Author Archives: sekoch

Online Advertising: A big kid’s game?

Online advertising is an important tool for business today – having a presence on the web can do a few very important things for a business. First, it gives the customer a direct link to provide feedback, troubleshoot, and share with friends. Second, it can greatly enhance sales and revenues. Finally, advertisements can be segmented to areas of the web which will capture a target audience. With all of those great attributes, why wouldn’t a company advertise online?

A Wall Street Journal article today outlined how small businesses are having a hard time getting returns on their online advertising investments, especially on search engines. For those unfamiliar, search engine advertising is done through an auction style marketplace, where clients place bids on certain keywords to appear on users’ screens. The easiest way for small businesses to access these auctions and be successful in winning the auction is to hire a marketing firm such as ReachLocal, Inc., who will “provide hands-on, personalized support.” (Safdar & Loten, WSJ) Small business owners, on the other hand, say that they are filed away and can’t get the same attention or customer support as the bigger players. Of course, this sounds remarkably similar to what happens in investing – where it is in the manager’s best interest to monitor the accounts which have more earnings potential.

So what are the options for a small business owner looking to find online advertising space? The answer, in my opinion, comes through word-of-mouth. While search engine advertising, if done properly and in the right industry, can be effective, it doesn’t compare to a five-star review. For some, the social media space, such as Facebook pages, have been effective for advertising promotions and gaining loyal followers. For most industries, however, users aren’t interested in following a company that will encroach their news food. Instead, small businesses can lean on customer feedback oriented websites and applications such as Yelp to attract new customers. Yelp is just one example of a way for companies to get the word out without spending a fortune – restaurant customers seem to be happy to leave a good review at a place they thoroughly enjoyed. Another interesting strategy was taken by a car dealership in my hometown. For car buyers, accumulating 100 likes on a photo of you and your new vehicle will pay off in the form of the dealership covering your first payment. This innovative strategy has worked extremely well so far, as friends feel obligated to help out with just a click of the “like” button.

Due to the high volume of demand for adspace and the overall low rate of hits, online advertising is a hit or miss affair. For some, advertising an application or one-click purchase on Twitter’s app for mobile devices may be the next solution. Maybe there is an innovative social media solution that companies can use to spread promotion and gain followers. But for most, it may be time to go back to basics – providing a high quality product or service and in return having widely-used and respected platforms such as Yelp available for that word-of-mouth to get around.

(Revised) The Renters Dilemma

To rent or to buy? It can be a major dilemma and life decision, especially for young professionals in their 20s. And now the choice is becoming more and more complex as demand for rentals continues to skyrocket and, as a result, the price of monthly rent. A recent New York Times article shed light on the issue, explaining how the middle class simply can’t afford rentals like they used to.

Traditionally, renters aimed to spend no more than 30% of their income on housing and utilities. This benchmark is important as it allows for other important categories on a budget such as savings. The rental website Zillow conducted a study this week that examined how rental rates have been increasing and are now approaching or exceeding this 30% line in many cities. This issue is especially important for soon-to-be graduates, as pricey rent may stretch budgets and have a series of side affects. For one, saving for retirement and paying back student loans are often the first things to go in order to maintain a certain lifestyle for today. Both have severe consequences due to interest accruing. For savings, losing years of compounding on retirement accounts is crippling for goals of having an adequate amount of future wealth. On the contrary, paying the minimum in loans rather than a targeted monthly payment could end up costing thousands down the road as the higher balance continues to punish the lender via interest costs. Alternatively, it is possible to save money in other places – like buying cheaper, more unhealthy food. I recently wrote a blog post examining why the easy access to junk food is a huge threat to the U.S. population that can be found here. A graph showing trends for rental and mortgage rates is shown below:

Screen Shot 2014-04-16 at 9.53.05 PM

 

 

Of course, high rental rates aren’t just a problem for those headed to the real world. Ann Arbor’s off campus housing can be expensive and hard-to-find, and these increases in rent prices are going to have serious consequences for college students in the area. As shown in the graph below featuring Ann Arbor-specific data, Ann Arbor rental rates already are close to 35%. With many students either working part-time or using loans to pay rent, raising rates further could cause housing located near campus to cease being an option for many students.

 

Screen Shot 2014-04-16 at 9.52.27 PM

 

But what can be done? The other feature on the above graphs is the affordability of taking a mortgage. Unlike rental affordability, mortgages have seen a favorable trend since the recession. One potential option for students is to purchase an off-campus home. While this may seem extreme, especially for those planning to leave Michigan following their graduation, it could have a plethora of benefits. Most importantly, the thousands accrued in rent over the years wouldn’t be going to a bloodthirsty Ann Arbor housing company. Instead, those monthly payments would be available in asset value down the road.

Sure, I personally recommend living as close to campus as possible and enjoying the once-in-a-lifetime college experience. Commuting to school would be a completely different lifestyle and would turn many (including myself) away. However, having a home partially paid off coming out of college would be an absolute game changer and set a student far ahead from their peers. To conclude, I wanted to offer an actual example of buying rather than leasing as a student. A cousin going to school in Wisconsin decided to partner with two others and purchase a “fixer-upper” three years ago. Recently while home for the holidays, he mentioned to me that his group now own three homes in the area and he has yet to pay a cent in rent while in college.

While it may not be for everyone, a radical change could be on the horizon for student living. With rental rates across the country skyrocketing, it may be time to take a risk and choose to buy, not rent.

The Renters Dilemma

To rent or to buy? A major dilemma for many, especially those in their 20s. The decision is becoming more and more complex as demand for rentals continues to skyrocket and, as a result, the price of monthly rent. A recent New York Times article shed light on the issue, explaining how the middle class simply can’t afford rentals like they used to.

Traditionally, renters aimed to spend no more than 30% of their income on housing and utilities. This benchmark is important as it allows for other important categories on a budget such as savings. The rental website Zillow conducted a study this week that examined how rental rates have been increasing and are now approaching or exceeding this 30% line in many cities. This issue is especially important for soon-to-be graduates, as pricey rent may stretch budgets and have a series of side affects. For one, saving for retirement and paying back student loans are often the first things to go in order to maintain a certain lifestyle for today. Both have severe consequences due to interest accruing. For savings, losing ten years of compounding on retirement accounts is crippling for the future. Paying the minimum in loans could end up costing thousands down the road as the higher balance continues to raise interest costs. Alternatively, it is possible to save money in other places, like buying cheaper, more unhealthy food. I recently wrote a blog post related – why easy to obtain junk food is a huge threat to the U.S. population – that can be found here. A graph showing trends for rental and mortgage rates is shown below:

Screen Shot 2014-04-16 at 9.53.05 PM

 

Of course, high rental rates aren’t just a problem for those headed to the real world. Ann Arbor’s off campus housing can be expensive and hard-to-find, and these increases in rent prices are going to have serious consequences for college students in the area. As shown in the graph below featuring Ann Arbor-specific data, Ann Arbor rental rates already are close to 35%. With many students either working part-time or using loans to pay for their rent, raising rates further could cause living close to campus to cease being an option for many students.

 

Screen Shot 2014-04-16 at 9.52.27 PM

 

But what can be done? The other feature on the above graphs is the affordability of taking a mortgage. Unlike rental affordability, mortgages have seen a favorable trend since the recession. One potential option for students is to purchase a home off-campus. While this may seem extreme, it could have a plethora of benefits. Most importantly, the thousands accrued in rent over the years wouldn’t be going to a bloodthirsty Ann Arbor housing company. Instead, those monthly payments would be available in asset value down the road.

Sure, I absolutely recommend living as close to campus as possible and enjoying the once-in-a-lifetime college experience. Commuting to school would be a completely different lifestyle and would turn many (including myself) away. However, having a home partially paid off coming out of college would be an absolute game changer and set a student far ahead from their peers. To conclude, I wanted to offer an actual example of buying rather than leasing as a student. A cousin going to school in Wisconsin decided to partner with two others and purchase a “fixer-upper” three years ago. Recently while home for the holidays, he mentioned to me that his group now own three homes in the area and he has yet to pay a cent in rent while in college.

While it may not be for everyone, a radical change could be on the horizon for student living. With rental rates across the country skyrocketing, it may be time to take a risk and choose to buy, not rent.

Early signals point to unemployment trouble

In January, I wrote a post that supported shortening the unemployment benefits for the long-term unemployed. I used data from North Carolina to show a 1.4% drop in the unemployment rate in just six months. Unfortunately, analytics website Five Thirty Eight published an article from their data lab today that tells a different story.

Since the end of the Emergency Unemployment Compensation program cut unemployment benefits for many Americans three months ago, those whose checks have stopped coming still aren’t finding jobs. In my own analysis of the North Carolina data, I noted that one potential red flag was the high percentage (3/4 of a percent) who dropped out of the workforce altogether. The unemployed who become discouraged and quit trying to find work cause the biggest flaw with the unemployment measure, causing a counter-cyclical movement against the unemployment rate. That drop-out red flag seems to be a larger driver of the overall rate than we’d hoped.

“The number is much smaller today not because the long-term unemployed, as these Americans are defined by the Labor Department, have found jobs, but because they have given up looking for work.”
-Ben Casselman, Five Thirty Eight

These data’s prognosis isn’t good. In essence, Five Thirty Eight’s data lab has found that after six months, your chances of finding a permanent job are close to “hopeless.” Those who are finding employment are accepting part-time or temporary work.

Casselman also has an interesting take on how policy will react in the coming years and in the next recession. While there have been mixed reviews about how to interpret the Fed’s unemployment target, it seems like it will continue to serve as an indicator to some extent. The Fed’s 6.5% threshold seemingly has been reached, and scaling back stimulation into the economy has already garnered speculation for the first interest rate increases in years. For those who have dropped out of the workforce or yet to find employment, the future looks bleak.

“The Fed has been pulling back on its efforts to stimulate the economy, despite continued high unemployment and low inflation, suggesting it thinks the long-term unemployed are gone for good.”
-Casselman

It’s hard to pinpoint how to manage the long-term employment situation in America. On one hand, it isn’t possible to continuing paying out benefits forever to millions without jobs. Yet, this three month data shows hints that it isn’t a lack of effort preventing Americans from the workforce. The chances of finding work quickly diminish after six months unemployed, so the first step is ramping up the efforts to get laid-off workers going right out of the gate. Additionally, hiring long-term unemployed to government jobs such as infrastructure projects or creating easier access to community volunteering opportunities can help prospective employees keep their resume fresh and full of work experiences.

What can’t Amazon do?

This week, it was announced that Amazon plans to release a smartphone in 2014 to compete in the market heavily dominated by Apple and Samsung. Joining the smartphone market would be another venture for Amazon, a company already having a video streaming service, a strong position in the ebooks and tablet market, and a host of other aggressive ventures that CEO Jeff Bezos has become known for. But in the a competitive cellular phone market, can a late entry from Amazon be sustainable?

Of course, these new ventures are just a fraction of Amazon’s core service – offering a huge number of products for low prices and two-day shipping. The company has toyed with the idea of deploying drones to further decrease these short shipment times and recently begun offering AmazonFresh, a food delivery service that can bring refrigerated goods to your door.

“Amazon has done a lot more than become a stellar retailer.
It has reinvented, disrupted, redefined, and renovated the global marketplace.”
McCorvy, 2014

But how will Amazon’s smartphone perform in the market? Even when analyzing its past initiatives, it’s hard to draw up a comparison. First, brand loyalty for the iPhone would make it difficult to pull away customers fully acclimated to using Apple’s cross-platform services, including email, calendars, messaging and media libraries. Market leader Samsung has similar advantages, although if Amazon decides to use Android software the transition could go smoothly for customers. Second, the new features being proposed include 3-D imaging on the front of the phone – a technology that has yet to convince buyers. 3-D televisions have stumbled out of the gate, and other uses of the technology (such as the Nintendo 3-DS) have failed to meet expectations. Concerns for declining vision are at the heart of 3-D reluctance.

“the phone would employ retina-tracking technology embedded in four front-facing cameras, or sensors, to make some images appear to be 3-D, similar to a hologram” – WSJ

Finally, the smartphone market is heavily connected with phone service providers such as AT&T and Verizon. Personally, I can’t remember ever paying close to full price for a phone due to contracts and other promotions from these providers. Amazon’s strategy has typically been to provide superior value at a lower cost – such as its Amazon Instant Video Service, which is cheaper by month than its competitor, Netflix, by offering significant but slightly less content. However, when phone providers are already offering Samsung and Apple products at heavily subsidized rates (sometimes even free), Amazon doesn’t have much, if any, room to go lower.

Amazon may choose to use its smartphone as a vehicle of promotion for its more developed services and app store. However, offering innovative features and finding a strategy to maintain its low cost/high value will be huge initial hurdles upon entry into the market. If the company does manage it – and there’s a good chance they do – it’s hard to imagine there’s anything the internet giant can’t do.

Minimum wage vs Unemployment: A Historical Approach

As President Obama continues his cross-country tour encouraging a raise in minimum wage, there is a lot of speculation as to how the change would affect the minimum wage in America. Of course, where better to look than history to see how increases in minimum wage have affected the short-term unemployment rate in America.

The below graph shows FRED data on the civilian unemployment rate across time, along with data points I’ve added to show where the minimum wage was increased by more than 10%. The proposed increase to $10.10 from the current rate of $7.25 would be the second largest change in history, compared to an 88% change in 1950 (the 1950 increase took the wage from $0.40/hour to $0.75/hour).  More detailed information on other wage increases can be found in the table I’ve created.

FRED_unemployment

So what have we seen from rate hikes in the past? There are a couple important trends to consider. First, there has been a much more noticeable increase in unemployment for recent minimum wage increases. Since 1990, 5/6 (83%) of rate increases have resulted in a short-term increase in unemployment rate. In addition, all five were prior to or during a recession – a bad sign for those in favor of increasing the rate once again. Oddly enough, the other big rate increase, the aforementioned 88% hike in 1950, actually was turning a huge decline in unemployment. The wage increase’s timing significantly helped, as it was during a cyclical boom following the late 1940s recession.

The big question mark from this data is how today’s mark compares to a wage in the cents. Is data from the 1950s relevant for today? While history’s tales often tell true, it is always hard to justify comparing what seem like apples to oranges. When considering the trends mentioned above since 1990, it may be safer to take the successful increases of the 1950s with a grain of salt.

Screen Shot 2014-04-09 at 7.09.18 PM

However, while similar increases have seemed to spark or worsen recession periods in the past quarter of the century, trials seem to tell another story. The Wall Street Journal reported today that the city of San Jose hasn’t experienced job loss after moving the minimum from $8 to $10. After the announcement that the wage would move, there was a sharp reaction resulting in many layoffs. However, once the change went through, things quickly leveled out and there was a similar reaction in the positive direction. While it is dangerous to take this small sample too seriously, it could provide evidence that minimum wage workers are going to be needed, even at higher salaries.

The Congressional Budget Office has estimated that while there will be approximately 500,000 finding themselves without a job, the wage increase will bring almost a million out of poverty in the United States. But before we make one of, if not the most, drastic change in minimum wage in history based on economic models, it is important to view the negative consequences that have been so frequent in the recent past.

(Revised) Is a Storm Coming for the NCAA?

Players on the football team at Northwestern University, led by graduating quarterback Kain Colter, are on the right track in their quest to force the National Collegiate Athletic Association (NCAA) to change its policy on how college athletes are treated. The athletes – particularly those in division 1 men’s basketball and football – believe they behave more as employees than students. In turn, they want to be compensated as such. The NCAA – and the universities they attend – think the full tuition scholarship and living stipends they receive, along with the opportunity to earn a degree, are plenty. In March, the National Labor Relations Board ruled in favor of the players and granted them the right to unionize at Northwestern University. Could this spark a huge change in how the NCAA operates?

The recent win must be taken with a grain of salt, as Northwestern University has already pledged to appeal to the NLRB national headquarters in Washington, D.C. However, the strong decision by Chicago’s regional NLRB director, Peter Ohr, may make it hard to reverse. Ohr’s argument centered around the massive practice regimes that players must adhere to, which exceed their time used academically. At the hearing, Ohr argued, “Not only is this more hours than many undisputed full-time employees work at their jobs, it is also many more hours than the players spend on their studies.”

“This ruling would potentially be the beginning of the end of the NCAA as we know it,” (WSJ)

Even if the unionization push ends in vain, putting the NCAA under the microscope has led to a number beneficial changes for the athletes. In April, star point guard Shabazz Napier of the NCAA champion Connecticut Huskies spoke out, saying he sometimes went to bed “starving” due to the inability to afford food. Shortly after, the NCAA eliminated rules on food restrictions and granted an unlimited food allowance for athletes. NCAA president Mark Emmert later said that “the NCAA has historically had … dumb rules about food.”

NCAA players have long sought to be compensated more generously for their contributions on a college campus. For instance, former Michigan QB Denard Robinson’s jersey graced most closets across the Ann Arbor campus but he was unable to request a penny until after his graduation (when he was legally able to host paid autograph sessions)1. The complicating issue, however, is that the vast majority of college athletic programs fail to bring in revenue and annually end up in the red. The minor sports that fail to draw crowds and sell merchandise are funded by bigger programs – such as the Michigan football and men’s basketball teams – or are subsidized by the university. In 2012, just 23 of 228 division I athletic departments were profitable.

That complication likely will end all talks of each NCAA athlete getting some sort of compensation package and spark a new conversation for allowing licensing and sponsorship deals for star athletes. This, in my mind, is a natural progression for the NCAA in a time where 19 year-old student-athletes are forced to make a decision: take the guaranteed money by going professional or stick around to finish a degree. With the risk of injury every day, more often than not they are heading off early for the National Basketball Association (NBA) or National Football League (NFL).

While talks of creating monthly stipends of $1,000 to athletes may continue and even be passed through eventually, there is little other traction for a solution with equality for all. Simply put, the model for college athletic programs can’t sustain itself if paying athletes in minor sports more than the already-generous full tuition and living expenses. If Washington D.C. passes a verdict similar to Ohr’s, we can expect the NCAA to tailor things for their star players moving forward through merchandise revenue-sharing and allowing them to accept sponsorship deals through University sponsors (for instance, allowing basketball star Nik Stauskas to take a sponsorship deal from existing school-sponsor Adidas). If that type of deal was enough to prevent Stauskas2 from leaving after his sophomore season for the NBA, there would be a significant benefit for the school financially. It is, after all, all about the money.


  1. he was never given a percentage of his jersey sales 

  2. Stauskas and teammate Glenn Robinson III announced on April 15 that they are declaring for the NBA draft and forgoing their final two years of collegiate eligibility 

The new telemarketing?

It wasn’t that long ago that companies would call you up to pitch their latest product or service, thought at the time as a premier way to reach consumers. Times have changed, but using phones as a medium of advertising has not. As social media becomes more and more integrated with smartphones, companies are looking to cash in by putting advertising clients right in your hands. The relative painlessness for consumers and huge potential for advertisers make mobile app advertising a trendy expenditure.

Of course, no one browsing Twitter for the daily news, updates from friends, or the newest post from Professor Kimball wants to be bombarded with ads. While Facebook has adopted technology to match advertising with user interests, Twitter has had a hard time working advertisements into the Twitter feed without compromising its user experience. Other social media platforms, such as Snapchat and Instagram, have yet to introduce advertisements on mobile apps.

Yoree Koh of the Wall Street Journal wrote a feature this week about Twitter’s effort to expand its advertising services to attract customers. Twitter CEO and Michigan alumnus Dick Costolo is focusing on increasing available options for one-click subscriptions and purchases. While not groundbreaking by any means (“Facebook users downloaded 245 million mobile apps after seeing ads for those apps in their news feeds last year.” -WSJ), it is moving towards the future of purchasing behavior. One click technology has revolutionized payments all across the board, from making an Amazon purchase instantaneous to paying back a friend with a quick swipe of the finger on up-and-coming app Venmo.

Of course, Twitter has some intriguing possibilities for future growth, including the intrinsic value in the use of its hashtag feature. Most famously, back in February, insurance company Esurance used #EsuranceSave30 as a way to encourage Twitter users to promote the company. By offering $1.5 million to a lucky winner they convinced over 5.4 million to hit the tweet button and start a worldwide trend. It’s likely that we see similar mass marketing strategies if companies can find a platform like the super bowl to get the news out initially.

So while we may not be getting annoying phone calls throughout the day, companies have shrewdly found ways to be on our phones. With the ease of making a purchase, one-click advertisements, especially for products at a 99 cent price, are going to be a major revenue source for Twitter and other mobile applications. The obstacle, of course, is whether social media companies can increase ads while not compromising a high quality user experience. So far it’s seems to be working just fine.

President Obama comes to town

The big news in Ann Arbor today is the Presidential entourage that can be found on Hoover Street, the site of the Intramural Sports Building where President Barack Obama is speaking about his proposed increase in the federal minimum wage. The President’s proposal is to increase wages to $10.10 across the country in order to increase the ability for families to escape poverty. The jump is significant – a 39% increase from the current rate – and could drastically change the scope of the job market.

I have written a few posts about this proposed increase in wage (you can find the most recent one here). However, rather than continuing to examine the President’s plan, I want to offer a new resolution to the issue. First, it is important to realize that the United States is a vast and diverse country. Trying to pinpoint a single fair living wage for those in Manhattan and those in rural Iowa is impossible. Simply look at the cost of living map below to realize how a single wage point wouldn’t make sense.

uscostofliving

So if $10.10 across the board isn’t the answer, what is? There is a definite need, at least in the majority of areas in the U.S., to increase the minimum wage. It’s simply not feasible to live working 40 hours a week at a weekly gross income of $290. To some extent, the current system is performing as it should. 13 states voted to increase their wages at the start of 2014. However, a solution is needed to solve the urban vs rural disparity. One reasonable answer is to leave it in the hands of the local city governments. If the city of Ann Arbor and its residents determine that a $10 wage is right for the community, it makes sense to change it. In the meantime, the neighboring city of Ypsilanti, where costs of living are lower, could go on offering wages at an $8 level. This allows the natural supply and demand forces of each individual market to work and find the equilibrium price point.

In a complex United States economy, it simply isn’t possible to solve problems with a “one-size-fits-all” solution. It is important that our government allows the system to work, and for local issues to be solved with localized solutions. While our President’s efforts to help bring struggling families above the poverty line is valiant, the true solution is to encourage cities to find the wage that is right for them and give them the tools to do so.

ARWDWS: The Professional’s Hidden Veil

In A Random Walk Down Wall Street, Burton Malkiel argues that even investors have trouble making accurate stock forecasts and more often than not underperform the market as a whole. Throughout the book, he gives countless examples of how a lack of information to investors and unique jargon was used to build a “castle-in-the-air.” These stocks are perceived by the public to have an unrealistic level of growth and often can lead to bubbles. And while Malkiel gives many historic examples, he also points to how these castles can be build today. To avoid the risk of losing on individual stocks, Malkiel recommends investing in indices rather than using analyses or market information to make specific picks. Malkiel suggests that neither the at-home investor nor the professional can beat Wall Street’s “random walk” and names five reasons why professional security analysts have a tough time picking winners in the market.

1. “The Influences of Random Events” – The first and most obvious challenge to all investors, professional or not, is the occurrence of random events. Unpredictable and unavoidable, a negative event or discovery can doom a company and its stock. Malkiel is conservative but correct when naming this an obstacle.

2. “The Production of Dubious Reported Earnings through ‘Creative’ Accounting Procedures” – Similar to above, this is an instance where the reveal of dirty accounting can cause a nosedive for a share’s price. Of course, due to rules from the Securities and Exchange Commission (SEC), neither professionals nor casual investors would predict news of accounting fraud and would be at a huge loss if faced with an Enron-like scenario.

3. “Errors Made by Analysts Themselves” – Again, a simple and clear reason – but Malkiel misses the mark to some extent. He acknowledges young analysts to be “well-paid and usually highly intelligent person who has an extra-ordinarily difficult job and does it in a rather mediocre fashion.” (137) While everyone makes a mistake, he fails to acknowledge how experience and day-to-day work give professionals a clear advantage to learn from their mistakes and avoid them in the future – making them much less frequent than that of the average investor.

4. “The Loss of the Best Analysts to the Sales Desk, to Portfolio Management, or to Hedge Funds” – It’s not surprising that after a couple years, analysts are quick to jump to higher paying and less time-intensive positions. There certainly is merit to acknowledging the high level of turnover for security analyst positions.

5. “The Conflicts of Interest between Research and Investment Banking Departments” – The fifth and final reason is by far the most interesting, and the biggest reason why I chose to write this post. It reveals a huge educational gap in how the ratings system of stocks work, and how the interpretation of these ratings differs within the industry and from the outside. Malkiel explains, “When an analyst says ‘buy’ he may mean ‘hold,’ and when he says ‘hold’ he probably means this as a euphemism for ‘dump this piece of crap as soon as possible.'” In fact, these ratings sometimes are solely a way for analysts to please their biggest customers. Malkiel notes that the situation has improved to some extent through SEC policies, but the issue remains that a “buy” rating may not mean what an at-home investor thinks it does.

While reading through this section, I thought of Facebook and its initial public offering (IPO) in 2012. As a huge name and exciting company, it garnered the attention of casual investors looking for the next Apple or Google. Of course, the IPO disappointed many after it quickly dipped to under half its initial price. For those who stuck with it, the stock has recovered and now sits at 50% higher than the IPO price. However, as with many of Malkiel’s examples such as the Biotech bubble and ZZZZ Best, the casual investors were the ones to lose. If the market wants to create fair access for professionals and amateurs alike, the educational barrier through investing jargon and corporate bias must be the focal point of today.