Ascend Investment Partners
Senior Investment Strategist and Junior PM
Emma Muhleman, CFA, CPA is a Junior Portfolio Manager and Macroeconomic Strategist at Ascend Investment Partners. Emma and her team specialize in understanding the dynamics that underlie and drive investment performance in today’s global financial markets. Following the global financial crisis, expansionary monetary policies of unprecedented scale implemented by major central banks across the globe (primarily those of the so-called “core economies”) have completely redefined the ways in which the global markets operate. At Ascend, it is precisely Emma and her colleagues' unique expertise in the “macroeconomics of today” that enables them to evaluate the domestic and global landscape through a lens misunderstood by the masses, leading to abundant investment opportunity.
Emma's professional experience to date includes working for several years picking stocks (long and short) according to a global macro, event-driven long/short equity strategy. She began her career performing business valuations for Deloitte's valuation consulting group, and thereafter worked as a stock picker for Allianz SE, one of the largest global investment managers with total AUM exceeding $1.7 trillion. She has also developed several client relationships of her own within the private equity (PE) and venture capital (VC) investment realm ranging from Roth Capital's Venture Group to KKR and several others, and has extensive experience performing investment analysis and due diligence, negotiation and deal structuring as part of the evaluation process associated with Leveraged Buyouts (LBOs), Early- and Growth-Equity Stage Venture investments, and potential buyouts of distressed loan portfolios and/or turnarounds of businesses under duress.
MS, Accounting and Finance, University of Notre Dame
MS, Taxation, University of Notre Dame
Harvard, School of Engineering & Applied Sciences (SEAS)
The opinion expressed represents the views of the author and should not be seen as the opinion or views of Ascend Investment Partners. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Past performance is not necessarily a guide to future performance.
#1: You are paying $250 toward a lien on your car in the amount of $5,000: visit https://kbb.com and enter all the details about your vehicle, and be honest otherwise you're just misinforming yourself. Hopefully, KBB will return a value that is around the $5k you owe, preferably more, but if it's less, you should still follow the following recommendation to reduce your debt -- WHEN YOU'RE IN DEBT, YOU CAN'T AFFORD TO DRIVE A CAR WORTH $5,000. SELL IT, GET A JUNKER FOR $2,000 THAT'LL GET YOU AROUND (and carefully shop the used car market for a vehicle without excessive mileage, etc, no Mercedes/BMW or luxury brands where repair costs could be more than the $5,000 you sold you first vehicle for). Think old, reliable Buick.
#2: If your grades are high enough, assuming you are applying to UNDERGRAD and not grad school, and you have a strong enough SAT score, you should be able to get a student loan at a decent rate, especially if you look at all the government-sponsored lenders. This is only my recommendation if you intend to study something in the math/sciences realm, broadly speaking (if business, Accounting is the only major that makes sense given the cost unless you're going to Harvard or Stanford or another top 5 school; Marketing degrees don't help you get a job, whereas an Accounting degree with a GPA of at least 3.5 will often get you a decent paying job directly out of school at one of the Big Four firms). Other sensible things to major in that do not require further education post-bachelor's (which it doesn't sound like you would want to do given your aversion to incremental debt) are in the Computer Sciences arena and in engineering.
If you can do one of the majors mentioned above (i.e. one that is in high demand for people who're coming out of college, take the loan and go to school, it will pay off in spades). But remember, that last part ("it will pay off in spades") ONLY APPLIES IF YOU WILL SELECT A MAJOR THAT'S PRACTICAL GIVEN THE CURRENT AND PROSPECTIVE JOB MARKET. I've laid out the more promising areas above. And if you're not good at math/science, you can get a teaching credential after your Bachelor's and ultimately earn more than you current do, although you may not start much higher.
When it comes to medical related debt payments, whether incurred due to the fact that you are uninsured or because your insurance company refuses to pay anything until, say, you've already paid out the first $5K (a frequent tactic employed by health insurers, of which many policyholders are unaware), generally speaking, non-payment takes far longer to impact your credit when it comes to emergency medical expenses than if you were to, for instance, dodge your car payment for months or stop paying your rent.
But this is critical, YOU SHOULD TALK TO THE DEBT COLLECTOR, ASAP. Again, as it relates to debt incurred as a result of hospital bills for which you simply don't have the capacity (at present) to pay, debt collectors are far more generous with respect to the timing of payment. They'd rather get payment out of you than report the unpaid bills to the rating agencies and give up on ultimate collection of the bill. That said, the monies you owe are not going to disappear. What's most important to the debt collectors is that you communicate with them, let them know you are AWARE of the amount you owe, and that you intend to pay down the bills as soon as possible. As I have come to understand, if they know you intend to pay the bill, and you keep in connection with them, debt collectors will allow you significant time before it hits your credit score (if you stay in touch, they suggested they'd allow up to two years before they'd report anything). But if you simply ignore the bill, and ignore the debt collector, this will eventually come back to bite you on your credit report.
It's a little surprising in the first place that it took the hospital (or other medical agency) 18 months to sell the debts to a collector, but again, I can't stress it more, you need to contact the debt collection agency and let them know you're aware of the bill and intend to pay it down (as you really have no other choice, other than to allow it to damage your (currently stellar) credit score).
I strongly recommend you contact the debt collection agency, explain your current situation and indicate that you intend to work with them to get the bills paid off. This will prevent a hit to your credit score, which could happen tomorrow for all we know, you need to get in touch with them. Unlike what you might expect from a typical "debt collector," those pursuing individuals related to unpaid emergency medical expenses are surprisingly friendly and will work with you to eventually deal with the payment, get it off your books (so to speak) and move on.
As an Insolvency & Reorganization/Turnaround specialist, I've stepped in at companies on the brink of an involuntary Chapter 11 bankruptcy situation (where the company's creditors, typically vendors, file bankruptcy on behalf of the company in an attempt to reclaim anything they can from the insolvent debtor). In these situations, I represented the debtor and had to deal with the other (DARK) side of the debt collection agencies. These debt collectors are RELENTLESS, will call and email several times daily, harassing you to death with threats of legal action. They'll even attempt to get the contact information of former employees at the firm, their relatives, it's insane. This is not what you should expect to encounter with regards to personal, medical-related debt collectors. They tend to be much easier to deal with, and will work with you.
So, in the end, don't be shy or intimidated by the fact that a debt collection agency is bothering you. Instead, address the issue head on by giving them a call (like, now), explaining the situation and your current capacity to pay, and work out a timeline for which you'll pay down the obligation. As to the extent to which you can negotiate the bills down, I am unaware but I suspect you'll find there's little wiggle-room to get concessions from the collection agency (especially without an attorney). And in your case, it's unlikely you'd be able to find an attorney willing to take the case since the dispute is over a mere $3,000, and you admittedly were not insured when the incident occurred.
So please, save your credit score, and contact the debt collector.
I really hope you take this advice, as so many make the mistake of allowing their credit to go awry early in life and don't understand the importance of maintaining a good credit score. In my view, your credit score is of utmost importance, so I can't stress it enough, work with the agency and get the bill paid down over time.
Hope this helps. I know your situation is unique, so if you want any further guidance, feel free to contact me. My details are on my profile.
Emma Muhleman, CFA, CPA
I tend to disagree with some other advisors; an index fund is NOT necessarily a smart play, and it's certainly not a safe one.
Indexing strategies can be dangerously flawed. First, it becomes self-defeating as more and more adopt the strategy. Although the approach is predicated on the assumption that markets are fully efficient, the higher the percentage of all investors who index, the more inefficient markets become as fewer and fewer investors actually perform research or fundamental analysis. At the extreme, if everyone simply invested in indexes, stock prices would never change relative to each other because no one would be engaging in active management. Implicit assumptions behind Indexing strategies are flawed and have become even worse as the fad grows in popularity. For instance, when one or more index stocks must be replaced (due to bankruptcy or acquisition), because Indexers seek to be fully invested in the securities that comprise the index at all times (to closely replicate the index's performance), the security that's added to the index as a replacement must immediately be purchased by thousands of portfolio managers. Due to the sheer scale of Indexing coupled and limited liquidity, on the day a stock is added to an index, it often jumps appreciably in price (as indexers rush to get in). Nothing fundamental has changed, and nothing makes the company worth more today than yesterday. In effect, people are willing to pay up for the stock simply because it is included in an index.
With indexing, a company growing at 500% per year may receive no funding, while another with negative margins and declining growth may receive incrementally greater funding with each successive index inflow (simply because it is the largest and thus receives the greatest index weight). This can be particularly harmful to those investors who utilize index funds tracking "market-cap" weighted indexes (e.g. the S&P 500), in which more and more money is allocated as stocks get larger and more expensive. Additionally, Index Investing relies on the presumption that equity prices will always rise. We would do well to recall that less than a century ago, in the early 1930s, the Dow lost roughly 87% of its value in about two years. Prevailing sentiment toward the equity markets today reminds us of the years leading up to 2006/07 when nearly all would assert without question that “housing prices always go up.”
Due to the problems with Index-based investing described above, I would not recommend it – you could find yourself in an ugly position if the market were to endure any meaningful pullback.
Instead, in my view, the best approach to managing funds is to seek investments that are out-of-favor and thus are relatively cheap, and generally, have low expectations – making it easier for them to outperform in the future. In short, the best way to protect yourself on the downside is to perform careful analysis on each investment you make, seeking bargains and avoiding fads. In your case, this may mean investing in strategies that have been out-of-favor of late yet have stood the test of time, namely value strategies, or investing in managers who pursue a contrarian approach, is the best way to go. Due to the endless rally in stock prices since the Fed started propping the market with unprecedented liquidity (during which time the system has been built on significant debt) over the last 9+ years, investors have significantly under-allocated to value managers over the past decade. Indeed, value strategies just ended a 9-year bear market in 2016, and have begun to underperform. This is likely the early innings of its return to popularity. A quote from the legendary value investor Warren Buffett illustrates, in a general sense, the logic behind the value approach and contrarian investing.
As Warren Buffet once wrote, “I’ve commented about junk bonds that last year’s weeds have become this year’s flowers. I liked them better when they were weeds.”
Hope this helps.
Emma Muhleman, CFA, CPA
While the relative stability of a currency is generally reflective of the countries' stage in the development cycle, I would not recommend using the relative strength of a given country's currency to assess its stage of development (i.e. whether it is a "frontier," "emerging," or "developed" market). As an example, both Slovakia and Germany have the euro as their currency because both countries are part of the European currency union, but their relative levels of development are very different. Other countries that share the common currency (the euro), but are perhaps less developed relative to Germany, include the likes of Cyprus, Latvia, Estonia, Malta, and Slovenia, among others. While a country could be evaluated from a development perspective, partially by looking at the relative stability of its currency, the currency's value alone is not necessarily indicative of its development. Currency values are driven by countries' respective monetary authorities (or, in the euro's case, the EU's), if they exist, as well as the structure of the nation's economy (countries with export-driven economies tend to have weaker currencies than those that run a current account deficit, i.e. those that import more than they export). To summarize, currency stability and relative value can help you understand the structural nature of an economy, but its relative level of "development" depends on many other factors, such as the political system (is their rampant corruption?), infrastructure stability, government revenue levels, national debt, etc.
Yes, there are a wealth of indices for foreign currencies.
- The Bloomberg US Dollar Index
- The USD Index (USDX) created by ICE Futures, which tracks USD cross rates against the CAD, CHF, EUR, GBP, JPY, and SEK
- This is the world's most widely recognized index for trading forex futures, with ~12 million contracts traded in 2015
- Also, a number of multimillion ETFs are linked to the index (e.g. Powershares DB Bullish and Bearish funds, WisdomTree Bloomberg USDX Fund)
- The RXY Index Series: This is the latest example of a tradable currency indices, for the first time on the Chinese RMB. Comprised of a "PRIMARY INDEX," and three variant indices, as described below:
- The primary index of this series is the TR/HKEX Global CNH Index (Global RXY Index) - this is of particular relevance.
- Variant indices include:
- The TR/HKEX Global CNY
- The TR/HKEX Reference CNH
- TR/HKEX Reference CNY
- The index variants within the RXY Series differ based on 1) their respective base currency basket, a global basket which includes 14 currencies, and a reference basket which consists of 13 currencies; and 2) their reference RMB (China's Renmibi) measure, either the onshore RMB (CNY) or the offshore RMB (CNH).
- Thomson Reuters monitors and administers the RXY Indices, and they have the advantage of being used by underlying reference instruments including ETFs, options, and futures.
- The RXY Indices are based on two, trade-weighted reference baskets - 'trade-weighted' means the relative weighting of each non-Chinese currency included in the two baskets are based on the actual trade volume between China and the country of the corresponding currency.
- The global basket includes the following 14 currencies:
- CHF (Swiss Franc)
- KRW (Korean Won)
- MYR (Malaysian Ringgit)
- NZD (New Zealand dollar)
- RUB (Russian ruble)
- SGD (Singaporean dollar)
- THB (Thailand baht)
There are also spot indices on many, many global currencies:
- Australia 200 Spot Index (#AUS200)
- Belgium 20 Spot Index (#Belgium20)
- China A50 Spot Index (#ChinaA50)
- China HShares Spot Index (#ChinaHShar)
- Denmark 20 Spot Index (#Denmark20)
- Euro50 Spot Index (#Euro50)
- There are roughly 20-30 others in this list, ranging from Poland to Holland to Japan, the Nordics, Portugal, Sweden, Switzerland, the UK, and more.
The S&P Dow Jones also offers indexes covering all major developed and emerging market currencies. Please follow this link to view the numerous foreign currency indexes offered by S&P Dow Jones: https://us.spindices.com/index-family/strategy/currency.