Car For Sale—$6 Million

We own three cars. Combined, they have about 260,000 miles on them, meaning they have lots of life left. If we sold all three today, we’d have somewhere around $35k to invest in alternative transpo like this. Tempting at times.

Most mornings I skim the Bogleheads forum, an excellent online community of mostly Vanguard-based investors. Today, I came across a post titled “Novice question” by “Oldman”. Here are his opening sentences:

“I am an 82 year old, fairly healthy, happily married, with one son (gainfully employed) and two grandsons in high school. I have no experience in this investing game. My home is mortgage free, we have lived within our means on my pension and social security income of about $108,000 annually. My life insurance policy is worth $72,000. A very recent car sale has put almost $3 million in my bank account after the tax hits.”

Unsurprisingly, the last sentence left many readers perplexed. One joked that it must have been a Ferrari. He was right. Sale price, somewhere between $5.5 and $7m.

It’s a very cool story that began with a large and questionable financial risk. It’s also about teaching one’s self auto mechanics and passion for auto history and aesthetics.

In the video, the Admiral explains he didn’t buy it as an investment and never really thought of it as one until more recently. Still though, what a lesson in buying and holding. And for taking care of your stuff. I like everything about the story.

Wonder what our 2006 Honda Civic hybrid will fetch in 46 years?

Postscript: If a twenty-something were to invest in a consumer product for 58 years, in the hope of making more money than they would investing in the S&P 500, what would be some options? An AppleWatch Series 4? A Tesla? A Boosted electric skateboard?

Weekend Assorted Links

1. Everything you think you know about obesity is wrong. So damn substantive, I should probably just stop here. A must read for anyone interested in being a more intelligent, caring human being. Here’s some context:

“About 40 years ago, Americans started getting much larger. According to the Centers for Disease Control and Prevention, nearly 80 percent of adults and about one-third of children now meet the clinical definition of overweight or obese. More Americans live with “extreme obesity“ than with breast cancer, Parkinson’s, Alzheimer’s and HIV put together.

And the medical community’s primary response to this shift has been to blame fat people for being fat. Obesity, we are told, is a personal failing that strains our health care system, shrinks our GDP and saps our military strength. It is also an excuse to bully fat people in one sentence and then inform them in the next that you are doing it for their own good. That’s why the fear of becoming fat, or staying that way, drives Americans to spend more on dieting every year than we spend on video games or movies. Forty-five percent of adults say they’re preoccupied with their weight some or all of the time—an 11-point rise since 1990. Nearly half of 3- to 6- year old girls say they worry about being fat.

The emotional costs are incalculable.”

2. This cult comes highly recommended. I count myself a member. The top reader comments are equally interesting.

3. HOW award—headline of the week. With each tweet, Kavanaugh’s chances lessen. Please keep tweeting.

4. Can Ethiopia’s new leader, a political insider, change it from the inside out? Great opening:

“On the morning of his first day of school, when he was 7, Abiy Ahmed heard his mother whispering into his ears.

‘You’re unique, my son,’ he recalled her saying. ‘You will end up in the palace. So when you go to school, bear in mind that one day you’ll be someone which will serve the nation.’

With that preposterous prophesy for a boy growing up in a house without electricity in a tiny Ethiopian village, she kissed him on his head and sent him on his way.”

5. Jon M. Chu, who directed Crazy Rich Asians, shot a short film entirely on an iPhone XMax. Which greatly impressed John Gruber:

“The democratization of professional quality video cameras for filmmaking is one of the great technical achievements of the last two decades. 20 years ago you’d have had to spend thousands of dollars on film to make a short movie that looks this good.”

6. It’s often difficult to pick a major (concentration of study) in college. Here’s a new option that will likely prove popular.

Apple Will Get You To Open Your Wallet

Despite the new Apple Watch Series 4’s central features—a built in EKG and “fall detection”—being designed for aging Baby Boomers who may not be able to use it without their grandchildren’s help, the marketing skews young, urban, global, and very creative and good. The bifurcated approach to design and selling is interesting. Go ahead and criticize the high prices for the incremental improvements in hardware, but give Apple’s advertising team credit for continued brilliance.

Paragraph to Ponder

From “The Recovery Threw The Middle Class Under a Benz”.

“Data from the Federal Reserve show that over the last decade and a half, the proportion of family income from wages has dropped from nearly 70 percent to just under 61 percent. It’s an extraordinary shift, driven largely by the investment profits of the very wealthy. In short, the people who possess tradable assets, especially stocks, have enjoyed a recovery that Americans dependent on savings or income from their weekly paycheck have yet to see. Ten years after the financial crisis, getting ahead by going to work every day seems quaint, akin to using the phone book to find a number or renting a video at Blockbuster.”

How to Retire in Your 30s With $1 Million in the Bank

The very good headline of this New York Times article on the FIRE—financial independence retire early—movement. 

As a minimalist and student of Stoicism, I’ve been intrigued by and read lots about this movement. I’ve even locked horns with the movement’s most popular spokesperson. Steven Kurutz does a nice job explaining the phenomenon. And he provides lots of good links for readers who want to dig deeper.

There’s lots to admire about FIRE folks, but too many of the movement’s advocates  wrongly assume anyone can save $1m and retire in their 30’s. They argue on their numerous blogs that people can do it if they only follow their steps which start with securing a high paying job usually in engineering or computer software. To which Kurutz writes:

“They are. . . benefiting from an lengthy bull run in the stock market and, in some cases, the privilege of class, race, gender and background. It’s difficult to retire at 40 if you work a minimum-wage job, say, or have crushing student-loan debt, or did not have the same opportunities as others because you grew up poor in a crime-ridden neighborhood.”

Those two sentences will not go unchallenged by the FIRE orthodoxy. Probably skimping on humanities and social science courses in college, FIRE zealots tend to overlook the fact that the US economy is not a level playing field. Their counter arguments will not be convincing. It’s their blindspot. 

It’s okay that they have a blindspot, because there’s a lot to admire about the movement, including the practitioners’ disciplined saving, their rejection of mindless consumerism, their emphasis on family, and their determined nonconformity especially in creating non-work identities.

 

 

 

Tuesday Assorted Links

1. Knicks fan sells fanhood for $3,450, now will root for Lakers. Genius. Wonder what I could get for my lapsed Sonic fanhood. $3.45? Speaking of Spike Lee, I’m giving the Blackklansman an “A-“.

2. New logo and identity for the Library of Congress. And John Gruber, who takes his logos seriously, is not happy. At all.

“This new identity is a horrendous mistake. The old identity was perfect.

The new identity doesn’t look bad in and of itself, per se, but it doesn’t fit the Library of Congress in any way. The Library of Congress is majestic, historic, dignified, authoritative. A new or tweaked identity for the Library of Congress should be for the ages, something designed to last for a century or longer. This feels like an identity that will last 10 years. I love orange and black as a color scheme, but why in the world would you choose those colors for the United States Library of Congress? Why is the word “Library” used twice? Why do some of these marks break up the word “Library” at utterly random points making it unreadable? The ones that break it up as “LIBR-Library of Congress-ARY” look like a logo for the Long Island Railroad.

This is all so wrong it breaks my heart.”

3. What’s It’s Like to Shop After Not Shopping for Two Years.

“The most common mistake was that I used to buy things for a more aspirational version of myself, but then never used them because the real me didn’t want to. In waiting to feel the need for an object, I know it’s something worth buying—and when I have the money, the real me buys it and uses it. There are no justifications and no shame. I just buy it and use it.”

I’m a Cait Flanders fan.

Weirdly, just lately, in my advanced age, I started drinking asundry espresso drinks at asundry local coffee shops a few mornings a week after swimming or running. My sissy is disgusted with my frivolous spending, and I can’t live with the shame, so I’ve begun shopping for an espresso machine only to learn that’s the world’s largest rabbit hole. Oh, you gotta have a grinder? Not just any grinder, but a particularly good one. And every machine has serious trade-offs. Long story short, I’ve spent an embarrassing number of hours the last week watching YouTube reviews as I try to declare my independence from our local coffee shops. Hours I’ll never get back. Talk about frivolity. I wonder what Cait would charge for an hour of therapy. I could even bring the espresso. . . eventually.

4. Make America Great Again.

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.