Links for February 2023

Links for February 2023

This is alarming, but alas, not surprising: https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs-criminals-and-terrorists/

In the same vein, but more direct: https://wallstreetonparade.com/2019/04/research-study-on-ongoing-crime-spree-by-wall-street-mega-banks-gets-news-blackout-heres-why/

• The full report referenced in the Wall Street On Parade article: https://www.bettermarkets.org/sites/default/files/Better%20Markets%20-%20Wall%20Street's%20Six%20Biggest%20Bailed-Out%20Banks%20FINAL.pdf

Just a reminder: https://wallstreetonparade.com/2023/01/after-16-months-there-are-still-no-arrests-in-the-feds-trading-scandal/

One of the worst cases of inflation on record (the second-highest rate of inflation, behind Hungary post-World War II): https://www.economicshelp.org/blog/390/inflation/hyper-inflation-in-zimbabwe/

More interesting musings from SteveArk: https://steveark.com/2022/11/18/how-much-money/

Insightful analytics on millionaires in America: https://dqydj.com/millionaires-in-america/

Speaking of reports on millionaires, how about Credit Suisse's Global Wealth Report?  https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html

A compelling deep-dive into the reasons why medications cost so much in the United States:  https://www.yahoo.com/news/130-000-medicine-outrageous-blame-120004797.html

Great analysis on stocks as an inflation hedge: https://www.kennongreen.com/investing-in-stocks-as-a-long-term-inflation-hedge/

Happy Financial Wellness Month!

Happy Financial Wellness Month!

As Financial Wellness Month winds to a close, this is a good time to reflect on your goals - for the new year, and for the rest of your life.

Purdue University provides some helpful money management resources here: https://www.purdue.edu/dfa/students/moneymanagement/.

The Consumer Financial Protection Bureau provides a brief survey to help you assess where you stand: https://www.consumerfinance.gov/consumer-tools/financial-well-being/

Here's to a healthy and successful 2023!

Links for Jan 2023

Links for Jan 2023

Enjoy this food for thought during the depths of winter! (At least, winter in the Northern Hemisphere. To readers in the Southern Hemisphere, such as Australia, New Zealand, and South Africa - we're all jealous of you, enjoying the nice summer weather!)

Without further ado:

These should induce rage among young people, and should probably induce rage among older people on behalf of younger people. But unless that rage gets converted into productive action, I'm not sure how much good it'll do.

• https://www.supermoney.com/average-millennial-income/
• https://www.businessinsider.com/income-increase-young-adults-less-than-housing-tuition-costs-2019-9

Great reminders from Darius Foroux:

• https://dariusforoux.com/money-fallacy/
• https://dariusforoux.com/money-principles/

A couple worthwhile lessons from the book The Millionaire Mind, written by Thomas J. Stanley, author of the bestselling The Millionaire Next Door: https://limpression.org/the-millionaire-mind/

Since crypto and FTX is in the news, I'll include these from CNBC:

• https://www.cnbc.com/2022/12/13/live-updates-ftx-collapse-house-lawmakers-hold-hearing-following-arrest-of-founder-sam-bankman-fried.html
• https://www.cnbc.com/2022/11/15/cryptocom-customers-worry-it-could-follow-ftx-ceo-reassures-them.html

And I'll issue a reminder of my Bitcoin analysis from 2018, which still holds today: https://froogalstoodent.blogspot.com/2018/01/should-you-invest-in-bitcoin.html

Stumbled across this interesting piece on Wikipedia. Speaks to how interconnected the world is, as well as providing yet another lesson in the dynamics of stock market bubbles: https://en.wikipedia.org/wiki/2015%E2%80%932016_Chinese_stock_market_turbulence

An essay by Michael Crichton, published in 1993! https://www.wired.com/1993/04/mediasaurus/

'Our kids say our small house is embarrassing.' Spoken like people that didn't have to pay for anything: https://www.marketwatch.com/story/our-kids-say-our-small-house-is-embarrassing-my-husband-and-i-earn-160k-have-1-million-in-retirement-savings-cook-at-home-and-drive-an-old-honda-are-we-missing-out-11673356853

• Sounds like these kids need to read The Millionaire Next Door, so they can learn how wealthy people REALLY behave!

Links for December 2022

Links for December 2022

Yet another reminder about the impossibility of predicting the future. Pilots love to say that the enemy you don't see is the one that shoots you down: https://www.mindfullyinvesting.com/if-youve-already-won-the-investing-game-should-you-stop-playing/

More sense and sensibility from Mindfully Investing: https://www.mindfullyinvesting.com/fitting-square-inflation-data-into-a-round-stock-market-narrative/

Just stumbled across Joshua Kennon's blog, and it's filled with wisdom! Ignore his lessons at your own peril! P.S. the comments are usually excellent, too.

• Never invest in something you don't understand: https://www.joshuakennon.com/how-joe-campbell-found-himself-106445-56-in-debt-to-his-broker-in-a-matter-of-minutes-because-he-didnt-understand-the-risks-of-shorting-stock/
• The risk of investing in individual stocks: https://www.joshuakennon.com/gt-advanced-technologies-bankruptcy/
• Note: this is exhibit #407 on why the Froogal Stoodent recommends low-cost index funds!
• https://www.joshuakennon.com/lets-talk-about-the-gamestop-short-squeeze/
• https://www.joshuakennon.com/assumptions-are-the-enemy-of-the-rational-thinker/
• Perspective: https://www.joshuakennon.com/won-lottery-yet-people-still-think-world-going-hell/
• https://www.joshuakennon.com/the-valuation-levels-prior-to-the-1929-crash-were-absurd/
• https://www.joshuakennon.com/food-stocks-and-the-great-depression/
• A heartbreaking study called "The Night Black Wall Street Burned to the Ground:" https://www.joshuakennon.com/night-black-wall-street-burned-ground/
• A good policy analysis: https://www.joshuakennon.com/lets-talk-about-elizabeth-warrens-proposed-wealth-tax/
• I think there's a lot of great points in this analysis: https://www.joshuakennon.com/who-is-the-future-self-made-american-millionaire/
• Essentially, there have always been two main paths to wealth: 1) make enormous amounts of income, or 2) careful stewardship of what resources you have. Essentially, prioritizing either 1) offense or 2) defense.
• Joshua's analysis seems to focus mainly on 'offense,' or earning power. He's not wrong on that point, but consider my commentary on the case of MC Hammer, among others. Championships are generally won by well-rounded teams that play good offense and good defense; similarly, the wealthy almost always need to have some elements of both. But some will be best-suited, by disposition, to prioritize offense. Others, like myself, will be best-suited to prioritize defense.
• Defense is probably the slower route to wealth, but it's also more sustainable during dark economic times. That is, you can't always depend on being able to make a big income. As such, risk-averse people like me tend to prefer an emphasis on cost control.
• I was fond of his concept of 'economic drag' (as in 'drag show'). People who live two lives: one with a normal house and ordinary car, and another life, with much more extravagance, around other wealthy people. Related: stealth wealth.
• An interesting (and mathematically correct) use of capital: https://www.joshuakennon.com/how-one-of-my-family-members-used-shares-of-u-s-bancorp-to-build-substantial-wealth/
• My own aversion to debt would make me reluctant to behave in a similar manner. But I will admit that history suggests this would be a better course of action.

An interesting human-interest piece with a retrospective on the life of A&P heir Huntington Hartford: https://web.archive.org/web/20220120053932/https://www.vanityfair.com/news/2004/12/hartford200412

Interested in accounting methods? Probably not. Interested in how the federal government spends money? Probably so. Many people don't realize how the two are interconnected: https://www.nationalaffairs.com/publications/detail/the-case-for-fair-value-accounting

The Intelligent Investor: A Froogal Stoodent review

 The Intelligent Investor: A Froogal Stoodent review

The Intelligent Investor by Benjamin Graham – Notes and Quotes

Ninth in a series of book reviews by The Froogal Stoodent

No doubt thanks in part to Warren Buffett’s recommendation, Benjamin Graham’s classic The Intelligent Investor remains highly regarded by investors everywhere.

Now, I can say that I have read it for myself. Twice, in fact.

So, do I recommend that you read it too? Surely, if it’s good enough for the greatest investor alive, it’s good enough for you, right?

Let’s read on and see.

Links for October 2022

Links for October 2022

Uh-oh. https://www.bloomberg.com/news/features/2018-05-24/small-time-bankers-make-millions-peddling-mortgages-to-the-poor

Another reason to be cautious about crypto: https://www.thestreet.com/investing/cryptocurrency/another-prominent-crypto-lender-goes-down

And, in fact, I don't find this surprising at all: https://www.cnbc.com/2022/10/06/celsius-executives-withdrew-millions-before-freeze-on-customer-funds.html

A Redditor did some calculations on things like rent-to-income ratio across different generations. https://www.newsweek.com/worker-shares-proof-gen-z-must-work-twice-hard-boomers-survive-viral-reddit-1724722 However, the author of this Newsweek piece states "[these] figures and claims were not analyzed by experts." 

Unlike the author, I don't need 'experts' to verify somebody's conclusions if they provide their data source. #IAmAnExpert 

But, this is also known. How's the stamp of the Economic Policy Institute for 'expert verification?' https://www.epi.org/blog/growing-inequalities-reflecting-growing-employer-power-have-generated-a-productivity-pay-gap-since-1979-productivity-has-grown-3-5-times-as-much-as-pay-for-the-typical-worker/

Hmm...I can apparently use Google better than this 'journalist' who gets paid to write clickbait - oops, I mean 'articles' about what people are saying on Reddit - for Newsweek. 🤔

Is college worth the cost? The doubt is going mainstream: https://www.usatoday.com/story/news/education/2022/07/11/colleges-student-loan-debt-high-cost/7768824001/?gnt-cfr=1

Do you want an optimal withdrawal rate? Or a safe one? The answer to this question is pretty important for retirees to consider: https://retirementresearcher.com/difference-safe-optimal-withdrawal-rates-retirement-spending/

In my reading, I keep running across the power of incentives to govern human behavior. It's far more powerful than you probably think: https://collabfund.com/blog/incentives/

An astute analysis of the power of mass and social media to distort reality: https://dariusforoux.com/rich-and-famous/

Another excellent analysis from Morgan Housel: https://collabfund.com/blog/incentives/

"Sounds like the free market is working just fine." I'll have to remember that one! https://www.newsweek.com/baby-boomer-millennial-debate-workers-pay-free-market-1721501

Does successful investing have more to do with offense (generating big gains) or defense (preventing losses)? https://paulmerriman.com/the-biggest-challenge-to-successful-investing/ 

___

Check out my book-review series, available now:

1. Debt: The First 5000 Years by David Graeber

2. Rich Dad Poor Dad by Robert Kiyosaki

3. The Clash of the Cultures by John C. Bogle

4. Principles (Life and Work) by Ray Dalio

5. When Genius Failed by Roger Lowenstein

6. The Practicing Stoic by Ward Farnsworth

7. Gold: The Once and Future Money by Nathan Lewis

8. The Changing World Order by Ray Dalio

Why Invest?

 Why Invest?

Sometimes, people ask me: Why invest?

Well, I thought of a great answer, and I wanted to write it down so I don’t forget. Now, I can just send those folks a link to this page :) And hopefully, other people can benefit from these answers!

As explained below, the answer to this question is: I’d rather die with money than live without it.

A Conversation on the 4% Rule

 A Conversation on the 4% Rule

I had a brief conversation with Steve of the SteveArk blog, in his thought-provoking post on the 4% rule.

My initial comment was WAY longer than it should have been, but the thoughts and resources just kept pouring out of me, as I couldn’t help but think “what if somebody runs across this, a few years from now, and wants to know more?”

So I figured I might as well turn this into a post on my own blog! Perhaps I can do a better, more well-thought-out (and well-edited!) version here. So here goes:

Value Laptops 2022

Value Laptops 2022

Want the best value for your money on a laptop in 2022?

This is targeted mainly at students and bloggers; people who need a do-it-all laptop that won't bust even a modest budget.

I'm very pleased with the direction that the industry has gone in the last few years. I've long recommended computers with an SSD, or solid-state drive, because they truly are that much better than the old spinning hard drives. It's like comparing a 1975 Cadillac Sixty Special Brougham (they called them 'land yachts' for a good reason!) to a modern Shelby Mustang - in terms of performance or reliability, there's simply no comparison.

I no longer need to make that recommendation, because you'll be hard-pressed to find a laptop without an SSD these days.

Links for June 2022

Links for June 2022

Sad situation: https://www.marketwatch.com/story/were-headed-for-a-family-feud-my-father-offered-his-3-kids-equal-monetary-gifts-my-siblings-took-cash-i-took-stock-its-soared-in-value-and-now-theyre-crying-foul-11648697565?

• I wonder if his siblings would be equally eager to give the Letter Writer money if his stocks had gone down in value?...

How to lose your job in 10 years, courtesy of the Banker on FIRE: https://bankeronfire.com/how-to-lose-your-job-in-10-years

Found a couple good reflections, with a lot of perspective (and, dare I say, wisdom):

• https://eversightwealth.com/why-perfectionism-ruins-portfolios/
• https://awealthofcommonsense.com/2021/01/its-ok-to-build-wealth-slowly/
• I'm always a fan of Ben Carlson of Ritholtz Wealth Management. In fact, several employees of that firm run insightful blogs. Really good way to share your outlook and attract the kind of clients you want!

Speaking of wisdom and perspective, George Sisti of On Course Financial Planning has a great monthly newsletter! I'm particularly fond of this recent one: https://oncoursefp.com//images/Vectors%20Apr%2022%20final.pdf

Another good one from Banker on FIRE--here are the people who beat the stock market: https://bankeronfire.com/beat-the-stock-market

• For the rest of us, there are index funds! And they work pretty well, too...

Tsunami stones, a physical representation of how important it is to avoid unnecessary risk: https://www.atlasobscura.com/places/tsunami-stones

Several articles on Universal Basic Income:

1. The first one I ever came across from this guy. I found it well-reasoned and surprisingly persuasive: https://www.scottsantens.com/engineering-argument-for-unconditional-universal-basic-income-ubi-fault-tolerance-graceful-failure-redundancy/
2. Why UBI? Because "Computer technology is already eating jobs and has been since 1990." https://medium.com/basic-income/deep-learning-is-going-to-teach-us-all-the-lesson-of-our-lives-jobs-are-for-machines-7c6442e37a49
3. How are we supposed to pay for all this? Yes, Santens has a comprehensive plan: https://medium.com/economicsecproj/how-to-reform-welfare-and-taxes-to-provide-every-american-citizen-with-a-basic-income-bc67d3f4c2b8
4. Won't that just cause rampant inflation and defeat the whole purpose? Not necessarily: https://www.scottsantens.com/would-unconditional-universal-basic-income-cause-inflation-ubi/
5. Wouldn't it be better to target only those who really need it? In short, no:  https://medium.com/basic-income/the-progressive-case-for-replacing-the-welfare-state-with-basic-income-e8bd02c5875e
6. FAQs: https://www.scottsantens.com/basic-income-faq/