You can use auto bill pay which mails him a check every month. No charge at all. Not sure why they do that but they don’t allow recurring payments on Zelle. Bizarre. Other major banks do allow recurring Zelle payments.
I have BoA also. You could set him up as a Bill Pay recipient, and BoA will send him a paper check each month.
“Immortality, take it, it’s yours!” just popped into my head after reading your post, had no idea what it was from, had to google it.
damn son your auto bill pay arrived a little late this month
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That’s a lot worse than just straight $600 transfer.
Why?
His dad will hit him with fees if the payment is late?
Yeah I owe my dad a loan, I’ve had it set up for six years, he’s gotten it every single time on time. Signs it and deposits it with his phone. Zero issues except for when he moved he didn’t get it right away.
Why is it better to instantly have the money without having to go in to a bank to deposit a check during a pandemic?
He can deposit it with his phone, he doesn’t have to ever leave his house.
Yeah I’ll get right on that. My Dad has a burner flip phone he uses for emergencies.
I thought you just said he’s terrified of online banking?
He’s terrified of logging on and using online banking. He’s not terrified of me transferring money into his account. He thinks if he never creates an online account, no one can ever hack him. Which isn’t the worst thought process.
I doubt he’s ever used an ATM to deposit a check. It’s possible I could twist his arm into trying it - but it would undoubtedly cause him a lot of stress and I’d get the speech about how he’s a right-brained poet and not a left-brained tech wiz like me. Also he’d be driving or walking to the bank in winter in KC for no reason.
Does he have an ipad? Could use that to deposit the checks. He’d probably like that he can hold onto the check until it’s in his account rather than leaving it in the ATM.
No he doesn’t have an ipad. He has a laptop that he uses for email, Word and browsing the internet. I’m amazed he has that.
He would never in a million years trust taking a picture of a check on some app.
The last thing I want to do is add stress to my Dad’s life every month. Transferring the money is a no-brainer.
These are kind of self-contradictory. If they’re priced correctly, then the only risk premium they should earn is one that can’t be diversified away. If it’s a diversified high-risk portfolio where every holding is exposed to the same risk, then it should probably earn a higher return but not one that is attractive on a risk-reward basis.
In terms of research, the things that come to mind are:
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the well-known fact that “value” stocks have performed better than “glamour” stocks, where value and glamour are just distinguished based on dumb metrics like book-to-market and price/earnings ratios. I’m not even sure that this has been true recently.
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Joe Piotroski got semi famous (for an accounting professor) who showed that garbage-looking stocks can be sorted based on certain factors, and if you invest in the right factors you would earn abnormal returns.
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This idea is most salient in the bond market, where Michael Milken famously argued (I think correctly) that junk bonds–although individually risky–generated postive risk-adjusted returns when held in a diversified portfolio.
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What makes all of this harder to think about is the fact that there’s some evidence that people have a preference for lottery-like payoffs, so they’re actually willing to pay more than fair value for riskier bets. For example, an analysis of OTC stocks finds the following:
In this paper we investigate how investors value stocks with lottery-like payoffs. We collect a new sample of returns on over-the-counter stocks [primarily stocks quoted on the OTCBB and the Pink Sheets) (now called the OTC market)]. We find that the stocks in our sample have large negative average returns. A portfolio of OTC stocks under-performs the market by more than 1% per month excluding transaction costs. Transaction costs are high, and even though our portfolios are designed to have very low turnover, the under-performance is around two percent per month including transaction costs.
Finally, it makes me think of the fact that these beaten-down firms are often going to be hard to short. If so, it means that price is formed by a skewed distribution of investors. That is, if everyone has a slightly different belief about how much a stock is worth, but the only people actually influencing prices are those with the highest beliefs (because the people with low beliefs can’t or won’t short the stock), then the price is going to be too high and the stock will earn negative abnormal returns.
So basically, if you want to take on more risk in an effort to earn a higher return, just tweak your asset allocation to hold a higher percentage of equities.
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OK I kind of put that poorly. If everything is priced correctly and rationally on a risk-adjusted return you would expect a higher return on bankruptcy-threatened stocks, right?
Then I’m also saying that they’re probably not rationally priced, and that people might be all oh hell no I’m not buying a gross stock that has a 50% chance of going bankrupt! Which could (should?) drive the return up even more.
And I mean, I’m not actually going to do this. If I’m too much of a pussy to do the Joel Greenblatt spin off portfolio there’s no way I’m doing the SenorKeed bankruptcy portfolio.
Sure, if the bankruptcy-threatened stocks all face a common risk exposure, so that in some periods many of them are likely to go bankrupt and in other periods none of them are likely to go bankrupt.
I think given the evidence of investors’ lottery-like preferences, it’s just as likely that these stocks end up being overpriced.
One of the all time “Great content/terrible title” books!
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Given his refusal to allow electronic access to his account it may be difficult to get the money in there.
Of course, you could go old school and have the bank mail you a bunch of deposit slips so you could mail the bank a check each month to deposit in his account.