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.

 

 

 

 

 

Why the Seahawks are 3-4

Maybe it’s because the teams they’ve played have a combined record of 19-3.

Or maybe it’s because the offensive line is making minimum wage.

Or because the receivers can’t get any separation.

Or because Marshawn Lynch’s mom has put a curse on the O Coordinator.

Or because the Legion of Doom suddenly can’t stop anybody down the stretch.

Or maybe the Seahawks mediocre record is the result of key defensive players—Richard Sherman and Earl Thomas in particular—getting PAID.

Sherman and Thomas grew up with little and are highly intelligent. Now they’re making tens of million a year, meaning their portfolios are probably generating more passive income than they earned on their rookie contracts. Even if they have a career ending injury tonight (when they get to 3-4), their families are independently wealthy.

Both spent the off-season rehabbing serious injuries and earned their eight figure contracts by sacrificing their bodies for the good of the team. Also, and here’s the key to my hypothesis, Sherman is a Stanford graduate meaning he has to be reading all of the incredibly depressing CTE literature being produced by medical docs studying retired players’ brains.

So two years ago, knowing the NFL stands for “Not For Long”, they were making 5-10% of what they’re making now and had never been to a Superbowl. They were motivated, they were physical, they were focused.

Now, they’re watching their wealth surge every thirty days regardless of what the stock market does, they’ve been to the Superbowl twice, have one ring to show their grandchildren, and they’re learning more all the time about the long-term damage they’re likely doing to their brains. If Thomas and Sherman are not playing quite like their families futures depend upon it, it’s because their families aren’t anymore. If they’re not playing every game like it’s the most important thing in the world, it’s because it isn’t anymore. It makes perfect sense if they’re wondering if sacrificing their long-term health still makes as much sense, because it doesn’t.

The cult-like 12’s only think about what it would be like to make Thomas and Sherman money. They’re not reading the scientific studies that detail the brutal costs of Not For Long glory. I don’t blame Thomas, Sherman, or anyone else in the Seahawk backfield for having lost their edge. If one or more of them are having an existential crisis that’s affecting their play, it’s perfectly rational.

Thank You Pete Carroll

Two minutes to go the length of field and win back-to-back Sup Bowls. I ask no one and everyone, “Can we really do it again? Can we take it the length of the field?!” “Yes,” I’m assured by some Hawk faithful. And then, sure enough, our offense starts clicking. The more pressure, the more better. Key third down completion. Circus catch for the ages. 2nd and goal on the 1 with enough time and timeouts to run it three times if necessary. Hell yes we can do it again. Just have Wilson keep it or feed the Beast. Either way back-to-back baby!

Wait! No, no, no! Shotgun formation? Are you kidding me?! What on earth are they thinking. “Get back under center!!!” Interception. Ballgame.

People start saying not very nice things about Seattle’s Offense Coordinator, Darrell Bevell, but as my brother-in-law convincingly pointed out to me, the head coach has to take charge in that situation. Pardon the blasphemy, but we also don’t know yet if #3 called an audible.

What to do now. Obviously we need Washington State’s congressional delegation to investigate and determine without a shadow of doubt who made the worst call in football history. Not just professional football history, but street, Pop Warner, high school, college, CFL.

If it was a Wilson audible we’ll keep paying him the same salary for another three years (saving the team about $75m). If it was Carroll, we’ll have to act swiftly to assure his safety. Meaning Witness Protection. If it was Bevell, we should still act swiftly to assure Carroll’s safety, since he should have taken charge of that call. Meaning again, Witness Protection. New name, identity, and location.

In actuality, Seahawk fans owe Pete Carroll a huge thank you because there’s no decision any of us can possibly make in 2015 that will be anywhere close to that bad. That is freeing! Here’s how things will most likely go down in my Post 2nd and 1 household. “I’m really, really sorry honey, even by my standards, I did something really stupid.” Then the sorrowful explanation. Then the Good Wife, “It’s okay, really, it’s not like you decided to throw on the goal line with Marshawn fucking Lynch in the backfield.”