I’m enjoying blogging. My readership is small (about 360 hits so far), but ticking upwards. It looks like I have a core of readers made up of family, friends, and students. My hope is if people enjoy it they’ll send the link to a friend or two.
A writer friend once told me that if your first thought when you wake up isn’t your current project, you’re subconscious isn’t working hard enough. With my self-imposed deadline, I find myself thinking about writing more than normal. As a result, I have lots of ideas for future posts.
So far I’m struck by how much thinking I’ve done over the years about parenting and family life and how much I enjoy communicating about those topics. I’ve never committed to writing a book. My doctoral dissertation, the story of an international studies magnet high school in SoCal, was well received and would have made a decent book, but in hindsight, I needed a mentor to help find a publisher. Since finishing my dissertation, I’ve never felt like I’ve needed more than 30 pages to communicate what I’ve most wanted to. I’ll know more in a year, but as a result of this process, I think a book may bubble up. If I do commit to writing a book and it starts taking the form of an insipid, run-of-the-mill self help manual, please organize an intervention and steal my laptop.
You may be relieved to learn I don’t feel a need to communicate all of my thoughts on parenting and family life in the first month or two of this year-long experiment. I should probably turn to a more masculine topic like finance. Nothing girlie about bears and bulls.
After reading my initial post, one of my sibs asked, “If you’re writing about wellness shouldn’t faith play an important part?” I was remiss in leaving spirituality out of the mix. What does spirituality have to do with finance? Far more, I believe, than is normally acknowledged.
So many people are stuck seeking fulfillment through store purchase after store purchase that materialism is our secular religion. Religion isn’t the opiate of the masses, consumerism is.
Financial planners assume that the key to financial success is understanding the technical aspects of investing—indexing, asset allocation, minimizing investment costs, dollar cost averaging, etc. But personal finance study after personal finance study demonstrates that even knowledgeable investors buy too high, sell too low, and trade too often.
In sports, athletes that melt under pressure and underachieve talk about “getting in their own way.” Golfers are a good case in point. When a golfer breaks through and wins their first tournament they often say, “I finally got out of my own way.” It’s counter-intuitive, but by relaxing and not trying as hard, we sometimes experience more success. Investors who are most materialistic are most prone to anxiety in times like this because their ability to consume is eroding. They listen intently to the financial pundits, fret over their portfolios, and tend to “get in their own way.”
In contrast, people whose fulfillment comes more from intangible things like meaningful work, intimate relationships, and service, are less likely to sell low, buy high, and trade unnecessarily. Also, these spiritually grounded investors have a tremendous advantage over the less spiritually grounded in that they can delay purchases almost indefinitely. As a result, they can time the selling of their assets only after they’ve greatly appreciated. As their portfolios dip, there’s a longer-term perspective and a calmness that enables them to either tune out the hyperbolic analysts or put their hysterics in historical perspective.
As an investor, I’ve made more good decisions than bad. I tend to “stay out of my way” but there are bogeys mixed in with the birdies. I admit to watching my portfolio more closely since New Years so the last few paragraphs are reminders to myself.
Our mutual fund company provides an unusually helpful service that helps me keep historical perspective. When I log on to its website there’s a “Portfolio Watch” that shows our asset allocation. Currently, it’s short-term reserves, 3.5%; bonds, 38%; stocks, 58.5%. Then there’s a link to “Historic Risk/Return, 1926-2006.” Average return, 8.8%. Best year, 35.7% (1933). Worst year, -25.9 (1931). And here’s the key stat for getting a hold of today’s market. Years with a loss, 19/81, 23.5%.
This won’t sell many papers or fill much time on cable television, but after an unusually strong six year run, the market is returning to the mean.
Average return, 8.8%. After adjusting for investment costs, taxes on earnings, and inflation, what, 4-5%? So the critical questions are 1) how much is invested and 2) how patient is the investor?
Shifting gears, my youngest daughter, J, learned about the stimulus bill in one of her classes recently (props to that teacher) and she was more than intrigued. “What are you going to do with your $1,200?” she wanted to know. “Save it, invest it.” She couldn’t have been more disappointed.
I haven’t given the tax rebate a lot of thought, but increasingly, money’s most important value to me is time. In all of the “What would you do with $600?” discussions going on, I haven’t heard anyone say, I’ll use it to slow down a bit, rest, reconnect with friends, think, nap, exercise, start a garden, read.
At work recently, I encouraged a close friend known as “Ichiro” to apply for an administrative position in part because I knew he’d be good at it and in part because I told him he could nearly double his salary. His response? “The more I’d make, the more we’d spend.”
Psychologists who study happiness refer to our tendency to adapt to what we have and perpetually seek more as the “hedonic treadmill.” Ichiro’s self-understanding is unique. Most of us don’t know we’re on the treadmill.
How much is enough? When does time for one’s self and one’s closest friends become valuable enough that we “buy” time? What about saving not to spend, but to slow down? What would being more spiritually grounded look and feel like?
The Bush and Obama administrations better hope my thinking doesn’t spread, because if it does, a recession is all but guaranteed.