Market Returns To Ponder

“The S&P 500, the most widely followed proxy for the U.S. stock market, has returned a negative 22.7 percent, including dividends, this year through Thursday, according to FactSet. In the same period, the Bloomberg Aggregate Bond Index, the most widely used benchmark for the broad, diversified investment-grade U.S. bond market, has returned a negative 14.4 percent.”

From, “Bonds May Be Having Their Worst Year Yet“.

Apple Does It Again

Wednesday’s Apple event was just the most recent reminder that when it comes to marketing, everyone else is competing for the red ribbon or the silver medal or the consolation bracket title. They are the LA Dodgers. Best in class and it ain’t close.

They’re so good they are going to convince a huge cross-section of the population that they need something they’ve been fine without their whole lives–satellite coverage in case of a car crash or other emergency. Hell, when we crashed our cars and got lost in nature before we had cell phones we were almost always fine. There were pay phones, people assisting one another, smoke signals.

Now, Apple is amping up everyone’s anxiety with a bunch of WHAT IFs with infinitesimal odds. And I have no doubt it’s going to work. Sometime soon, people will question your sanity if you venture into your car or the woods without satellite coverage.

And because Apple is going to leverage your anxiety so expertly, my AAPL stock is going to keep increasing in value. Thank you in advance.

Monday Required Reading

School starts tomorrow, so time to buckle down. Plus, Scottie loves assigned reading.

  1. I want one.
  2. Turns out, it’s really hard to scare a seal. Bonus trivia, the Byrnes clan is celebrating the fact that eldest daught lives 5 miles from the Ballard Locks as of today.
  3. Effective altruism has gone mainstream.
  4. The six forces that fuel friendship.
  5. How does it feel to be a teacher right now?
  6. Guilty as charged.

Looking Into Our Electric Vehicle Future

On the roads of Norway.

“In March this year, 16,238 passenger cars were registered in Norway. Of those, 13,983 were battery-electric vehicles. That’s an amazing 86% of all cars registered that month. Meanwhile in the US, according to the Argonne National Laboratory, sales of light-duty vehicles with plugs (including hybrids) made up just 5.85% of the market in March. That was nearly a 40% increase over the previous year, but still floundering in the single digits.

Why the disparity? Is Norway just a utopia of forward-thinking EV zealots? Not exactly. Where state and federal governments in the US have engaged in a haphazard collection of half-assed, confusing incentives to spur EV adoption, scattering a middling collection of carrots here and there over the years, the Norwegian government has instead chosen the biggest of sticks: taxes. Want to buy a gas-powered machine? Be prepared for a painful whack.”

The “greatest country in the world” is getting its ass kicked. Again.

Hypocrisy On A Staggering Level

A reader writes, “Hey Ron, who should I read and follow to better understand the housing crisis?”

Jerusalem Demsas.

But why did Marc Andreessen, billionaire venture capitalist and vocal affordable housing advocate, just block Demsas on Twitter?

Because of her brilliant reporting and scathing takedown of Andreessen in this Atlantic essay, “The Billionaire’s Dilemma”. In thirteen paragraphs Demsas teaches a master class on contemporary American life and the wealth gap more specifically.

The money paragraph. . . pun intended:

“Unfortunately, when local officials charged with overseeing development are confronted with balancing exercises, they almost always default to blocking or delaying projects. This happens in part because the future beneficiaries of new development cannot advocate for themselves. No one knows who will eventually live in new housing, what kids will be born there and go to school in the neighborhood and grow up to make the community better. But the present-day neighbors who are worried about construction, who believe that their home values might “MASSIVELY decrease” if teachers live near them, who are prejudiced against renters and people who live in multifamily housing—those people can and do speak up. And often, local officials bow to the pressure or are elected because they themselves oppose new housing development.”

I listened to an in-depth interview of Andreessen recently and was blown away by his intelligence. Demsas’s piece is a powerful reminder that the heart trumps the mind.

Reality Catches Up

A reader writes, “Hey Ron, August is finally here and I’m going on vacation. I wanna get my financial life in order. What’s one book you’d recommend with that in mind?”

The Psychology of Money by Morgan Housel.

I read Housel’s blog too. Today’s post is titled “Reality Catches Up”. It’s about the precarity of fleeting success. This paragraph will resonate with anyone with much work experience.

“It happens at work, too. A manager who can’t earn employees’ respect by leading often tries to force it through fear. That can feel great: Your employees say “Yes sir, right away sir!” But it’s unearned respect. Employees who fear you will hide the truth from you to avoid repercussions. So the manager flies blind, oblivious to problems large and small that won’t be apparent until it’s too late. Every bit of respect over what you deserve is a liability, a hidden form of debt.”

Dr. Melissa Yuan-Innes

Understands privilege way better than most. Yuan-Innes is a part-time emergency room doc in Canada and one of six people The New York Times interviewed about this year’s stock market correction.

Yuan-Innes isn’t sweating the downturn. “If we need more money,” she explains, “we would just earn more money — I would rather not do that, so it’s sad, but it’s certainly not as hard as people who are getting paid minimum wage.”

She adds:

“I recognize my privilege in having parents and grandparents who worked extremely hard before me. Lots of financial independence types will tell you they’re entirely self-made, unaware of advantages they’ve gained from their white privilege, gender, middle-class status, education, government, or their relatives’ sacrifices.”

“We’re lucky we have enough money coming in to cover what’s going out.”

Being mindful of one’s privilege and one’s luck go hand-in-hand.

Retire (Really) Early

FIRE (financial independence retire early) profiles are so out-of-touch as to be pretty damn funny. They’re also ridiculously formulaic. The subjects, usually engineers, almost always work in tech, and always make six figures. The formula is “We (it’s almost always a pair of people) saved over half of our income for “x” number of years and retired at age “y”. In the profile I read today, “y” was 35 and 36 years old.

Slackers. I wanna read a FIRE profile where the subjects retire at 23 and 24 years old.

“We made $500,000 right out of college as coders, AirBNB hosts, and professional poker players. We saved 80% of what we earned for the eighteen months that we worked. Our $600,000 nest egg currently generates $30,000/year which is more than enough to support our #vanlife.”

The Ultra Wealthy Are Winning. . . For Now

Based on yesterday’s middling statistics, including how few times the LA Times link was opened, I did a poor job framing Mckenzie’s story. I described it as a long and difficult read hoping you’d rise to the occasion. If I were to suggest all of us go run a hilly and hot marathon, I probably shouldn’t be surprised if none of you show.

I should’ve lead with the importance of regularly mixing in challenging content with all of the light, entertaining stuff that tends to dominate the interwebs.

I can’t shake Mckenzie’s story, especially after reading Evan Osnos’s mind blowing New Yorker piece, “The Haves and The Have-Yachts”. Osnos tells the story of the ultra-rich buying ever larger, more expensive yachts.

If you’re even a little bit like me, and you don’t like the ultra-rich, Osnos’s piece will turn your dislike into a much, much deeper antipathy. If you have high blood pressure, be sure to take your pills first.

I can’t help but read the stories without wondering why in hell the world isn’t overcome by poor people’s revolutions. Osnos makes a few references to the “EatTheRich” movement, but the Wikipedia entry for it describes it as a political slogan associated with class conflict and anti-capitalism.

Sometimes in my hometown of Olympia, WA I see an “Eat the Rich” bumpersticker or graffiti tag. If I was a “Have-Yachter” I’d be thrilled that the primary pushback to the growing wealth gap is some flaccid combo of political slogans and bumperstickers.

This puts me in a tough position in that I don’t condone mindless property damage or really violence of any kind, and yet, I can’t help but wonder if much more radical responses to the growing wealth gap are warranted.

Another dilemma is how do we define “ultra-wealthy”? The tipping point seems to be $30 million, but compared to Mckenzie, I definitely qualify as ultra wealthy.

The legions of ultra wealthy people reading this post are saying to themselves, “We’ll be fine, we’ll just invest even more in security.” Right now they’re right, but whether I live to see it or not, someday poor people’s rage will ignite like the fires in France, Greece, Portugal, and Spain.