Think Differently

PressingPausers have proven to have little interest in personal finance. Correction. PressingPausers have proven to have little interest in my thoughts on personal finance. Big dif. So why do I persist? Idk.

Just like getting dressed in the morning while on sabbatical, the fact that NO ONE will read this is liberating. Whatever shorts and t-shirt I left splayed on the floor last night are good, not many peeps are going to see me anyways as I write a blog post NO ONE will read. If a blog post falls in the woods. . .

Classic investing advice is to keep investing expenses to a bare minimum; determine what balance of stock, bonds, and cash will enable you to sleep well at night; and keep trading to a bare minimum.

In the US, investors currently have 56% of their assets invested in stocks or more than 10 percentage points higher than its historical average of 45.3%. At the top of the bull market in 2007, it stood at 56.8%. This has a lot of analysts worried that a correction is coming.

Another investing maxim of increasing popularity is to stop trying to outsmart the market. Instead, as Kendrick Lamar advises, “Be humble!” His next vid will prolly be about investing in passive index funds like this. The chorus. . .”Be passive!”

Another oft-repeated investing maxim is never invest more than 5% of your net worth in any individual stock because they’re far too volatile. A mutual fund or exchange traded fund is a basket of hundreds or thousands of individual stocks that go up and down at different times, thus creating a smoother, steadier, long term increase in value.

But damn is AAPL en fuego. Check this missive from a Vanguard forum of knowledgeable investors I’ve taken to reading recently. Wait a minute. That last sentence presumed you’re reading this, which you’re not, so note to self—revise that. This missive from a Vanguard forum of knowledgeable investors has me thinking about chucking conventional investing wisdom and improvising like #3.

“Hi—
Long time lurker first time poster. Thank you to all who have contributed to my education here, absolutely invaluable.
I’m writing about my mother and father in law’s finances, which I am slowly taking over at their request.
FINANCIAL PICTURE
Savings
$425k in various super low interest checking / savings accounts
Investments at Fidelity (unlikely to change brokerages):
Rollover IRA: $675k of which
* 86.8% AAPL he’s a lifelong Apple fanboy, bought $11,500 worth way back when, which is now $575k.”

Hindsight is 20-20, but if I was my daughters age again, for every $2 dollars of savings I could set aside, I’d put $1 in a super safe certificate of deposit and the other in AAPL. And then rebalance annually and pay 15 or 20% on the capital gains. As the aforementioned anecdote intimates, I would’ve done really, really well adhering to this “barbell” plan.

But this way of thinking suggests I’m suffering from an advanced case of “optimism bias” which causes a person to believe that they are at a lesser risk of experiencing a negative event compared to others. Note to self—AAPL can’t continue its recent run. VTI is a much safer, wiser, long-term instrument for building wealth. VTI is also long overdue for a serious correction, or to use the fancy pants mathematical phrase, a regression towards the mean. It’s as certain as the Mariner’s August playoff fade.

Sometime soon, the half of the barbell holding certificates of deposit earning 3-4% is going to bring great comfort.

 

 

 

 

 

Rocky Mountain High

The Good Wife and I lived in Denver in our late 20’s and early 30’s. I was studying curriculum and global education at the University of Denver, she was improving the life prospects of inner city third graders. We became a threesome while in Denver and it was supe-cool to be back for a family wedding with both daughters.

In 1993, I would’ve never left Colorado if there were more academic positions there once I had it piled higher and deeper (PhD). 300 days of sunshine a year, beautiful mountains, shimmering aspens, 300 days of sunshine a year. Of course, I’d probably be dead from skin cancer by now, but no one lives forever. The sun was hotter than I am used to and there’s next to no tree cover compared to the upper lefthand corner of the country.

Like most places in the country, Denver has grown and changed a lot in a quarter-century. Especially downtown. Tangent. There were NO homeless people downtown. In Boulder either. Coming from Seattle, Portland, Olympia, that was really odd. Someone in the know, educate me. Where are they? Why?

We hiked a few times including in a crowded Rocky Mountain National Park, visited the first house we ever bought near the “U”, and attended a wonderful outdoor family wedding in Lyons. Two young, giving, caring people committing to love is a wonderful antidote for these cynical times.

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First house. Observatory Park, 25 years and one grown ass woman later.

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Flatirons, Boulder. Getting our hike on.

 

Wednesday Assorted Links

1. I wouldn’t normally be drawn to an essay titled The Gift of Menopause, but the Times’s preamble drew me in. So glad. Brilliant. Exquisitely written.

2. The Difference Between Being Broke and Being Poor.

3. The Fight for Iowa’s White Working-Class Soul. Is that DJ Byrnes’s future?

4. The Highest Court in the Land. For Richie. Who would dominate.

5A. The specious claims of the “wellness industrial complex” continued. Worshipping the False Idols of Wellness. 5B. Wellness Brands Like Gwyneth Paltrow’s GOOP Wage War on Science.

6. Flat Cokes, Relay Running, and 500 Pages of Notes: A Professor Prepares to Break a Guinness World Record for Longest Lesson. I will not be attending.

Steve Carter Gets It

If you’re an unrepentant megachurch “superstar” pastor, who has been living a double life, the last thing you want is to see your story told. Shortly before you plan to retire. By the New York Times. On a Sunday. But that’s the bed Bill Hybels made for himself.

The Times tells Hybel’s personal secretary’s story:

“That first back rub in 1986 led to multiple occasions over nearly two years in which he fondled her breasts and rubbed against her. The incidents later escalated to one occasion of oral sex.

She said she was mortified and determined to stay silent. “I really did not want to hurt the church,” said Ms. Baranowski, who is now 65, speaking publicly for the first time. ‘I felt like if this was exposed, this fantastic place would blow up, and I loved the church. I loved the people there. I loved the family. I didn’t want to hurt anybody. And I was ashamed.'”

These #MeToo stories are starting to read like 1980s Madlibs. “The first [type of sexual encounter] led to multiple occasions over nearly two years in which he [verb, past tense] her [a body part] and rubbed against [a different body part].

And saddest of all, the “and I was ashamed” phrase, is an oft repeated, concluding refrain.

The New York Times story alludes to how Hybels’s spell on the church members left them so enthralled with him they couldn’t believe Baranowski and the other women who told similar stories. How dare the women even make the allegations many thought. To this day, that’s the view of the church elders who are proving better at group think than leadership. Initially, the #2 and #3 church leaders, Heather Larson and Steve Carter, both a generation younger than Hybels, rallied around Hybels who they felt was being unfairly criticized.

After reading the Times story, I poked around a bit at Larson’s and Carter’s social media. I learned that almost immediately after the allegations fell on deaf ears at their church, they started to feel remorse for not siding with the aggrieved women.

Larson’s mea culpa to the congregation can be viewed here.

Carter did one better by resigning yesterday upon reading the New York Times article.

He explained:

“I am writing to announce my resignation from Willow Creek Community Church, effective immediately. The new facts and allegations that came to light this morning are horrifying, and my heart goes out to Ms. Baranowski and her family for the pain they have lived with. These most recent revelations have also compelled me to make public my decision to leave, as much as it grieves me to go. Since the first women came forward with their stories, I have been gravely concerned about our church’s official response, and it’s ongoing approach to these painful issues. After many frank conversations with our elders, it became clear that there is a fundamental difference in judgment between what I believe is necessary for Willow Creek to move in a positive direction, and what they think is best. . . . I offered my resignation many weeks ago, but I was requested to delay an announcement and continue with my duties until the leadership determined how to make the decision public. At this point, however, I cannot, in good conscience, appear before you as your Lead Teaching Pastor when my soul is so at odds with the institution.”
Thanks to courageous women like Baranowski, the future belongs to the Steve Carter’s of the world, not the Bill Hybels.

Make Cars Great Again

By weakening fuel efficiency rules. Thank you Trump Administration for correcting the errors of the Obama Administration and helping keep cars affordable. And safer. All while continuing to protect the environment. And thank you for soliciting “all interested parties to weigh in with their views”. Very cool. Very democratic.

My view is totally sympatico with yours. Put me down for a “yes” vote on the weaker rules. Goals should be achievable, and you’re right, electric vehicles are for losers. In particular, this really resonated with me:

“Some data conclude that nearly half of consumers who purchase an electric car do not buy another because of challenges with range and recharge times.”

When it comes to things like your Environmental Protection Agency’s track record and your courageous questioning of climate change science, your administration has earned my trust so the phrase “some data” is good enough for me!

And I also agree that subsidies for electric vehicles are for losers best left to European and Chinese businesses who will never truly grasp capitalism’s allure. Please know my free-market invisible hands are clapping for your commitment to Big Oil having a more level economic playing field.

“. . . keeping in place the standards finalized in 2012 would add $2,340 to the cost of owning a new car and impose more than $500 billion in societal costs on the U.S. economy over the next 50 years.”

Again, thank you, $2,340, is not chump or even trump change. About $200 a year over 12 years of car ownership is a hell of a lot to ask for things as boring as markedly improved gas mileage and slowing climate change. Wouldn’t the typical electric car owner save more than $200 in gas costs? Sorry, strike that from the record. I’m sure there’s some more sophisticated math you have used that I probably would not understand. If you say it doesn’t “pencil out”, then it doesn’t pencil out. And “$500 billion in societal costs over the next 50 years?! No way can I do that math, but again I trust you that the “societal costs” are super scary things like more liberals feeling emboldened about spotted owls, more illegal immigrants invading our country, and more Democrats invading Congress.

“Due to these increased costs, Americans are holding on to their older, less-safe vehicles longer and buying older-model vehicles. The average vehicle on the road today is 12 years old, and data from the National Highway Traffic Safety Administration shows passengers are likelier to be killed in older vehicles than newer ones. In each of the past two years, more than 37,000 lives were lost on our roads. A key goal of this rulemaking is to reduce the barriers to enabling Americans to purchase newer, safer, cleaner cars.”

Initially, upon hearing that your Administration wanted to weaken fuel efficiency standards, I wondered why. I thought if America’s engineers were even a little great, the Obama goals were appropriately aspirational. I apologize that a part of me even wondered if you might be currying favor with Big Oil and Big Automakers, but upon just a little additional thought, that struck me as entirely too swampy a thing for your team.

I’m embarrassed that I pre-judged you. Of course, your first and foremost concern is our safety. All of your improvements to our infrastructure point to that. My cynicism got the best of me. I will do better going forward in my more affordable, safer, cleaner car.

Lastly, your editorial didn’t really touch on the “continuing to protect the environment” from the intro, but that’s okay. I understand word limits and trust you to be good for that. Again, to be clear, I am down with your downgrading of our fuel efficiency standards. And I look forward to your administration’s additional bar lowering pronouncements in the near future.