The ‘Can’t Miss’ Investment I Missed

Dammit. I wish someone had pulled me aside at a dinner party when I was in my early 20’s.

And told me the two words that could’ve changed my life. Self-storage. Apart from AAPL, I double dog dare you to find a better investment.

From this week’s Wall Street Journal:

“Self-storage pulled ahead of other property types in the reopening trade as the real-estate business rebounded this year during the easing of pandemic restrictions.

The storage facilities around the country have brought the biggest returns to investors in public real-estate stocks this year. Many people moved, and for those who stayed put, a desire to have more space in their homes because of remote learning and working also spurred demand for self-storage.

As of June 30, total returns from self-storage real-estate investment trusts reached 36%. . . . Over the same period, the FTSE Nareit Equity REITs Index gained 22% and the S&P 500 climbed 15%.

People generally haven’t been able to tame their consumerism, increasing the need for storage space. The self-storage industry sees demand when people’s lives are disrupted, such as relocating for a new job, marriage, divorce and education.

‘Self-storage thrives when people experience change, and Covid disrupted norms across all generations,’ said Drew Dolan, principal at DXD Capital, a self-storage developer and investor. He added that many customers who needed self-storage in 2020 were first-time customers.

Operators moved quickly during the pandemic to offer customers more choices for reservation and move-ins, including online rental agreements and kiosks that limited contact with other people.

‘What used to be a 45-minute transaction can now be a six-minute experience,’ said Natalia N. Johnson, chief administrative officer of Public Storage, in a recent presentation to investors.” 

“People haven’t been able to tame their consumerism.” My vote for understatement of the year, decade, century. I should’ve bet big on American consumers not taming their consumerism years ago. I coulda, shoulda made bank on your neighbors’ conspicuous consumption.

No it’s not too late, but the crazy recent gains have to moderate, don’t they?

Influencia

Cristiano Ronaldo’s marketing power appeared to be on full display this week when his removal of two bottles of Coca-Cola from the podium at a press conference coincided with a $4 billion drop in the company’s market value.

Before speaking to the media on Monday in Budapest a day before Portugal’s Euro 2020 opener against Hungary, the Juventus star moved the Coca-Cola bottles out of the frame and held up a bottle of water before saying, ‘Agua.’

Coca-Cola’s share price dropped from $56.10 to $55.22 soon after Ronaldo’s gesture, while the company’s market value dropped from from $242 billion to $238 billion. Coca-Cola is an official sponsor of the European Championship.”

What To Make Of The Secret IRS Files

A week ago, ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest showed how the wealthiest Americans pay little in income tax compared to their wealth in “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax”.

Pro big business libertarians were outraged at ProPublica’s decision to release private tax information of people who, in their view, have contributed disproportionately to the public good.

The extremely well written report left many others shocked by the findings and gleeful that the billionaire class was exposed.

Long story short, most Americans pay 14% of their income in taxes, billionaires pay 3+% on average. That’s because we tax income and not wealth and billionaire’s wealth grows much, much faster than their income.

Everyone concedes that the highlighted billionaires haven’t done anything illegal, which leaves many wanting to make our tax system much more progressive.

A few thoughts:

  1. As long as we tax income and let wealth slide, the Great Tax Divide will only widen. At some point, billionaires’ physical safety may very well be threatened. It is in their self-interest that we have a more egalitarian society. Therefore, it is in their interest to pay more in taxes.
  2. We need to invest a whole lot more in the Internal Revenue Service. Specifically, we need more, better trained agents who understand of how the ultra-wealthy avoid taxes sometimes illegally. Right now the ultra-wealthy are emboldened by the ridiculously low rate at which they are audited.
  3. Conservatives often defend things like video surveillance by asking, “Well, what do you have to hide?” In that same spirit, when it comes to personal income taxes, maybe we should go the way of Norway.
  4. Debates about the ethics of ProPublica’s decision-making will continue especially since they’ve said this is just the first of several related reports. As will debates about the implications of the data and related policy questions.

socialism-socialism-socialism

Why Bill And Melinda Are Calling It Quits

Melinda can’t take it anymore.

Instead of making his own lattes, Bill drives through Starbucks every damn day. Instead of walking public golf courses, he rents carts at private country clubs. Instead of parking his own car at those clubs, he uses valets. Instead of buying pre-owned cars that use regular gas, he buys new ones that require premium. Instead of investing in low cost index funds, he invests in expensive, actively managed mutual funds. Instead of making dinner at home, he frequents a diverse rotation of restaurants. Instead of having his bond funds in tax-free accounts, he has them in taxable ones. Instead of buying groceries in bulk at Costco, he makes repeated trips to Whole Foods. Instead of lifting and running with the boys, he uses a personal trainer. Instead of checking books out from the library, he buys hardbacks. Instead of mowing the lawn, he uses a “landscape service”.

It’s enough to drive any woman crazy.

Please Help Me Understand

President Biden has proposed increasing the rate at which capital gains are taxed on anyone earning more than $1m a year. That’s .3% of people or 3 in 1,000.

Why are so many of the 99.7% of people for whom the tax increase is completely irrelevant so upset at the proposal?

What’s the principle at work? Millionaires are an aggrieved group who deserve a break from people of ordinary means?

Just Because You Can Afford To, Doesn’t Mean You Should

A picture of a neighbor’s property from this morning’s walk. 

“Hey Ron, what’s the backstory of the University of Washington-painted tennis court/full basketball court with state-of-the-art plexiglass break-away rims?”

I’m glad you asked.

The owner, a friend of a friend who I have never met, bought this large wooded property a couple of years ago. And then proceeded to clear cut it. And then added a bunch of out-buildings and the primo lighted sport court for his children.

Granted I’m not omniscient, but I’ve never seen or heard the children using either of the courts. Which is why the lighting is a humorous touch, as if there’s not enough daylight to get in all the basketball and tennis the children want to play.

Meditating on that court this morning made me think of Venus and Serena growing up on Compton, California’s public tennis courts. Or any elite basketball player who routinely left their hood to find competitive games that helped them hone their skills.

But forget elite sports—whether college or pro—consider the opportunity costs, besides the obvious environmental ones of the clear cutting, of not having to play in public settings with a diverse assortment of other people. Some exceedingly difficult to get along with. Even though my parents could have afforded to, I’m glad they chose not to join a country club. I benefitted immensely from growing up on public golf courses, swimming in public pools, and playing on public tennis courts.

Like in public schools, places where I learned to mix it up with other kids. Which has proved extremely valuable throughout my life.

Keep It Simple

When my dad’s business career took off, I was studying history with mostly Marxist professors; consequently, I didn’t fully appreciate his world. Fast forward four decades. As a member of the bourgeoisie (externally at least), I often think of him when I’m running or cycling and listening to an interview with an interesting businessperson. Now I wish I could talk business with him.

A lot of the podcasts I listen to alternate between business topics and trends and how to invest in light of those trends.

Tons of attention is being paid to new investment vehicles like NFTs (non fungible tokens) and blockchain-based cryptocurrencies (BitCoin, Ethereum, etc.). And let’s not forget trading stocks on commission-free apps like Robinhood. For home run hitters, fast changing personal finance-related technologies are alluring, but for singles hitters like me they are a distraction from what matters most when trying to build wealth slowly and steadily.

What does matter most? How much you are able to save and invest, if anything, at the end of a typical month. Until it’s consistently a positive figure, any energy expended thinking about all the shiny new investments that everyone is (seemingly) getting rich from is a complete waste of time. 

Most importantly, remember, good mental and physical health is the best kind of wealth.  

 

Threading The ‘Time Needle’

In one sub-section of my first year writing course we read about contrasting parenting philosophies and some students write about how they were raised and whether they intend to parent similarly or differently.

When listening to them reflect on their childhoods, I’m always struck by the chasm between their family lives. About half describe their families as loving, supportive, and close. Another half describe some sordid version of explicit, unhealthy dysfunction. It seems there’s no middle ground.

Often I think the same thing about people and time. Half of people, having or choosing to work super long hours, don’t have nearly enough time. To be introspective. To think about the meaning of life. To live intentionally.

And unless they have compelling hobbies, another half or so who are unable to find work or choose not to for whatever reasons, may have too much time for optimal mental health. Because one of the most common mental health challenges today is dealing with anxiety about things like the ‘rona and the vaccine. More specifically, there’s a tendency to overthink whether one might get the ‘rona or whether one might suffer serious side effects as a result of the vaccine.

I am not a mental health professional so correct me if I’m wrong, but it seems to me that having to work, or more generally, to have some sort of responsibilities for others’ well-being is a salve for overthinking things. If I’m listening to others, caring for them, helping them somehow, I am less susceptible to the anxiety-inducing thoughts that endlessly loop in my head when I don’t have any responsibilities for other living things, whether people, animals or plants.

With shorter work weeks, I suspect European countries are threading the ‘time needle’ in ways that are healthier, mentally and otherwise, than we are in the (dis)United States. Cue related discussions about the federal minimum wage and universal health care.

Nomadland Reconsidered

This Joshua Keating critique of Nomadland is excellent. He starts off praising it.

“The film Nomadland, which cemented its status as the front-runner for Best Picture with six Oscar nominations this week, includes unforgettable characters and images. It heralds the arrival of a major directing talent in Chloé Zhao, nominated for Best Director, and features yet another masterful turn from Frances McDormand, nominated for Best Actress. But for anyone who has read its source material, Jessica Bruder’s 2017 nonfiction book Nomadland: Surviving America in the Twenty-First Century, the film feels oddly incomplete. The filmmakers chose to jettison the book’s muckraking journalistic spirit and economic critique, ending up with a film that’s supposedly an examination of contemporary society, but feels politically inert.”

Lucid, critical, respectful, the phrases “oddly incomplete” and “politically inert” strike the perfect chord.

His main critique:

“These are people who are adamant that they are not victims, have chosen the lifestyle they lead of their own free will, and are grateful for the opportunities they get. This is admirable in some sense, but in the case of modern nomadism, it’s part of the problem. As Bruder’s reporting shows, one of the reasons companies like Amazon like to hire retirement-age “workampers” for physically demanding jobs that seem better suited for young bodies is that they “demand little in the way of benefits or protections. … Most expressed appreciation for whatever semblance of stability their short-term jobs offered.” The scrappy, no-complaints stoicism that makes these people appealing movie characters also makes them extremely exploitable.”

Keating convinces me that a very good film could’ve been even better.