in their life cycle. This means that right off the bat they will be eligible for the most widely-tracked indexes simply because of their size. If you own any kind of broad-based, or large capitalization index fund, you will soon enough have a small percentage of your portfolio in Uber.

But this dynamic – owning little bits of a ton of companies – is exactly the kind of strategy to take. It allows us to sidestep the “should I buy it??” questions, and instead focus on other things – like, literally anything else you can possibly think of. Want to spend (waste) some time watching the Seattle Mariners? Go right ahead, you’re free to do it because you don’t have to analyze Uber’s next quarterly report. You’re gonna own a little chunk of it. The alternative is an investing reality you don’t want to endure.

This is the beauty of being a passive investor. Take, for example, Danaher Corporation (ticker: DHR). I have never heard of this company in my life, and this is kind of my thing to know. But guess what – I own it! It’s actually the 66th largest component of the S&P 500. Thankfully, I didn’t have to decide whether its investment prospects were rosy or grim. I just own a tiny chunk of it and can live my life doing other things. Just now, I took a break to make a snack. In no part of this break did I have to dedicate time to check in on Danaher Corporation. 100% of my break time was devoted to my snack. What a time to be alive.

The hardest hurdle to overcome as an investor is the lure of the stock pick. The best way to win that game: Don’t even play.

See also: Citizen Kane’s Investing Mantra. (“Well, I’m sorry, but I’m not interested in gold mines, oil wells, shipping or real estate”)

Tax Refunds Are Down – That’s a Good Thing

Tyler Linsten Personal Finance, Taxes


I am strangely enraged by people who defend this weird desire to have a big tax refund. They tend to say, “I like knowing there’s something coming my way in April.” This is largely anecdotal, but I hear it all the damn time.

Earth, to you Big Refund People: Your argument is terribly flawed and this is a supreme example of what’s wrong with personal finance in America.

Disclaimer: None of this massive rant applies to lower-income folks who may have tax complications due to the Earned Income Tax Credit or other various matters related to income uncertainty. They have it hard enough and don’t need me sending bad karma their way. No, this is for the six-figure earners I know. Yeah, you guys. 

I was compelled to make this post after seeing this CNN article, knowing that most people will see it in a negative light:

This is a good development

As reported by CNN, the average tax refund last year was $2700. But we also know that 41% of Americans cannot afford an unexpected $400 expense.

Translation: Refunds are huge, yet people are still broke.

People think they’re being responsible by setting themselves up for a large tax refund. In reality, this is a tax-free loan to the government and has basically no chance of being utilized in a smart way. Full stop. If this is your saving strategy, I am here to tell you it is not a good one. It is a band-aid intended to cover up the bullet wound that is your financial discipline.

If you skip lunch and then eat two dinners, you won’t be losing weight. People are convincing themselves that this is an effective financial diet.

Some may think that they’re performing some kind of a preventative financial measure because they know they aren’t good savers, and they would immediately spend the extra money every paycheck if they withheld a more appropriate (smaller) amount for taxes. HELLO? If you don’t think you can handle seeing a few extra dollars arrive with every paycheck, do you really think you’ll wisely allocate a one-time lump sum of thousands of dollars? I get the logic, I really do. But it’s wrong. People, stop doing this.

There’s also a big difference between making sure enough is withheld for taxes (and generating a small refund, which is fine) and the aforementioned tax refund-as-a-savings-account delusion. A small refund is OK – it’s a margin of safety against paying a penalty for underpayment. You never want to owe money at tax time. But setting yourself up for an obvious, huge refund is just silly. If you don’t have the discipline to save money weekly or bi-weekly, you certainly don’t have the discipline to save your mega refund.

Good personal finance rule: Receive interest, don’t pay it

With interest rates now being much closer to being “normal,” it’s easy to once again make the argument about passing up interest on the amount of these mega tax refunds.

It’s dead-simple to earn an FDIC-insured 2.20% APY in a savings account right now (2023 update: more like 4.00% APY). Given that $2,700 refund, people are technically leaving about $60 $108 on the table over the course of the year. It’s nothing major, and not even close to being the real argument here, but it’s not nothing. Call it a nice dinner out to celebrate making a wise tax decision. To me, that’s worth it.

In summary, Uncle Sam will always get the exact amount he’s owed. No matter what. There is no free lunch. Should people decide to convert this process into a twisted game of delayed gratification, then, well, that’s on them. But don’t say I didn’t try to change their mind.

Rant: Over.

About That “Consider Firing Your Male Broker” Op-Ed

Tyler Linsten Investing, Personal Finance

Hopefully you’ve also fired your Mail Broker by now. Stamp prices are at record levels this week and he’s just sitting around doing nothing about it! This aggression cannot stand.

In all seriousness, I’m actually referring to the controversial New York Times opinion piece penned by a financial advisor in New Orleans this month. To sum it up, she makes the case to fire your “male broker.” Wading into this topic is fraught with peril, but I’ll do it anyway because it’s my blog.

Don’t mistake my maleness for generating my reaction. It’s my status as a fellow fiduciary fee-only advisor (and also a fellow CFA Charterholder!) that draws out my serious criticism here.

Ms. DuQuesnay says she didn’t write the headline, and I believe her. But her argument is weakly-supported, largely anecdotal, and her conclusion is sexist and promotes reverse discrimination. Worse, she takes focus away from the real issue in financial advice and instead hones in on a topic that was sure to generate clicks and comments. After all, she works for a firm whose business model is based on generating business through rising traffic on its network of financial blogs. (Its CEO heads a firm espousing long-term, patient investing, yet he appears daily on a CNBC show dedicated to short-term trading and speculation. Go figure)

Promoting one sex or the other as superior, in any industry, is reverse discrimination, and is taking precisely the polar opposite stance from that of a progressive approach toward a much-needed equal playing field. The bigger fight here is broker versus fiduciary, not woman versus man. We all lose in the latter scenario. I get the sense that Ms. duQuesnay knows better but was given a national megaphone and wanted to make sure her voice reverberated.

I’ll end it with this level-headed take, published in the NYT a few days later:

Q4 Client Letter

Tyler Linsten Client Letters, Investing

2018 wasn’t an awesome year for investors. Let’s chat about it.

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