In the 20th edition of our Best of the Best Blogger series, we spoke to JT of Money Mamba.
In addition to Money Mamba, JT publishes several investing newsletters with a combined monthly readership of 250,000 subscribers. In my
not so humble opinion, JT is one of the new, young “turks” in personal finance: educated, bright, opinionated and incredibly worthy of the readership that he’s earned to date.
JT’s like the Doogie Howser of personal finance. He opened his first bank account at 6 years old and his first online stock brokerage account with E-Trade at the ripe old age of 13. Looking at a picture of him today, however, he doesn’t look a day older than 18.
All kidding aside, DO NOT let the baby face fool you. His articles are well-researched, well-written and thought provoking and cover a wide range of topics in personal finance and economics. JT’s passion for the topic is obvious but what’s more impressive is the remarkably sophisticated depth and breadth of his knowledge on the subject matter. He covers topics like the economics of choosing a seat in class, the Federal Reserve’s dual mandate and its impact on capital flows, and my personal favorite, game theory in Monopoly.
I spoke with JT recently, and as is usually the case in our Best of the Best Series, we covered an eclectic array of topics in our discussion, including Warren Buffett, economic moats and his secret desire to “key the car” in the personal finance category.
Q: What was your inspiration behind starting Money Mamba? Be specific.
But secondly, I started MoneyMamba to combat what I saw to be a concerning trend in personal finance—I call it “because I said so finance.” I’ve always felt that one of the worst reasons to do anything is just that, “because I said so.”
Finance has a logic test for most anything. Personal finance should have the same logic tests. If we can test a thought, theory, or common held belief about how to manage your finances, why do we ever need hard and fast rules that do nothing to encourage thoughtful discussions about money?
I wouldn’t be so ego-centric to say I’ve even made a dent in how people think about money. But if personal finance were analogous to a car door, I at least hope to leave a very expensive key scratch.
Q: You’ve been interested in finance, money management and economics you’re whole life. It’s very clearly not all about just making money for you though. What is most appealing to you about finance, the mathematics, the logic or its application?
The prevailing point of interest for me is this tangled bunch of “if, then” statements rooted in the stories of available investments. There really isn’t much love for money with me—I find quantity is really arbitrary. It’s about reading the markets and individual firms better than anyone. And I absolutely hate losing.
Q: Talk about your role models in money management and investing. Who’s had the most impact on your money and investing style and philosophy?
From Graham I find the best explanation for modern finance. I like his methodology, and I’m very keen on picking up firms for less than their working capital when possible.
Buffett further solidifies this fundamental investment thesis, but his emphasis on economic moats and qualified management is equally important. I call moats “structural advantage,” but they’re as important to me as they are Buffett, regardless of nomenclature.
Finally, I’m a big fan of Peter Lynch’s approach in finding firms that operate in unloved industries, and equally a fan of cyclical stories. Peter Lynch doesn’t enough respect for his work in finance; he’s by far the most practical applicant of Buffett’s qualitative investment factors like good management and valuation approach.
In almost every respect, I favor value over growth. I feel like if you get value, then you always get growth at a reasonable price. I’m not a growth investor necessarily, because I feel like it’s something investors always overpay for. You don’t ever have to overpay for value, nor do you ever overpay for future growth when you get value today.
Q: What’s been most surprising about your blogging experience with MoneyMamba.com? Most disappointing?
To that end, I’m happy to have readers who are willing to accept that they’re reading the writing of someone who may be younger than them. I’m only 21; I don’t have real life experiences, which is really counter to a lot of personal finance bloggers. I don’t really write about my experiences, though—I won’t pretend to have a life I don’t have.
The biggest disappointments come quite frequently. Blogging has its ups and downs. I have a few readers who will comment sparingly, and in between a few posts I start to think that I lost them somewhere. Then, out of the blue, I see a comment from one of them and all is well again.
Q: How do you feel about the use of credit cards? Are they the root of all-evil?
Credit cards are a great scapegoat for a lack of responsibility. If nothing else, admit you aren’t responsible and therefore cannot use credit cards. I don’t buy the idea that credit cards make you spend more money, either, a point which I highlighted in a post about how credit cards cause spending like seat belts cause cancer.
I don’t even want to say how many credit cards I have, mostly because I’m not sure I can count that high.
Q: You have a particular affinity for international investing. What’s the best advice you would give someone who is new to international investing?
And this is a really important point about international investing. Don’t go overseas for the purposes of going overseas. You take your investment capital overseas with purpose to find an investment thesis you can’t get locally.
For example, what’s the point of buying a Chinese oil firm—we’ll say PetroChina — over Exxon Mobil? Sure, PetroChina is in a growing economy, but does it really matter? Oil is oil, which is oil. Both of these companies benefit from higher oil prices, which is not a local happening. Commodities are priced globally.
There’s no reason to buy exposure to oil through a very risky proxy like an emerging market economy.
So when investors look to international investments, I hope they look toward markets where there is something unique about them. Don’t go to India to buy oil companies or utilities firms, go there to purchase something that’s different. Go to India to buy exposure to a growing middle class. You don’t buy more utilities or telecom services because you’re middle class, but you buy a lot more transportation goods, or consumer goods themselves.
In the same thread, don’t go overseas for macro themes when you can find them locally. Coca-Cola sells half its product in other currencies, making it a great play for a weak dollar. Philip Morris International sells all its product in foreign currencies, making it an even better play.
But even a weak dollar isn’t a secular happening. Weak dollar policy is rooted in low interest rate policy. Leverage up with cheap money (a derivative of weak dollars) and you have the same play without the emerging market risks. Or find companies that make more money when rates are low—here’s a hint, look into healthcare companies, as their consumers are all on fixed-incomes.
The fact that I like international finance but rarely go overseas with my investment capital should say something about how I feel about international investments. The best international investments are often found at home, and the stories that drive emerging markets can be duplicated in developed markets without the plane ticket.
A sincere thanks goes out to JT, once again, for taking the time out to go so deep with us.
JT is most definitely an up-and-coming personal finance blogger to keep an eye on. We’ll be watching…