tag:blogger.com,1999:blog-72625926473310264322024-03-12T23:34:38.317-05:00Confessions of an InvestorMy lessons from trying to beat the market and save me from myself. Plus some meandering trails off into the unknown.Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-7262592647331026432.post-20323066280195208982024-02-24T11:10:00.002-06:002024-02-24T11:16:51.243-06:00How I Pick Stocks<p><span style="font-family: inherit;"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUBRGJTZlPHo6Rimt0BdAVtmIlEtbKQ9zNyLWa6I-wpWkZn298xFPu6rMCDJK1TbFQzzQPGjHVyrGkiBNK7IFTq68D2hTkCBH_N76UjIXgn08m5UqdTZvRC7xANlj6Ts_sIxmEGIgAkoxULYXCLmErRep-VBYuwwwDLwnsDbotlX7dIsom2TweMQrBlVU/s259/Buy%20Stocks.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="194" data-original-width="259" height="194" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUBRGJTZlPHo6Rimt0BdAVtmIlEtbKQ9zNyLWa6I-wpWkZn298xFPu6rMCDJK1TbFQzzQPGjHVyrGkiBNK7IFTq68D2hTkCBH_N76UjIXgn08m5UqdTZvRC7xANlj6Ts_sIxmEGIgAkoxULYXCLmErRep-VBYuwwwDLwnsDbotlX7dIsom2TweMQrBlVU/s1600/Buy%20Stocks.jpg" width="259" /></a></div>Most investment advisors share a similar opinion on buying individual stocks: Don't do it, but if you do, keep it small and be careful. I’ve followed little of their advice, although I’m well aware of the dangers that come with owning stocks.<br /><br />I bought my first stock when I was in college and my second one some years later. One worked out OK, the other a bust. Regardless, I never quit and for most of this century I've had up to a third of my equities in individual stocks. Here’s the method to my madness.<br /><br />For my early years, I mostly drove blind, quickly learning that this isn’t easy. I was amazed at my confidence when making a buy and my humility when the stock didn’t perform well, which was common.<br /><p>Then I learned about stock ratings. This gave me some justification for purchases. During the Great Recession crash of 2008, though, I learned that the ratings were mostly useless.<br /><br />But I never gave up. My next stop was to read The Intelligent Investor by Benjamin Graham, the bible for value investing. I’ve since stayed close to his basic theory that you can do well buying stocks at less than their true value. And there are well-known fundamentals that can help determine a stock’s value.<br /><br />One of my key insights regarding investing was to learn that people – including me – have too much confidence in their judgment, specifically with forecasting. And investing is largely about forecasting market returns. Instead of trying to forecast, like our forefathers, if the fish are biting for others, we tend to move into the same waters.</p><p></p><p></p><p></p><p></p><p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTQMI6dD3_lGu40AB_ruCFGZVojuSu-d-BC9vZmBYehIU5W8VugaRk7pBw-8hP-GaCHbHPtdm8fd1H92dQPYIr-WOGDRmzBlH9GZGHO0_5VwVb5e3w60_WOidlphgntUuizQBASDaLVz1N8_gLCCe7G06n_Vi6JXPNS6yB7DnLHm4mJ8ItAMfoNSLePCk/s317/Value%20Investing.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="159" data-original-width="317" height="159" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTQMI6dD3_lGu40AB_ruCFGZVojuSu-d-BC9vZmBYehIU5W8VugaRk7pBw-8hP-GaCHbHPtdm8fd1H92dQPYIr-WOGDRmzBlH9GZGHO0_5VwVb5e3w60_WOidlphgntUuizQBASDaLVz1N8_gLCCe7G06n_Vi6JXPNS6yB7DnLHm4mJ8ItAMfoNSLePCk/s1600/Value%20Investing.jpg" width="317" /></a>The data is overwhelming that even professional money managers tend to run in herds, although chasing returns mostly doesn’t work. For various well-documented reasons, the professionals lag the market indexes. As much as we may know that a low price to earnings (P/E) ratio is one of the best indicators of future performance, we're still convinced that a rising stock will rise forever, P/E be damned.<br /><br />Another of my guiding principles for living but especially for buying stocks is Occam’s Razor, also known as The Law of Parsimony. It recommends finding explanations that have the smallest possible set of elements. For buying stocks, this means limiting the data that I use to some key indicators that are generally available.<br /><br />In summary, I’ve come to believe that picking stocks requires keeping your natural human emotions removed from the process as much as possible, primarily by limiting decisions to mostly verifiable data. And second, I don’t overcomplicate the process. There is an overwhelming amount of financial data available for a stock. It is critical to limit what of it is used.</p><p></p><p>So why could stock picking be this easy? Because although the principle is easy, its execution is very difficult. For example, today I own none of the big meme stocks driving much of the market, such as Netflix, Tesla and Nvidia. This is hard to do because the fishing has been great in this pool. But by most measures, these stocks are wildly overpriced, regardless of how well these stocks have done recently.<br /><br />My buying approach is to establish some quantifiable indicators that suggest a stock may be undervalued. Then, when considering a stock, score it on each of these items, add up the scores and buy the winning stocks. You can do it on a napkin. The idea is to quantify your beliefs and then use this analysis instead of your emotions.<br /><br />For example, historically stocks have had a P/E ratio of around 15. The S&P 500 today has a P/E nearly twice this. So looking for stocks with a P/E under 15 is a great starting point for quantifying the value of a stock. It’s easy to find another 3-4 similar type indicators.<br /><br />Note that in recent decades, average P/E has risen due to an emphasis on so-called 'growth' stocks, fast growing stocks that are expected to be worth much more in the near future, rather than stable companies that are growing at a slower pace with a more mature (and lower) P/E ratio.<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiov9eTQ0CkJ-2aE7YTAOW5Zpf-R43K8y3NvZaODeua_fl0CDbryvl9r22jvWOO-H6hlEFABNK9sZMHpkZIbmdSyOrBpKus9rieYFp9RnwUz68oUlRA-smLBFoRkS3gEY-SGt2v_xA3c8_22NWJnhQBAGiO0R0EX2DM6EoX-G8-9ebUCoYaQ1SxD7s4E7A/s284/Buying%20Stocks.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="177" data-original-width="284" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiov9eTQ0CkJ-2aE7YTAOW5Zpf-R43K8y3NvZaODeua_fl0CDbryvl9r22jvWOO-H6hlEFABNK9sZMHpkZIbmdSyOrBpKus9rieYFp9RnwUz68oUlRA-smLBFoRkS3gEY-SGt2v_xA3c8_22NWJnhQBAGiO0R0EX2DM6EoX-G8-9ebUCoYaQ1SxD7s4E7A/s1600/Buying%20Stocks.jpg" width="284" /></a><br /><br />While it's possible to make a lot of money picking a winning growth stock, you are essentially betting on whether and how well the company will succeed, something that depends on many factors that are far more difficult to quantify. Alternatively, ‘value’ investing is done with companies that have already succeeded but whose current price does not reflect that success.<br /><br />These are my basic steps. First, I have various ways to identify stocks that I may be interested in buying, sometimes because I know their product but often by using a stock screener available at many brokerage firms. I also consider what other equities I already have, working to maintain a level of diversification, whether in market sectors, market capitalization or location (US vs foreign).<br /><br />Then I rate any stock I am considering by each of the following four fundamental measures: dividends, valuation, debt and financial strength. I score each item 1 (poor) to 5 (excellent), average the scores and then only consider a high scoring stock. That’s it!<br /><br />Here’s the details behind each of my factors, all items well-known in investing and easily available to any investor.<br /><br />Dividends are a good measure of a mature and healthy income producing stock. For this measure, I may consider its dividend return, recent growth rate and payout ratio, with some consideration to the type of stock it is. For example, a stock may not even have a dividend, which could make sense for a fast growing company that needs to reinvest all of its cash.<br /><br />For valuation, I mostly consider its P/E ratio and its cash equivalent, price to free cash flow. P/E and free cash flow should be under 15 and they should be somewhat consistent. The lower the P/E, the higher the score.<br /><br />I score debt based on its debt-to-capital ratio. Low or zero debt is great. A figure over 100% is a warning flag. The rest is somewhere in-between. The logic is simple: It’s hard for a company with little debt to go bankrupt.<br /><br />Financial strength is a measure of how well it handles its money. For this, I again consider debt but I also check its current ratio plus a variety of profit returns, including return on equity, gross margin and net margin. High margins and low debt is good. High debt and low margins is not good. The rest is in the middle.<br /><br />Four measures, four scores, average them and if it’s anywhere near 4 or higher, it could be an underpriced stock that will eventually rise.<br /><br />Once I’ve considered a stock as potentially underpriced, I do some internet searching to understand what the company does. This includes a look through its most recent 10-K report. One of the fundamentals of investing in anything – funds, bonds, stocks – is that you have some idea of what it is and why it may increase in value.<br /></p><p></p><p></p><p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtWTR7D3l0F4QAN4022ByKwEryfMankmhR2lINkoLb0gsnbX-RA-Mqcn57syIasuLJzf_isx3F95d6HNE2JJBfBO3OtAJdNT3CTtqDqPiUYPTs0FJhfbPysXZmMxFn8ccqJHoVc-cTYIGvdpMPbhhgVKAbHlWYboa-7AJFp66sJIUy8KgQ04gLaiCAeK4/s288/Buying%20Cheap%20Stocks.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="175" data-original-width="288" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtWTR7D3l0F4QAN4022ByKwEryfMankmhR2lINkoLb0gsnbX-RA-Mqcn57syIasuLJzf_isx3F95d6HNE2JJBfBO3OtAJdNT3CTtqDqPiUYPTs0FJhfbPysXZmMxFn8ccqJHoVc-cTYIGvdpMPbhhgVKAbHlWYboa-7AJFp66sJIUy8KgQ04gLaiCAeK4/s1600/Buying%20Cheap%20Stocks.jpg" width="288" /></a>There are many other considerations that can be used in selecting stocks, including sentiment, inertia, technical analysis or analysts’ ratings. But in time, none has much predictive power to where the price of a stock is heading. The algorithms used to backtest ideas become exceedingly complex, and in the end, mostly gives us some excuse to fish with the rest, which is where our emotions want to go.<br /><br />Does this work? If we trust the complicated reporting out of Quicken, yes. But I am quite confident that it weeds out the market noise and instead finds solid investments that continue to perform well. But picking a stock is half of the battle. The other is when to sell, which in general is when a stock is something you wouldn’t buy. That is, update its score.<br /><br />So if like me you want to own some individual stocks, some variation on what I’ve described is a good place to start. The process is straightforward: Use some standard measures to quantify the value of a stock, ignore the endless extraneous data and keep it simple. Finally, monitor what’s happening to any stock you buy, whether often or annually, to help learn from what you’ve done.<br /><br />Still, I don’t recommend that anyone own stocks unless they are willing to work at it and feel comfortable with hard decisions and volatile returns. Human emotion will buy what’s hot (high-priced) and sell when things don’t feel good (low-priced). This runs counter to what works in stocks which is just the opposite, buying low and selling high. But that’s our human make-up, and it’s hard to fight.<br /><br /></p><p></p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-73170693536250184592023-12-23T05:42:00.002-06:002023-12-23T05:42:39.575-06:00Christmas 2023<p>Merry Christmas, if you can call a green one merry. OK, I admit that I don’t really mind Duluth warming up a bit. If their predictions are correct, we’ll eventually own some of the most valuable real estate in the world.<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7r0Zqt_5injTY3ssqxK2xr9dL_7LHRRKzyEnJQp2F6DURwY9Bm9GkA2GPZyLjTRe5h-yuUgDeIUQkL3dmGRXAY8vyLLypD92pEbVFV8JdHaGqbakPneByiRf9YJOIia8RBaro0liiVqEWDbuD_1U73ZMqsP5gIz7w92unSTNK61c8eoRjMmjygLD0jEI/s3479/20231103_165422.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img alt="Our granddaughter, Azzy" border="0" data-original-height="3479" data-original-width="1971" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7r0Zqt_5injTY3ssqxK2xr9dL_7LHRRKzyEnJQp2F6DURwY9Bm9GkA2GPZyLjTRe5h-yuUgDeIUQkL3dmGRXAY8vyLLypD92pEbVFV8JdHaGqbakPneByiRf9YJOIia8RBaro0liiVqEWDbuD_1U73ZMqsP5gIz7w92unSTNK61c8eoRjMmjygLD0jEI/w181-h320/20231103_165422.jpg" width="181" /></a><br /></p><p>This is the time of year we look back a bit and maybe ponder the recent changes in our lives. However, last March 14, Ann and I went out on the 40th anniversary of our first date. In this case, we pondered forty years! It was great fun. We discussed things we had never talked about before. It was especially fun sharing our first impressions of each other, and how those panned out.</p><p>Let’s just say that 2023 has been an “interesting” year. I’m still unemployed, looking for My New Frontier, whatever that is. I’m taking cues from 80-year-old Mick Jaguar, who just released a new album. He once couldn’t imagine turning 45! Interestingly, his peers, including Bob Dylan, Paul McCartney, and Eric Clapton—artists I appreciate—also appear to have missed that memo. <br /></p><p>ChatGPT says that here is where I tell you what I’ve learned and where I’m going. But I really don’t have an answer to those $64,000 questions. Maybe next year’s Christmas letter. <br /></p><p>While I was wondering what I do, Ann spent months as the portable nanny caring for two grandchildren. It started later in 2022 and ended this August, with some time off for good behavior. She had a wonderful time getting to know our grandchildren. She especially enjoyed spending extended time with our daughter-in-laws—and with our sons, too. <br /></p><p>We also got in a couple of trips. We spent nearly two weeks this spring in the French Quarters of New Orleans. That was an adventure into a substrata of American society, a place steeped in history that never shuts down. One of our favorite stops was Café du Monde, a large cash-only outdoor doughnut shop where we stopped after our morning walks. <br /></p><p>More correctly, it’s a coffee and beignet shop, which is about all that you can get there. A beignet is a fried fritter covered with powdered sugar, an item brought to New Orleans from French who had settled loosely in New Brunswick (Acadians) and then made their way to New Orleans. They are only served in orders of three. Did I mention that New Orleans is its own land?<br /></p><p>We also did our 2nd annual vacation in Seattle. Again, Ben rented an Airbnb (his employer) near Mt. Rainier. We hiked and hung out at a wonderful place, complete with half-tamed elk walking down our street. It was fun just to throw Azzie into her stroller and take a walk through the very small town we were staying in.<br /></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3_qPwG5bOHxeRWf8k4eXhSJgbkbrgAHCMEE3p1TxQYO3GM98ElrmeD6ha4zO1jtu6nD3vz-mNHVNL66NfkYA2kzuWIQy42DTKHNlRxysunufM1nbiERYRxJ0WSiYnCWT5TkJEJEh8sEG7VR22KpEMIpDQJ7j_REdvVbqse4O_CbU_4dzmz9sTXs6mmSU/s2774/PXL_20230926_140442764.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="2774" data-original-width="2269" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3_qPwG5bOHxeRWf8k4eXhSJgbkbrgAHCMEE3p1TxQYO3GM98ElrmeD6ha4zO1jtu6nD3vz-mNHVNL66NfkYA2kzuWIQy42DTKHNlRxysunufM1nbiERYRxJ0WSiYnCWT5TkJEJEh8sEG7VR22KpEMIpDQJ7j_REdvVbqse4O_CbU_4dzmz9sTXs6mmSU/s320/PXL_20230926_140442764.jpg" width="262" /></a></div>Ann and I spent the last half of this year working out a new house routine for both of us. We’re normally up early with fresh coffee followed by a five-mile walk. We’ve reserved specific days for ourselves, whether hanging out at the house, catching lunch or running some errands.<br /><p></p><p>We continue to run Celebrate Recovery, just completing our 15th year. Ann leads several women’s groups, including some at area group homes. I still run the band. I also oversee basic administration, whether scheduling activities, balancing our money or chasing down outreach materials, such as the great new banner we have up at our church. <br /></p><p>We’re still rebuilding since the COVID debacle. Just recently, we restarted our program for teenagers. We’re tracking at least as well as the rest of the country.<br /></p><p>Ann and I also work one lunch a week at Union Gospel Mission. Ann works with food prep and serving. I run the dishwasher. It’s mostly several of our friends from church working alongside a small group of young people employed by Union Gospel. It is a nice and physical break to our week. <br /></p><p>I’ve resurrected a couple of old interests of mine. The first is working on cars. I did my first oil change in over twenty years. I’ve vowed that I’ll never run another truck into the ground, but my current one is into its thirteenth year.<br /></p><p>I replaced the cracked rear taillights, got fluid levels adjusted and put in a new battery. Once I found the replacement part, it took a friend of mine ten minutes to repair my heater fan. The truck’s like brand-new!<br /></p><p>My surprise this year was getting back into camping. I went four times, all in the Superior National Forest, twice into the Boundary Waters with David and his dog Freyja. We used the same canoe I bought in college.<br /></p><p>The highlight of the year came very early one morning in June at a forest service campground. I crawled out of the tent to a gorgeous blue sky. I turned on the propane grill to brew my coffee and then got a fire going.<br /></p><p>Soon I was sitting in this wonderland of peace with a hot drink and a crackling fire, a sort of transcendental moment. Oh, and it was 35 degrees out. We eventually packed up, drove into town and got a local breakfast.<br /></p><p>I also resurrected my interest in birding, a hobby I started in college. How things have changed! There are now amazing online tools to help with finding and identifying birds. I dusted off my old life list and got myself e-listed into the birding world. <br /></p><p>I’ve been to Hawk Ridge several times to watch the spectacular fall migration of hawks and other raptors. I saw dozens of eagles, including a couple of goldens. I’ve gone to Sax-Zim Bog, a famous birding place an hour west. The birding is incredible. Let’s be clear—this is two tiny ghost towns set within 300 square miles of bog that is good for little but boreal birding. In the worst of winter, there will be huge Great Gray Owls sitting in trees, bothered little by your presence.<br /></p><p>Ann’s always been an amazing cook but she’s gone into overdrive since returning home. All three of our sons enjoy cooking, trying new foods. Ann is following suit. She is now making more artisan breads, plus Thai, Chinese and Indian cuisine. They are all fun, but Indian may be her favorite. We both like spicy foods and this has been wonderful! <br /></p><p>David hosted the Midwest Anderson Thanksgiving dinner at his house in St. Paul. He served smoked beef ribs, potato salad, homemade baked beans and blackberry cobbler. It was all good but the beans and the cobbler were to die for.<br /></p><p>Another of our routines is connecting up with the kids. About once a month, either we’re in St. Paul or one of them is in Duluth. Jason et al. came up the weekend before Christmas, David is coming here for Christmas, and after the holidays, Ben is coming here with Azzie to introduce her to a real winter. <br /></p><p>It’s a challenge to teach Azzie everything she needs to learn about life in the Northland—OK, let’s say real life—in just a week but we’re up to the task! Jyri’s an easier sell—we see him a lot. <br /></p><p>The kids are all good with their jobs. Only one of the three ever goes into an office. Five years ago, one was in Texas and two were in San Francisco. Since then, two own homes in St. Paul along the Mississippi River an hour walk from each other, and Ben owns a home outside of Seattle.<br /></p><p>We’re wishing all a Safe, Healthy and Blessed Christmas. <br /></p><p>Ann and Jon</p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-32944764879436254812023-11-20T08:59:00.000-06:002023-11-20T16:13:27.062-06:00Social Security plus<p>The U.S. provides diverse retirement options, from 401(k)s to Social Security. This system can work very well, providing even those who have earned a modest income the ability to retire financially secure.</p><p>It works especially well for people who understand money and investments enough to make reasonable financial decisions. If you work most of your adult life, save 10% of your income and invest heavily in low-cost indexed equities, you are virtually guaranteed to be able to maintain the lifestyle you had while working.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfgjpKpwwcW9EZSuAOi1MKdsMusn7Lwi_r0JiYT0K_D3b9sPoIs9xjTK6Dr_W5XDNGyw0ddtR2jAlsVWaEIHwyKulwtfHZ5rLWC70zECo57YtQTbQOoSu92iNOQJBmKkGalz_UTwgou97OWB2hy4OvWI_WiUFXMe5NpjghaPLiKqgPKZ_K_34KL00Gxh8/s720/retirement-planning-chart-md.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="720" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfgjpKpwwcW9EZSuAOi1MKdsMusn7Lwi_r0JiYT0K_D3b9sPoIs9xjTK6Dr_W5XDNGyw0ddtR2jAlsVWaEIHwyKulwtfHZ5rLWC70zECo57YtQTbQOoSu92iNOQJBmKkGalz_UTwgou97OWB2hy4OvWI_WiUFXMe5NpjghaPLiKqgPKZ_K_34KL00Gxh8/w320-h213/retirement-planning-chart-md.jpg" width="320"></a></div>But life is messy. Even successful people will not save and invest well; they divorce, lose their job or become disabled; and to add insult to injury, they then take Social Security at their first opportunity. But even with the best of planning, one may just outlive their savings.<br><br>One of several problems with this system is that it puts too much responsibility on the employee to essentially manage a life-long personal pension plan with some vague promise that with some luck, they will survive.<br><br>Often one is asked to estimate how long they will live and what their expenses will be. Yeah, no problem here - my electric bill will be about $4,000 a month and I expect to die at 83, hit by a Greyhound bus. They're mostly ridiculous questions for a thirty year old - or anyone. What happens when one lives another twenty years longer that life-expectancy tables predicted? I guess they're just out of luck.<br><br>And if you do it right, you will probably die with a large amount of money for your heirs. Like I said, it's a crazy system.<br><br>Today's retirement system faces a fundamental challenge. We've transitioned from employer-managed, risk-bearing defined-benefit plans to employee-controlled defined-contribution plans, requiring that workers fund their own retirement, shouldering most of the associated risks.<br><br>For example, today's system provides little opportunity to take your life savings and lock it up so that you can never lose it all. For all its problems, Social Security does just that. Benefits are inflation adjusted and last as long as you live.<br><br>My thoughts for fixing at least some of the problems with these defined-contribution plans is that the government establish a voluntary, self-sustaining Social Security-like pension. I call it Social Security <i>plus</i>. It’s not in place of Social Security, but rather an additional saving alternative. Here’s how it might work:<br><p></p><ul style="text-align: left;"><li style="text-align: left;">Pays out a fixed, inflation-adjusted income for life based on your contributions, a sort of hybrid defined-pension, defined-contribution personal pension plan.</li><li style="text-align: left;">Contributions are voluntary and tax-deferred. Employers may choose to match donations, as they often do for 401(k)s.</li><li style="text-align: left;">Benefits can only be taken at a high minimum age (I suggest 70) regardless of employment, health or other circumstances, and contributions can never be withdrawn, just as Social Security is today.</li><li style="text-align: left;">Independence is critical. The agency receives no government funding and is actuarially sound, similarly to a defined-benefit pension plan. And the agency is free to invest as private pensions do.</li></ul><p>It's also critical that the fund can't morph into funding other needs. Organizations struggle to keep their hands off any pot of money, but this system is doomed if if becomes another social equity funding for the latest meme injustice. This is a personal retirement pension savings plan, not a redistribution program.<br><br>For those who are comfortable with savings and investments, they may well do better doing it themselves via 401(k)s and IRAs. Remember, there is a lot of good in today's system, such as the ability to maintain control of your savings.<br><br>This system has drawbacks, most notably that due to its undefined payout period, its payouts will be conservative. And regardless of intentions, the Federal government becomes its the insurer of last resort, which in reality is about the only way to ensure it never fails.<br><br>Ensuring lifetime security for people that could live decades longer than imagined is difficult and expensive. But this model is a means to avoid some of the bigger problems with today’s defined-contribution system that requires workers to spend a life-time preparing for their later years. For those who struggle to save and invest - a majority of workers - this is a way that one can easily save money that virtually guarantees a better retirement.</p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-25009948613733964412023-11-02T09:55:00.000-05:002023-11-02T09:55:14.012-05:00Fathers, Sons and the Land in Between<p>I recently read a book by Hisham Matar, “The Return: Fathers, Sons and the Land in Between.” I was very excited to read his story about him and his father. <br /><br />He tells us how at age 8, his family was forced to leave their homeland, Libya, a place they deeply loved. At age 20, his father, a vocal critic of Muammar Gaddafi’s regime, was kidnapped and imprisoned in Libya. Mr. Matar spent most of his adult life on a relentless quest to find his father, not knowing whether he was alive or dead. </p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2w5AH9OsnmB-y9hMvJdomudoSfVeCUcSxKjz7Bw7l0CynqUzEVsQKtWVwveg_HhLePMRMqbViGz18gjZKrpx7Ad1SOimZ_LqK1fHoTt9WE5pimVmWhtC0rXNcfy-XjHv1J8lhE7CxmzWnsw3Ch5VWTgxExtmPIZDS-D8npsgQHMN8cMME_mIU8-KJWHw/s2370/IMG_0154.JPG" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img alt="Llyod's Pool Hall, Michigamme, Michigan" border="0" data-original-height="2066" data-original-width="2370" height="279" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2w5AH9OsnmB-y9hMvJdomudoSfVeCUcSxKjz7Bw7l0CynqUzEVsQKtWVwveg_HhLePMRMqbViGz18gjZKrpx7Ad1SOimZ_LqK1fHoTt9WE5pimVmWhtC0rXNcfy-XjHv1J8lhE7CxmzWnsw3Ch5VWTgxExtmPIZDS-D8npsgQHMN8cMME_mIU8-KJWHw/w320-h279/IMG_0154.JPG" title="Llyod's Pool Hall, Michigamme, Michigan" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Lloyd's Pool Hall, Michigamme, Michigan<br /></td></tr></tbody></table><p>“The Return” is an intriguing story of how a boy lives being separated from both his father and his homeland. He writes passionately about his love for both, with his father becoming an almost mythical figure in his life. The pain of his absence is a constant companion, an inconsolable emotional state.<br /><br />He seeks any morsel he can find about his father, any input from someone who once knew him or maybe had seen him since his arrest. He remembers things his father said or was, small details such as the look of his hands.<br /><br />He articulates the very nature of grief, questioning whether the dead can ever truly be gone. “I think this because absence has never seemed empty or passive but rather a busy place… The body of my father is gone, but his place is here and occupied by something that cannot just be called memory… (Grief) is an active and vibrant enterprise. It is hard, honest work… My father is both dead and alive. I do not have a grammar for him.”<br /><br />He also reflects on the idea of leaving one's homeland, an issue that many struggle with. Some have said that one should never leave their homeland. He ponders the question, "what do you do when you cannot leave and cannot return?"<br /><br />I so relate to his question. I grew up in the Upper Peninsula of Michigan, a region rich with family history. My Nordic grandparents immigrated to the Upper Peninsula, where they built their lives around the local iron ore industry, still one of the largest in the world.<br /><br />I, too, was separated from my father. At the age of 8, he died suddenly. Then years later after completing college, for economic reasons I made the difficult decision to leave my homeland. These events have left an indelible mark on my life. This is my own experience with fathers, sons and the land in between.<br /><br />Now in retirement, I reflect on three pivotal moments in my life: the loss of my dad, my sojourn in Minnesota and my marriage that brought me three sons of my own. I say 'sojourn' because although I'll probably never return to the Upper Peninsula, in another way, I've never left.<br /><br />For instance, the master passwords I use are mostly places I cherished as a child, such as remote towns or rivers I was introduced to by my dad. They are etched into my memory, often unintentionally.</p><p></p><p></p><p></p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtjI810J1fi9BFzN0m2jHz4zj51kyrdWCp0x4l2JaWxrcLDBVQKtP0lfn2FPxvpAxSMeDH7dEtuERsXumFpgqCeQqWY9EiqbP5nt7JsJ2rpS6jFBTQ_Ru2yg2w86peq0ZpzyggHF2M_uQklTj6P9rF5vnyy25Zathve9lcei0VtjxGGmW84zNM1HSaits/s1024/Sturgeon%20River.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="683" data-original-width="1024" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtjI810J1fi9BFzN0m2jHz4zj51kyrdWCp0x4l2JaWxrcLDBVQKtP0lfn2FPxvpAxSMeDH7dEtuERsXumFpgqCeQqWY9EiqbP5nt7JsJ2rpS6jFBTQ_Ru2yg2w86peq0ZpzyggHF2M_uQklTj6P9rF5vnyy25Zathve9lcei0VtjxGGmW84zNM1HSaits/w320-h213/Sturgeon%20River.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Sturgeon River, Michigan<br /></td></tr></tbody></table><p>One of my sons has my dad's middle name. Another’s middle name is my dad’s first name.<br /><br />Up until my dad died, I believe that I lived an unimaginably wonderful life. My left brain tells me this cannot be true. But that's another world. I'm talking about fathers and sons.<br /><br />I could go on all day about this past life. My dad built us a sandbox that was the envy of the neighborhood, and in winter, he constructed a saucer slide that all the kids enjoyed. Our house served as a hub of activity for both our extended family and the neighborhood, where we heard endless stories from the past, particularly of the Great Depression and the finer art of fishing.<br /><br />He built our house himself (he didn't but he designed it and did some of the work), he and our family also built our cabin (neither is true, but so what), he walked to work when the roads were closed due to horrendous winter storms—and he didn't wear a hat. That's what real men do. And my dad did them all.<br /><br />Our cabin was in a nearby town, Michigamme, a very small mining community that died decades earlier along with its mines. It’s one of my most memorable places that I associate with my dad, a place he loved as did I.<br /><br />The most devastating day of my life is still the day my dad died, August 10. We had plans to spend the weekend at our cabin. As he often did, my dad arrived early to set everything up, and later, my mother brought us there, stopping along the way at our favorite swimming hole, Champion Beach.<br /><br />But this time, we were suddenly hurried out of the water, packed up quickly and drove to neighbors just down the road from our cabin. They served my sisters and me ice cream at the dining room table while adults huddled in the kitchen. Something didn’t feel right.<br /><br />Eventually, I was told that my dad was "very, very sick." I could do sick. I remembered that my sister had been in the hospital once, and she was fine. But it didn't take long for me to learn that he wasn't sick – that he was dead. He had died outside our cabin from a heart attack. I remember returning home to a houseful of people, crying on my bed with a kind neighbor consoling me. I had no idea what to think. And I had no sense of the changes coming.<br /><br />I remember the funeral home, his casket and where I sat at the graveside service. My Uncle Bill assured me, "Don't worry, Jonnie, I'll take you fishing." They say orphans wonder who is going to teach them how to drive. My fear was who was going to take me fishing. I loved to fish.<br /><br />Had someone told me then that my dad would be absent for even ten years, I could have handled that. But I couldn’t comprehend forever. Forever he was gone. And as much I wanted to believe I’d see him again in another life, I knew I could dig down into the dirt and run my hands through his rotting remains. I struggled to come to terms with the permanence of this loss.<br /><br />The grief I felt during those days was indescribable. I would lie in bed, practicing holding my breath. I was going to hold my breath until I died. And then I decided to try living one more year.<br /><br />No one can truly replace a father. I remember what I was doing August 10 ten years later, the summer after I graduated from high school. It was like his death had happened yesterday, the pain as raw as ever. A decade later, working at my job, the pain had dulled a bit.<br /><br />Tens year more, I was married with identical twin sons. But even then, I remember when they were born, thinking, “Wouldn't dad be proud.” He was never far away.<br /><br />There’s a flower’s scent that I associate with my dad’s funeral. Occasionally I smell it, and in an instant, I’m back at the Bjork & Zhulkie funeral home, and I can hardly breathe. Yes, I get over the flower in a few minutes but I never get over his death.<br /><br />Some may insist that we should "get over" our losses. One of the many things Mr. Matar and I have learned is that you can't simply "get over" everything, that some scars run too deep to ever fully heal.<br /><br />I once suggested organizing a family reunion on my father's side, much like the multi-day gala we had held for my mother's side. The idea was met with stone-cold silence. It wasn't a topic that could be discussed. There would be no reunion.<br /><br />Leaving the Upper Peninsula was one of the most difficult decisions I’ve ever made. I mostly had to leave to pursue a career in software engineering. Soon after college graduation, I relocated to Minnesota, where I’ve been since.<br /><br />Mr. Matar describes his eternal struggle with having left his homeland. Me, I've never really left. A part of my soul will always remain there. <br /><br />For example, just a year after starting work in Minnesota, I bought a half acre of land on a small lake in the Upper Peninsula, Little Brocky Lake. On a cold, rainy, miserable fall day, I signed for the property. Years later, I accepted an unsolicited offer to sell it. While it made logical sense, it left me feeling like I had sold off part of my soul.<br /><br />I remember the day my mother told me she was selling our cabin in Michigamme. This was the practical thing for her to do and I couldn't afford to buy another piece of land. But feelings aren't logical and dads are eternal – I felt awful all day. My grasp on my dad and my homeland kept slipping further away.<br /><br />I've been away from the Upper Peninsula for over forty years, and I have no intention of returning permanently. One sister owns the house I grew up in and another resides nearby. Despite the decades that have passed, I continue to traverse the roads from Minnesota to Michigan, each journey feeling like a new adventure. My heart longs to keep exploring the Upper Peninsula, to visit any of its lakes or hills or small cafes.<br /><br />And on and on, a feeling I can’t turn off. There's no end to the land I came from, a land that has had 32 inches of snow fall in 24 hours and once had nearly thirty feet of snow in a winter.<br /><br />In L. Frank Baum’s “The Wonderful Wizard of Oz,” the Scarecrow asked Dorothy about her home in Kansas, and she told him about how gray everything was there, and how the cyclone had carried her away. The Scarecrow said, "I cannot understand why you should wish to leave this beautiful country and go back to the dry, gray place you call Kansas." And Dorothy answered, "No matter how dreary and gray our homes are, we people of flesh and blood would rather live there than in any other country, be it ever so beautiful. There is no place like home."<br /><br />I agree. And as Mr. Matar states it, can anyone ever truly leave their homeland. There's no place like home.<br /><br />It's an interesting process how humans work together to help each other, especially in tragedies. I had many people who looked out for me, including relatives, teachers, pastors and neighbors. My uncle Bill was one of many.<br /><br />Remembering my wonderful relationship with my uncle, I wanted to pay it forward. After settling into Minnesota, I joined the Big Brothers organization. I was paired with a nine-year-old boy who, like me, was growing up with an absent father. We were inseparable for years and I'm still close to him. Once, I told him what a wonderful friend he was and that if someday I had a son half as nice as he is, I'd be thrilled. In fact, I have three sons, and they're all at least half as nice as he still is.<br /><br />They say that men marry their mothers. Maybe. But my wife, Ann, who I fell madly in love with reminded me of my dad. Ann and I had a tumultuous dating cycle over years. After a long breakup, we got back together again. Her friend wrote me that Ann was interested in trying one more time. It was a nice summer day in Minnesota. I sat on my couch reading the note, and in an instant, I felt like my dead father had walked into the room. I just sat there and enjoyed the moment. I didn’t know what to do with my feelings.<br /><br />Mr. Matar eventually returned to Libya for a visit, part of his long search for his father. I’ve thought that I’d never return to Michigan. But lately, I’ve been thinking of buying two burial plots in the cemetery four blocks from the house my dad built, where my dad, his brother, sister and parents, my mother and many others of my family are buried. Maybe I too will return home.</p><p></p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-47092579593148898322023-06-26T06:29:00.004-05:002023-06-27T05:36:47.920-05:00The Struggles of Investing With Funds<p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7mXWMOoEGXpeKITHbP5HGi16ixzyMXFgTsIk6G2tEhQeI6SOh2qA50gDdLsEq24lpdfpYc271WfPdtUo-MhFaQVbmdxyeyNPz5VrvF_6qjW46pCmZNrTbY6MiwF7YXmIb-_IeVt6DwMJW7jAlqxGItOysLV9u49LPXz1SWf2rWvm8PgcYtzAfMdHbCP4/s1416/Index_Funds_vs_Mutual_Funds%20Rev.png" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="885" data-original-width="1416" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7mXWMOoEGXpeKITHbP5HGi16ixzyMXFgTsIk6G2tEhQeI6SOh2qA50gDdLsEq24lpdfpYc271WfPdtUo-MhFaQVbmdxyeyNPz5VrvF_6qjW46pCmZNrTbY6MiwF7YXmIb-_IeVt6DwMJW7jAlqxGItOysLV9u49LPXz1SWf2rWvm8PgcYtzAfMdHbCP4/w200-h125/Index_Funds_vs_Mutual_Funds%20Rev.png" width="200" /></a>Jason Zweig recently wrote a post on how relatively easy it is for amateur investors to beat the pros (Wall Street Journal, April 14, 2023 <a href="https://www.wsj.com/articles/active-vs-passive-index-fund-beat-the-stock-market-58e8bd83">https://www.wsj.com/articles/active-vs-passive-index-fund-beat-the-stock-market-58e8bd83</a>). I couldn't agree more. But as I've written before, I also think amateurs can beat the indexes, although it's considerably more work.<br /><br />Here's some of what Mr. Zweig says, with my thoughts.<br /><br />Essentially, Mr. Zweig points to the handicaps fund managers work under, handicaps that, according to a recent 30-year study of thousands of U.S. stock mutual funds, results in most funds underperforming the market.<br /><br />The first problem is their insidious fees. I used this word deliberately. According to the Online Etymology Dictionary, it comes from a Latin word <i>insidiae</i> meaning “ambush, snare, plot,” which is derived from the Proto-Indo-European term <i>sed</i>, “to sit,” usually with a suggestion of lying in wait with the intent to entrap. This is fitting, as “insidious” often carries the meanings “deceitful,” “stealthy” or “harmful in an imperceptible fashion.”<br /><br />This is just how fees work in the financial world. Generally speaking, financial instruments are far better at finding ways to get more money out of you than they are at managing your money. And I do mean “far better.”<br /><br />Today's online world has an abundance of low-cost offerings that with their low fees offer you a significant advantage over an actively managed fund. Unfortunately, this is not where financial firms guide your investments, simply because they make a lot less from these offerings. It’s a sort of bait-and-switch tactic.<br /><br />There are many indexed funds charging 0.03% to own most of the U.S. stock market. This is not 3 percent, not 3 tenths of a percent, but 3 hundredths of a percent, about $30 a year in fees on a $100,000 investment. The typical actively managed fund charges over 1%, or $1000 a year on this same investment, 33 times more than you can easily find online. And many funds charge significantly more than the 1%.<br /><br />The typical fund analyzed in this study returned 7.7% a year after fees. However, the funds’ investors earned only 6.9% annually because of the compulsion of clients to chase hot performance and to sell when things go bad. This is your classic buy high, sell low problem where you should instead do just the opposite: buy low and sell high.<br /><br />For the fund managers, though, they are forced to buy high priced stocks with the flood of money that comes in from investors chasing high returns, and in reverse, are then forced to sell stocks when they are low to generate the cash needed for their investors who are selling out of their fund when prices drop. Mr. Zweig states it well that "the managers can perform only as well as their worst investors allow them to." And that is not a good return.<br /><br />The total cost to the fund that is forced to buy high and sell low is nearly as high as the drag from annual fees. What do these actively managed funds cost investors? From 1991-2020, investors lost about $1.02 trillion dollars, money they could have saved if they had instead bought a low-cost index fund tracking the S&P 500.<br /><br />Mr. Zweig then repeats a supposed axiom of market returns, and that is "in the long run, nearly all the market's return comes from a remarkably small number of stocks—giant winners that rise in value by 10,000% or more over decades."<br /><br />He cites other research that shows that only 4.3% of stocks created all the net gains in the U.S. market between 1926 and 2016. This suggests that winning requires finding these very few stocks, and this is mostly a matter of luck. Which then gets you back to buying indexes that mostly ensure you get at least some of these gains.<br /><br />I've never accepted the argument that very few stocks are good investments. First, almost no one buys stocks and holds them forever. So what an individual stock does over a lifetime is of little interest to most. I have all my stock transactions for over two decades available to search and analyze. I have not found it to be true that a very small proportion of my stocks have created most of my gains. I grant you that I also haven’t owned thousands of stocks so my example may be a poor one.<br /><br />Yes, it's true that there's usually one hot stock for any given period that brings in a lot of my returns. But when I measure longer time periods, the number of stocks that bring in most of my returns gets quite large. I've drilled further into my stocks. When I eliminate the one or two best stocks and the one or two worst stocks (that is, the extremes), I find that the middle ground returns about the same as the edges. And this holds as I eliminate more of the extremes.<br /><br />I did a quick test on Mr. Zweig's claim. I downloaded performance data from the largest 500 stocks as of April 24, 2023, which roughly approaches the S&P 500, and calculated their total return (gains, losses and dividends) for the prior 12 months. The stocks had lost about 5.6% of their total value in the prior 12 months.<br /><br />However, the average stock lost only 2.6% during this same period, and the middle 50 stocks lost 4.6%. So the most middling stocks did slightly better than the entire index, and the average stock did 3 percentage points better than the entire index. This hardly suggests that over a defined period of time, such as one year, one needs to find a very few hot stocks to keep up with the indexes, and in fact, in this one look into a random 12 month period, the middle and average stocks both outperformed the index.<br /><br />What I am saying from this simple test is that it doesn't matter if Apple or Tesla or Amazon or even Exxon-Mobile bring in an outsized lifetime return. I'm not buying stocks for a lifetime. I'm owning them up to several years, and I have no evidence that I need good luck to keep up with the indexes. I can buy average stocks and do quite well.<br /><br />Indexes by their nature buy high and sell low. By their design, their simplicity, by their very nature they function well. Yes, they perform better than almost any actively managed fund—which is well documented—but not great.<br /><br />I'm fairly convinced that an individual with a basic understanding of finance and math, with the emotional ability to see beyond the past year or two, and to accept some occasional deep drops such as we had in 2022, by owning several dozen stocks can beat the indexes—both with lower fees and with better returns. And they can do this by avoiding overpriced stocks that the indexes (and everyone else) love, that in the end do not do as well as perceived.<br /><br />Mr. Zweig gives some additional good help for investors that want to try their luck with individual stocks. Avoid big, household-name companies and avoid following crowds into the latest meme stock.<br /><br />He suggests that investors instead look for winners among smaller firms with good financials. Limit yourself to a handful of possibilities and don’t put more than a total of 5% of your money in them. Further, never add new money to a winner. This will help you win well when you’re right, and will limit your losses when you’re wrong. <br /><br />And if you do find a winner, hold it as long as you can. Small potential fortunes are lost selling after a stock doubles or triples, watching on the sidelines while it continues to double and triple still again. By then, of course, you’ve lost this opportunity.<br /><br />Against common advice, I’ve kept about 30% of my equities in individual stocks and the rest in low-cost indexed funds. Since the market peak before the Great Recession to today, which includes two bear markets, my individual stocks have performed significantly better than my index funds. The gains seems to be quite widespread, and not because of a couple of lucky purchases.<br /><br />My additional suggestions with individual stocks is to be slow to buy and slow to sell, regardless of where their price is going. Keep an eye on the stock’s fundamentals: margins, debt and dividends. And don’t be afraid to check out an annual or 10-K report. If something smells bad, it may be time to sell it.<br /><br />Although I generally recommend indexes over individual stocks, for someone who is willing to put time into stock research, there are a lot of fees to be avoided and a lot of money to be made following some basics with individual stocks. As my analysis on the S&P 500 shows, using a dartboard to buy a dozen stocks from the S&P 500 will probably outperform the S&P 500. And this is probably because you’re passing on overpriced stocks that are overallocated both by individuals and indexes.</p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-11951118387686527972023-03-27T10:54:00.001-05:002023-03-29T05:05:24.395-05:00My Move Out of Index Funds<p></p><p>I have struggled for years with the logic behind both asset allocation models and indexing, two tenets of modern investing, ideas I’ve used most of my investing life. Unfortunately. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjApg1-rHlVxlxEqHT7Gc7zu9V2SRusqeFlHBkSzlzPrL0oWGw752-zK3XenPBBp_QZzrUI1VayQd_OsR3WtlUIneomwJJ-iMRj1exaWffE7iVuMkh_uvhNtLG-yhS-a-DZagffoATUPnuhv435PTXwJuqWR-rVsUoG2kpW6DvvFmGcewfI5gT3i4x3/s1200/stocks.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="800" data-original-width="1200" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjApg1-rHlVxlxEqHT7Gc7zu9V2SRusqeFlHBkSzlzPrL0oWGw752-zK3XenPBBp_QZzrUI1VayQd_OsR3WtlUIneomwJJ-iMRj1exaWffE7iVuMkh_uvhNtLG-yhS-a-DZagffoATUPnuhv435PTXwJuqWR-rVsUoG2kpW6DvvFmGcewfI5gT3i4x3/s320/stocks.jpg" width="320" /></a></div><p></p><p></p><p></p><p></p><p>I recently posted my arguments against asset allocations. My frustration has been that asset allocation eventually got me to invest almost half of my wife’s and my life savings in bonds that historically barely keep up with inflation, and then in 2022 lost over 13% of their value. I’m already moving away from that model.<br /><br />My next move is away from index funds. The very reasonable argument for index funds is that they may be your best bet for investing in equities rather than trying to “beat the market” by owning individual stocks. I agree that the easiest way to win in the stock market is owning low-cost index funds. A reasonable person can establish an allocation formula for their equities, for example, 70% of stocks in the US and 30% international, balance back to this allocation every year or two, and do little else for decades. It works and I highly recommend it.<br /><br />But I have a major issue with index funds. By their design, when you buy an index fund, you are overallocating to overpriced stocks, and underallocating to underpriced stocks. What is overpriced and what is underpriced is subject to great debate, a debate index funds settle by declaring nothing is ever over or underpriced, a tenet of indexing, and that the best estimate of what a stock is worth today is what it is selling for today.<br /><br />I disagree with this. Stocks often get overvalued and undervalued by almost any valuation measures. Great examples are the Dot-Com Bubble of 2000 and the Great Recession of 2008. But what the intrinsic value of a stock is at any given time is an endless and emotional discussion, a little like religion, and it won’t get settled here.<br /><br />Let’s just say that I don’t buy this argument that stocks always trade at a price that best represents the value of that company at that time. A live example (and there are endless more) is Tesla. It recently had more market value than the market value of all other automobile manufacturers in the world combined.<br /><br />Read that last sentence again slowly. No rocket science or deep financial analysis is required to recognize that this is either an overpriced stock in the long term, or all other automobile manufacturers in the world are collectively underpriced.<br /><br />During 2022, from high to low, Tesla lost over 70% of its value without any significant change in the company. That’s how much variation there can exist in a stock that supposedly is trading at its fair value. And my bet is that at its low, it’s still way overpriced.<br /><br />The most basic investing maxim that I learned in high school is that you should buy low and sell high. But indexes, by their design, buy high and sell low. It’s not intentional but it is part of their design, a design that is simple and easy, but causes other problems. An index fund mimics the composition and performance of a financial market index, such as the S&P 500 index.<br /><br />So if in early 2022 you bought an index fund that tracts the S&P 500 index, you are overallocating your money into many overpriced stocks like Tesla, and underallocating your money away from many underpriced stocks, the opposite of what one should do.<br /><br />There are other advantages to owning individual stocks besides this issue of index funds overbuying overpriced stocks. Although it is easy to find low-cost, low-turn index stock funds, stocks have even lower fees. Many brokerage firms have zero fees for their accounts and zero fees for buying and selling stocks.<br /><br />So by owning stocks you can reduce any fees to zero sans spreads. If you then hold your stocks for long periods, real fees approach zero. You can have your entire life savings maintained online for years, with full access to the firm’s tools and services, and never pay a fee, directly or indirectly. How these firms make a profit is another discussion.<br /><br />The arguments against owning individual stocks are many and valid. It takes a lot of time. It requires research and knowledge, although not necessarily any special cognitive skills. The best argument against it comes from Daniel Kahneman, the author of “Thinking, Fast and Slow.” He convincingly suggests that people have too much confidence in human judgment, specifically with forecasting. <br /><br />His research on stock picking, a form of forecasting, shows overwhelming evidence that professional stock pickers have awful track records doing what they’re purportedly paid to do. It supports his claim that human are terrible forecasters, whether it’s stocks or anything else requiring a long-term view.<br /><br />Finally, one more strong argument against owning individual stocks is that most money in the stock market is made in very few stocks. Therefore, regardless of one’s skills, the chances of hitting on these few stocks is slim, no matter how good one might be at their trade, and success mostly comes down to luck. And the best way to counter luck is to own all the stocks in a low-cost index fund.<br /><br />Acknowledging these challenges, people have endless ways to try to make money in the market. I’ve already mentioned buying underpriced stocks and selling them when they return to their intrinsic value or higher. There are strategies for out-smarting other bad investors, such as the ones who bought Tesla in the last several years. These approaches are sometimes known as the “bigger fool,” assuming there will always be people willing to pay yet more for an already overpriced item.<br /><br />Timing and technical exercises are endless, including the Santa rally and the "sell in May and go away" theory that tries to beat the historical underperformance of stocks from May-October. Apparently, there’s an argument for buying and selling anything based only on the day of the week or even the time of day. And technical analyses are endless, a little like reading tea leaves.<br /><br />Most have some merit and for sure, someone has always made money doing all of them, which countless articles give undue attention to.<br /><br />I bought my first stock while in college, Niagara Mohawk Power, a utility that still operates, now owned by a British utility. My next purchase was Manville Corporation, the manufacturer of asbestos-containing building products. That ended badly. I bought some stocks during the Dot-Com Bubble. They ended like most of the market. Ditto the Great Recession.<br /><br />I mostly learned what’s often stated: It’s hard to beat indexes. I purchased stocks with full confidence they would rise quickly. But it was based on a lot of emotion and little information.<br /><br />I never quit, probably for the reasons many buy stocks. It’s a little like gambling but with a far better chance of success. I’ve continued to entertain myself, randomly buying stocks based on various valuation theories, and then holding them as long as I can stand it. Since the Great Recession, I’ve usually had about a third of our equities in individual stocks, about as much as I could tolerate. I’ve had some disasters (e.g., Peabody Coal), some close calls and some wins, most notably Ford Motor that I bought during the Great Recession fire sale.<br /><br />How have I done with these stocks? It’s hard to say because it’s hard to know what I would have owned if I hadn’t purchased them. And for various reasons, it’s hard to make an apples to apples comparison with comparable index funds I’ve had. For example, my 401(k)s have normally been funded by bimonthly purchases from my salary, commonly known as dollar-cost averaging. My stocks are purchased randomly. Comparing collective returns is difficult.<br /><br />But as part of my look through the carnage of 2022, I noticed that my individual stocks dropped about half of what the S&P 500 did. Again, comparisons are hard because I own some international stocks and funds.<br /><br />So I looked a little further and found that over the past many years, my individual stocks have performed nearly twice as well as my index funds have. Further, it held true for most of these calendar years. A look further back has more mixed results but in total, since the peak before the Great Recession to today, my individual stocks have performed significantly better than my index funds.<br /><br />I considered whether I got lucky. So I looked at returns over several periods excluding the best and worst stocks. The middle ground held about the same as the extremes. <br /><br />I’ve searched returns for a single year across the entire S&P 500 and contrary to what I’ve read, I don’t find it true that the vast majority of returns come from a very small handful of stocks. These winners make a lot of press, but that’s not the only place money is made. And it’s also where a lot of money is lost.<br /><br />I did a backtest of what would have happened the past ten years if I had had all of our money in only the same stocks I owned at the time. That is, what would have had happened if I had not owned any stock funds or bonds. Again, it’s a mixed picture – higher volatility but the returns are significantly higher than what I experienced, and in only one year would our total portfolio value have dropped lower than what we actually experienced with our mix of bonds, index funds and stocks.<br /><br />Another common mistake investors make is focusing on market extremes, the rises or falls from recent highs and lows, rather than long-term returns. For example, the S&P 500 dropped 56% high to low in the Great Recession. But if you limit your analysis to 12-month or other longer term views, the extremes are much less. So when I look through returns, I normally only look by calendar year, or other long periods. This removes so much of the noise that causes such emotion. These short-term variations don’t have nearly the actual impact to your portfolio that your emotions respond to.<br /><br />Which brings me back to the same place. There is a high price for higher stability, and if one can ignore the noise, there is significantly more money to be made owning individual stocks than there is in either stock index funds or in bonds. As an aside, this is one of the reasons (along with paying their own salaries) that professionals struggle to do well – their clients respond quickly to this noise forcing them to respond accordingly, too, which often includes selling underpriced stocks.<br /><br />This is where I’ve been stuck for years. I don’t trust indexes and I don’t trust professionals, but I’m never confident that I or anyone can pick stocks well. But there’s little evidence that my stock picking is any worse than index funds. And in fact, I’m reasonably confident that beating the indexes isn’t that hard, which has always been my theory.<br /><br />To use stocks as long-term investments, I generally rely on three well-known factors: what the stock valuation is using some common metrics; the financial health of the company; and finally, some cautious consideration for what analysts might say about a company. I mostly ignore sentiment, inertia or any technical analysis, other common factors considered in selecting stocks.<br /><br />Please note that I don’t trust analysts either. They have a Lake Wobegon tendency to rate most stocks above average. But they can highlight some issues. I trust their poor reviews more than their good reviews.<br /><br />As for valuation, I try not to put much into a stock’s most recent numbers, and instead look closely at its last several years. In addition to profits, I also look at free cash flows and dividends. I also consider their book and enterprise values.<br /><br />For a company’s financial health, I look at its return on equity, its margins and its liquidity, and very closely at its debt. It’s hard for a debt-free company to go bankrupt.<br /><br />There’s no secrets to what I’m doing. This information is widely available online. And although it’s time-consuming, it’s not nearly as complicated as it sounds. My usual procedure for buying a stock is to first use various ways to come up with a large number of stocks that I may be interested in, whether something I hear about or see on a list.<br /></p><p></p>However I get there, if I like what I’m seeing, I chase down several pieces of information on the company, and then score it across a half-dozen measures. The scoring is to help contain my emotions, which like most humans are terrible at predicting where a stock price may go. If it all adds up to a good score, then I’m serious about buying it, which I still may or may not do.<br /><br />Most of my life, whether investing or anything else that requires time and work, I’ve leaned heavily towards the law of parsimony, a principle that recommends searching for explanations constructed with the smallest set of elements. Although my stock analysis can seem a little overwhelming, I suspect one could probably come to the same decisions with half of the information I use. Maybe debt, margins, dividends, and price to cash and earnings, with a look at any warnings from analysts.<br /><br />I painfully hold to stocks I own whether they’re doing well or poorly. I consider selling when the same analysis doesn’t add up to buying a stock. But even then, I still give it some time. And time is one of many tricks I use to keeping my emotions out of these decisions. My default is to do nothing.<br /><br />Yes, I miss out on Google and Apple and Netflix. But I also missed out on Tesla last year. Cummins, Emcor, Ryder, Amgen and Teck aren’t nearly as interesting, but I trust them a lot more. Index funds trust overpriced stocks much more than I do.<br /><br />How far will I stray from index funds? I don’t know. I don’t make fast moves. After combing through scores of stocks over several weeks, I recently made a couple of new stock purchases. As I normally do, they’re a broad mix across sectors, capitalizations, and value and growth.<br /><br />And that may be all I do for a while as I wait, watching what happens with the recession “everyone” is predicting. If I do beat the market, doing little or nothing will get me closer to where I want to be. If I’m wrong, I’ll find myself making some changes. And confessing my mistakes to you.<p></p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com3tag:blogger.com,1999:blog-7262592647331026432.post-29807308977263803292023-02-28T06:08:00.008-06:002023-03-17T12:15:41.907-05:00My Goodbye to Asset Allocation<p>For as long as I can remember, I’ve read endless variations on two basics of investing. One is that you should maintain an asset allocation between stocks (equities) and bonds (fixed income), moving to a larger percentage of bonds as you near retirement. The second is that you shouldn’t own individual stocks, and instead you should buy them in indexed funds. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF9se48cLdjmjy6rx-dFpFMLlqZPDAIDgSXogGB8o6X5CYJPkLr7WYaDI8mFR-KNCvETB3ej2CqGrRE0Xwhkqx1LjHUUL1afnwmR2594_AvMihIon1byyLQkI4WgCuaC169M469kg4Zs5MYmYXyQRPRHT6AaEbiLmuLrOQVoXLYpo-Db879pal2McH/s474/Asset%20Allocation.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="316" data-original-width="474" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF9se48cLdjmjy6rx-dFpFMLlqZPDAIDgSXogGB8o6X5CYJPkLr7WYaDI8mFR-KNCvETB3ej2CqGrRE0Xwhkqx1LjHUUL1afnwmR2594_AvMihIon1byyLQkI4WgCuaC169M469kg4Zs5MYmYXyQRPRHT6AaEbiLmuLrOQVoXLYpo-Db879pal2McH/s320/Asset%20Allocation.jpg" width="320" /></a></div><p>There are valid arguments for both claims. But there are quieter places that challenge some of these assumptions. I’ve challenged both for years and now I’m slowly abandoning both.<br /><br />Today, I will discuss my move away from the standard asset allocation formulas so widely recommended. Later in another post I will walk through my concurrent move away from any stock funds, including indexed funds.<br /><br />Last year’s markets blew up the asset allocation model between stocks and bonds. In 2022, for a variety of reasons, stocks (S&P 500 including dividends) lost over 18%. But U.S. bonds didn’t do much better, losing over 13%. The theory for owning bonds is that they will neutralize some of the stock losses in a market downturn. That theory failed miserably this past year.<br /><br />I acknowledge that bonds did perform five percentage points better than stocks. And I acknowledge that this is the worst bond performance in forever. But this is small consolation to the fact that over decades, bonds generally return about one percent more than inflation, and stocks return at least six percent more than inflation. In inflation-adjusted value, stocks have returned about six times more than bonds. Six times. That’s hardly reason to invest up to half of your life savings in bonds.<br /><br />For years, Warren Buffett has repeatedly said that stocks are a better and an even safer investment for long-term investors. Yes, in the short-term, stocks can be painful. But in the long term, after inflation return on stocks is much, much better than bonds. Six times better, in fact.<br /><br />But surprisingly, even in the short-term, bonds can be poor performers. Although 2022 is an outlier, bonds can lose money. And the short-term bonds that are almost certainly not going to drop significantly in value normally return less than inflation.<br /><br />For my first 15 years investing in a 401(k) plan, I kept almost 100% of my wife’s and my retirement money in stock funds. They did fine. Turning forty, I bought into the asset allocation formula to a degree, and moved us to about 20% bonds and 80% stocks. As we aged, I did the "responsible" thing – something I have always struggled with – and increased our allocation of bonds. I entered the Great Recession of 2008 with nearly 30% of our money in bonds.<br /><br />When stocks dropped 56%, high to low, in the Great Recession, I admitted defeat and slowly moved us to nearly 50% bonds. Now we were safe. Or so I thought.<br /><br />Then 2022 came. After having up to half of our life’s savings in bonds during one of the greatest bull markets ever, I saw our bonds trashed. I expected it with stocks that had doubled and tripled and more. But bonds?<br /><br />Yes, over the past ten years, our bonds have not even kept up with inflation. Safe? Secure? Hardly. And they were mostly investment grade.<br /><br />I did a backtest of our investments the past ten years, testing my results if I had held no fixed income and instead had all of our money in the mix of equities I did own. Although returns are more volatile, the returns are notably higher than what I experienced. And it was interesting that the test never had us with less invested than we had with the asset allocation models I was using.<br /><br />This reminded me again of other ideas I’ve heard periodically, probably from Jeremy Siegel or Jonathan Clements. The counter idea to asset allocation is to keep 5-7 years of money you may need for an emergency or a market correction in cash and short-term bonds. In the event of a strong market correction, you then have five years to wait it out, using this emergency fund that is virtually guaranteed to hold its value in any market.<br /><br />(It is noted that as in life, nothing is guaranteed in the financial world. But for our discussion, let’s assume we trust the dollar to hold a reasonable value and for the U.S. government to honor all of its debts.)<br /><br />For the rest of the money, if you can handle the turbulence, the best returns will be in stocks. However, if you can’t sleep at night, then adjust stocks downward to the point you can sleep. That’s different than keeping a set percentage of your life’s savings in bonds.</p><p>It's important to know yourself and how you handle volatility. If you
know you're the sort of person who may panic sell when the market drops
25% in a short period, bonds might be safer for you. But if you can keep a long view and not make impulsive orders, over five years you are virtually
guaranteed to be in a far better position with your money in stocks
rather than bonds.</p><p>For me, I can’t sleep thinking what a mistake asset allocation has been. As we speak, financial analysts and journalists are busy both justifying and readjusting the asset allocation models they’ve pushed for decades. As is normally the case, they’re telling us to now go where we wished we had been a year ago.<br /><br />As is true for most forecasting, there’s a heavy bias from the most recent history, a human tendency referred to kindly as “recency bias.” It mostly reminds us of how bad humans are at forecasting anything.<br /><br />But I’ve already moved on. Been there, done that. I’m not interested in a new asset allocation model that may have worked in the past but probably won’t work in the future any better than past models.<br /><br />I’m moving ahead with a 5-year emergency fund that will always have all the money we may need for five years sitting in a stable place that earns little – but doesn’t drop in value. That will be mostly I-bonds and short-term Treasuries. I can ladder Treasuries in over 5 years at over 4% interest. That should probably keep up with inflation. But they won’t drop. Both investments guarantee the return of our principal plus about 4% interest.<br /><br />For the rest, I’m mostly walking away from other fixed income.<br /><br />How far will I go? I don’t know. I don’t make fast moves. I started by ending the reinvestment of dividends and gains from bond funds. I’m looking for opportunities to sell longer-term bonds and replace them with either short-term bonds or stocks.<br /><br />Then it’s a waiting game, watching what happens, monitoring everything we have. I hate selling anything, almost to a fault. And if markets go by their historical averages – which they rarely do – our allocation to bonds will continue to drop.<br /><br />If I’m right that bonds are a lousy place to be, I’ll get to where I want to be without a lot more work. If I’m wrong, I’ll find myself writing a mea culpa – and trying something else.<br /><br />But since I mostly don’t sell low, my opportunities to return to a higher bond allocation would only come when stocks are doing well. And then it’s hard to justify any such move since my theory is then working. That is, I may just be stuck in my own investment Catch-22.<br /><br />My next step is to move away from indexing as my primary means of investing in stocks, and instead move to owning more individual stocks than I have in the past. But that’s another discussion.</p><p></p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-8590625885576041822022-12-20T20:04:00.001-06:002022-12-20T20:04:33.420-06:00Christmas 2022<div><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1Vsf_yh4tNA1QwlneLNfG2RRunNUK_2mtFR-HtGjwvs8sqCvP-reykIB1nEwVlbNkxkTJ3_vxdy32kpnL2hkgJTzvtlI0miJ0H8VnIeGdPX9EtJOfpXy5n0Dnt7Ooy_ztJ8_T3oVAgb0nbQ7fKc5IPdwoWiCBBVWVvheF3lby0jRH30bFAWI2DDnS/s4032/IMG-2872.HEIC" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1Vsf_yh4tNA1QwlneLNfG2RRunNUK_2mtFR-HtGjwvs8sqCvP-reykIB1nEwVlbNkxkTJ3_vxdy32kpnL2hkgJTzvtlI0miJ0H8VnIeGdPX9EtJOfpXy5n0Dnt7Ooy_ztJ8_T3oVAgb0nbQ7fKc5IPdwoWiCBBVWVvheF3lby0jRH30bFAWI2DDnS/w240-h320/IMG-2872.HEIC" width="240" /></a>I’m sitting alone in an empty house during the blizzard of the year noting that there have been a few changes the past couple of years. No worries - we’re still married and we’re still in the same house in Duluth. But Ann’s in St. Paul helping with a seven-week old grandchild. Let me catch you up.<br /><br /> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2tFVVJuyKma9M8r3POZFr_ABzDsN9cLALrFQsSbZNVW80M0p1wcb5wDpvqVbsmFJiYkaCDsEjWSRYMldPqh9wM3L7HQb1VnuN3tewDw1tX1tBWKG07cQ5DdUnEZy5xKE992nufu5R0D6EpgeBqb3ZYWKKpQi_jeJ6TcTwpbLc1rrxjcQ82exNtxf-/s714/IMG-1749.JPG"></a>Not that long ago, Jason was living in Austin, Texas, and David and Ben were both in San Francisco. Since then, Jason and his wife, Nicky, moved back to St. Paul, bought a house in Dayton's Bluff, and now have a son, Jyri. It’s the Finnish spelling of the slightly more common Russian name, Yuri.<br /><br />Due to COVID, David moved to Redmond, Washington, and then earlier this year moved back to St. Paul where he owns a house not far from Jason. Ann and I helped with the move, driving a car and U-Haul over 1600 miles in 52 hours. It was our second ride across the Rockies that winter, and both were beautiful!<br /><br />Ben got married to Xin in 2021, had a daughter, Astrid (“Azzie”) last summer and has now purchased his first home in Issaquah, Washington, where he’s lived for a couple of years. I’m sure a dog will be coming soon to keep up with his brothers.<br /><br />Jason continues to work for the St. Paul firm that hired him out of college. Ben left his original employer, Thumbtack, and now works at Airbnb. David, who also worked at Thumbtack, now works for Instacart. The past several years have been great for technology, but some clouds have arrived on the horizon. I’m sure they’ll all do fine, though.<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtf4Wz1CVde4lYv64ODDKnQGynhLaiS9hJllwWyKxIIVMwnBimZ-PNL5teIetsbdasW166kVcYbF8uJTMmKvVtKDMANjT2K419S48y1bFsxhdGs2-imRs1hfBHWt0mO2AUUxGcKMzG2lWkgo_DJKVOx-_3L0TYsK_5MVB6suwIgEPc8WK6kws8qILW/s714/IMG-1749.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="535" data-original-width="714" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtf4Wz1CVde4lYv64ODDKnQGynhLaiS9hJllwWyKxIIVMwnBimZ-PNL5teIetsbdasW166kVcYbF8uJTMmKvVtKDMANjT2K419S48y1bFsxhdGs2-imRs1hfBHWt0mO2AUUxGcKMzG2lWkgo_DJKVOx-_3L0TYsK_5MVB6suwIgEPc8WK6kws8qILW/s320/IMG-1749.JPG" width="320" /></a></div><br />For us, it’s been a very busy and wonderful family time. We get to St. Paul often and the kids get to Duluth. But Ann has also taken on a new job. Both new sets of parents asked her if she’d be willing to help with the new babies.<br /><br />Ann was thrilled and spent a month this fall in Issaquah caring for Astrid, and is now in St. Paul caring for Jyri. It’s worked well, and the kids also appreciate the cleaning and cooking that she does!<br /><br />Since she intends to continue helping with the grandkids for at least several more months, Ann finally stepped down as leader of Celebrate Recovery at our church. Ann started the organization 14 years ago next month and has been critical in building it up. Although CR struggled during COVID, like the rest of the world we’re getting back to normal (whatever that is). She is still heavily involved as a leader but she’s no longer its director.<br /><br />Not to be outdone, fall of 2021 I was laid off from my long-term employer, Saturn Systems. It was part of the sale and consolidation of the company with another software engineering firm from the Twin Cities. I then set myself up as a self-employed consultant, something I’ve loosely talked about doing for years.</div><div> </div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIC1nxMDxsMOSuSDNeF7uwfZkhDov-yroOV6lI_bmqhyFF9jO41B_HRB__ca8TE-IYL-bqKCpj7XN_7EhIfxwyu0b7XQ6oNQyk_dFK0ltJo2Q1hRxBYy1m1QYhLh_GhzewxWuM8kxmSeMUK5hsE6EQtTNYFe7EaMn9oluXAAPDSDUsi_Ix7XwtsxzJ/s1448/image000000.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1088" data-original-width="1448" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIC1nxMDxsMOSuSDNeF7uwfZkhDov-yroOV6lI_bmqhyFF9jO41B_HRB__ca8TE-IYL-bqKCpj7XN_7EhIfxwyu0b7XQ6oNQyk_dFK0ltJo2Q1hRxBYy1m1QYhLh_GhzewxWuM8kxmSeMUK5hsE6EQtTNYFe7EaMn9oluXAAPDSDUsi_Ix7XwtsxzJ/s320/image000000.jpg" width="320" /></a></div>Although the work hasn’t been steady, which is mostly OK with me, I did have a good contract last spring. I’m still ambivalent on letting myself be permanently unemployed but I am enjoying testing what life might be like not working.<br /><br />We’ve had a lot of fun with the kids. We’ve spent a lot of time at both houses in St. Paul. Ann and I like to walk, and their homes are in great walking locations along the Mississippi River.<br /><br />When Ann was in Issaquah this fall, Ben rented an Airbnb in the North Cascades and invited me to join them. The five of us spent a week together hiking and hanging out with Astrid. It was a great time, beautiful scenery and great accommodation, a whole house and yard in a rural neighborhood.<br /><br />Last fall while Ann was in Washington, I did a road trip to see all three of my sisters who live at least parts of the year in northern Wisconsin and the Upper Peninsula of Michigan. It was a great ride to my favorite country, riding quiet two-lane roads just as the fall leaves are appearing.<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAxxoHEVJadMUhHbiNvqORC9GPLfUOIPhHKsqP3Tpn84EN8MgHR4M85ISt3aV-8qy5oJEL7a64PSe0ukTs2zaA3mtpalrLfDD-GB1isdeM9moaLNH97pC5R-wh4_ANNT7ybuKEo2eJfd4_umjHncamAljd1K9asMcCRWtGgXATdRwBplEQ34ISK35T/s3258/PXL_20221211_221942849.PORTRAIT.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="3258" data-original-width="2775" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAxxoHEVJadMUhHbiNvqORC9GPLfUOIPhHKsqP3Tpn84EN8MgHR4M85ISt3aV-8qy5oJEL7a64PSe0ukTs2zaA3mtpalrLfDD-GB1isdeM9moaLNH97pC5R-wh4_ANNT7ybuKEo2eJfd4_umjHncamAljd1K9asMcCRWtGgXATdRwBplEQ34ISK35T/s320/PXL_20221211_221942849.PORTRAIT.jpg" width="273" /></a></div><br />As we’ve done a couple of times before, Louise and I spent two days in my truck off-roading. I always liked doing this as a kid but only recently found that Louise likes it, too. We explored roads, rivers and rustic campgrounds. It’s one of those unexpected grand times I have vacationing!<style type="text/css">td {border: 1px solid #cccccc;}br {mso-data-placement:same-cell;}</style><span data-sheets-userformat="{"2":131,"3":{"1":2,"2":"#,##0.0","3":1},"4":{"1":2,"2":12445409},"10":0}" style="font-family: Arial; font-size: 10pt; font-style: normal;"></span><br /><br />I spent a similar day with Ben during our time in Redmond helping David move. Ben and I took a day-long road trip adventure north of Seattle along the coast, stopping at deserted parks to walk, grabbing food as needed. We even took a ferry. It was just a wonderful time to spend with my son.<br /><br />Merry and blessed Christmas to you.<br /><br />Jon & Ann<p></p></div></div>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-49833908943427637362022-12-02T10:56:00.003-06:002022-12-21T12:51:59.249-06:00Hiring, Fast and Slow<p>It’s no secret that when picking stocks, most people, including professionals, can barely keep up with a monkey. What’s less known, though, is that human beings in general are poor forecasters, and it impacts us in many ways beyond stocks. Further, there is little evidence that people can be trained to be better forecasters, and in fact, we struggle to even acknowledge this serious shortcoming. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2B_fGrCNtLTek1Y0tkTk34Dz7eLIWiEGIxm449EC1-BuF1W95JCCDlf2q2koK4uct0P6cOeSrP1qn-n6Y4p3C7f4KuJlC_Fp6QUcsy8s3xvVB8wTEHm5v497LiwSIn7SVEpRKOHGqDNKSbDFZsPLInsdMalNxiXneJdKcYakV1k__ETphWVDvLcRL/s286/Hiring,%20Fast%20and%20Slow.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="176" data-original-width="286" height="176" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2B_fGrCNtLTek1Y0tkTk34Dz7eLIWiEGIxm449EC1-BuF1W95JCCDlf2q2koK4uct0P6cOeSrP1qn-n6Y4p3C7f4KuJlC_Fp6QUcsy8s3xvVB8wTEHm5v497LiwSIn7SVEpRKOHGqDNKSbDFZsPLInsdMalNxiXneJdKcYakV1k__ETphWVDvLcRL/s1600/Hiring,%20Fast%20and%20Slow.jpg" width="286" /></a></div>One such place where good forecasting could be very helpful is in hiring. Hiring is largely a forecasting exercise, is highly subjective and has poor results. But I have learned some ways to improve this process in spite of our forecasting limitations, primarily by removing our instincts from the process. Let me explain.<br /><br />I’ve worked in information technology all of my professional life, and have spent a significant portion of this time hiring technical people, primarily software engineers. Early in my career, I learned how much differently a person may perform at a job compared with the impression I had from their interview. I soon realized that job applicants are presenting their best side and will work hard to conceal their shortcomings.<br /><br />I also learned that almost anyone can look good on a resume or a reference. One of the first hiring tips I received was to read through a candidate’s resume but to then set it aside, giving little value to its content. It’s not that people lie but rather that facts are fungible. The same is true with references. They are as good as candidates at projecting an overly optimistic picture.<br /><br />I also noticed that several different people interviewing the same candidate can have widely different opinions, and all sides can be widely wrong. And their opinions can change for no apparent reason.<br /><br />Not surprising, for many years our hiring success wasn’t much better than the monkeys picking stocks.<br /><br />I did learn several other things, though. I learned that the best indicator of future performance is past performance, and the best approach is to try to figure out what a candidate has done in the past. Not what they have wanted to do, not some spongy analysis of how amazing they have been, but what specific actions have they actually done.<br /><br />I learned to avoid discussions on dreams and goals. I learned that even if people could evaluate themselves well, you’re probably not going to get a reliable answer. I rarely asked “what-if” questions. It’s another self-evaluation that is of little help in evaluating their past performance.<br /><br />I learned to collect as many facts as possible based primarily on my questions, not their rehearsed summaries of their activities. I focused on specific examples, drilling into the smallest details. It is harder for a candidate to eulogize on their behavior once they are asked to describe a specific interaction, such as a certain topic discussed with a peer, or the smallest details of a program they wrote.<br /><br />I learned that high GPAs, awards and fancy colleges may not mean much. They may, but it depends. Finally, I learned that one of the best sources of reliable information, even a candidate with professional experience, is a careful review of their college transcripts.<br /><br />But the best help I ever got was from the book “Thinking, Fast and Slow” by Daniel Kahneman, one of the more fascinating books I’ve ever read. It describes the two modes of thought people work with. One is “fast,” instinctive and emotional, and the other is “slow,” more deliberative and more logical.<br /><br />His lifetime of research strongly suggests that people have too much confidence in human judgment, specifically with forecasting, probably because forecasts tend to use your fast brain. The problem with your fast brain is although it’s great dealing with a current situation such as an immediate danger, it is not very good at looking ahead years.<br /><br />In an especially interesting section, he goes through his research on both stock picking and hiring. Both tasks require an ability to forecast the future. He highlights the overwhelming evidence that professional stock pickers have awful track records doing what they’re purportedly paid to do. And the same is often true for hiring, even when done by professionals. The results can be just as bad.<br /><br />This is seemingly true for any forecasting. Most forecasts are just slightly better than guesses. Economists are a great example of horrible financial forecasts. And even when presented with this information, we will continue to feel and act as if each of our specific predictions was valid. Our emotional minds are so confident in our views that we are mostly unable to hear evidence to the contrary.<br /><br />Mr. Kahneman provides a psychological argument for why this is true. Probably for efficiency, the human mind has a strong “halo effect” which “inclines us to match our view of all qualities of a person to our judgment of one particularly significant one.” <br /><br />For example, if we think a baseball pitcher is handsome and athletic, we are likely to rate him better at throwing the ball, too. Our halo effect tends to have us hiring people based on factors largely unrelated to success, such as personality and physical appearances, and then applying them to other important factors with less regard for the facts.<br /><br />I vividly remember the glowing interview an employee had with a candidate. The evaluation was heavily focused on the candidate’s charming personality, humor and the fact that right during the interview the candidate fixed a problem the individual had with their PC. But most software engineers and many amateur techies probably could have fixed the same problem. It had questionable relevance to the position but had a notable impact on the interviewer.<br /><br />Kahneman’s evidence suggests that a hiring formula can be developed for a specific position, industry or company, and this formula will outperform the professionals. His theory is that if you remove much of the broad judgment interviewers make, and instead focus on a handful of clear indicators that the slow brain sees as predictive of success, you can significantly improve your hiring. The trick is to push aside the instinctive and emotional fast brain normally used in hiring.<br /><br />I was intrigued by his argument. Using this information and some of my own experiences, I radically changed the way we hired, with great results.<br /><br />Instead of trying to intuit what a candidate would do at a job, I started basing our hiring decisions primarily on a simple formula using specific quantifiable data, data that seemed predictive of good employees. Here is how I did it.<br /><br />From a large pool of current and former employees, I and my managers ranked each employee into approximately 4 quartiles, top to bottom. We based their rankings on several measures that we were able to quantify.<br /><br />Then based on this ranking I took the top 25% of our current and past employees and compared them with the bottom 25%, looking for notable differences. I only looked at the differences in what we knew about them before they were hired and did not consider items we learned later but could not have reasonably known when evaluating the candidates.<br /><br />My idea was to see if there was any information we could use in future hiring that might help us select people that would perform more like our top 25% and less like our bottom 25%.<br /><br />The results were astounding! Please remember that these results are for software engineers working in our organization. Your results may be much different for your needs.<br /><br />We were able to find significant differences in success based on their level of education, the specific school they attended, their degree and the GPA they received. This was true of both entry level and experienced candidates. Amazingly, we were even able to find a strong correlation with their letter grades in a couple of classes normally taken as part of standard software engineering training. It was also notable that we found no discernible difference between a bachelor's and a master’s degree.<br /><br />We found several significant indicators for job retention, including their past positions and where the jobs were. We found correlations with their previous experience, too, specifically with what basic responsibilities they had in each position and how long they stayed at that position.<br /><br />Although I considered many factors, I was able to reduce this information to 4-5 key indicators that summarized a candidate. These indicators fit on the back of an envelope.<br /><br />This is one of the other secrets of formulaic hiring and forecasting: Don’t use excessive analysis and detail. There are probably less than a half dozen discernible indicators available that will get you the same or better results. Further, too much detail and too much latitude opens the process up to finding a way to let your intuition abscond with your hiring, rather than using a few clear facts.<br /><br />I didn’t try to understand why a certain indicator predicted certain behaviors but rather just accepted the facts. For example, we had one highly rated college with strong graduates but on the job, they had a negative correction with successful hires. It’s counterintuitive but we accepted it. Anything that allows your fast brain back into the process is not good.<br /><br />The process succeeded very well. We still had misses and surely we passed on some good people. But confidence in hiring improved significantly.<br /><br />I was now able to quickly filter out candidates. Once a candidate passed our key screening, we then did several interviews, letting various people take a try at deciphering the candidate, primarily along our key indicators.<p></p><p>We did our best to ignore dress, communication, culture fit, commitment, strategic value and motivation, all words often bandied about as critical to an organization’s success. But our analysis suggested otherwise.<br /><br />There is one serious problem with this approach, though. People, especially the professionals and managers, will normally discard any thought of formulaic hiring, responding with hostility. Any notion that you can mostly ignore your intuition when making hiring decisions, and instead rely primarily on a handful of facts is seen as nonsense.<br /><br />Apparently, it upsets people to think that their assumed ability to read people is largely an illusion. After several tries over a long period of time, and in spite of an obvious improvement in our hiring success, I gave up trying to explain our methodology.<br /><br />Based on Kahneman’s book, we also eschewed onsite testing. It’s paraded around as a must-do but there’s little evidence that a quick test tells you much about one’s ability to work well in a position.<br /><br />To repeat, he instead highly recommends that you look at what the individual has already done in the field and don’t try to assess those abilities, whether by testing, intuition or any other means that has shown little ability to forecast the future behavior of an individual performing in your organization. You do not want to look into their eyes and find that impression you’ve already decided on, normally based on other often irrelevant factors.<br /><br />My suggestion is similar to Mr. Kahleman’s. However you do it, identify some key indicators regarding the candidate’s past performance that should be good indicators of success and can be normally elicited as part of your screening process. These can be based on your past hiring experience, as I did, or your own ideas of what seems to be reasonable factors in accessing an applicant for a position. Finally, don’t overcomplicate your process.<br /><br />Have each interviewer rate the candidate 1-5 on each indicator, add up the results and hire the candidate with the highest score. You’ll make mistakes but a lot fewer of them.</p>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com4tag:blogger.com,1999:blog-7262592647331026432.post-69343346546435450842022-06-21T19:05:00.001-05:002022-07-24T19:21:00.513-05:00A New Look at Clean – and Life<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggBPSUfwLpH0Su9uH0sKjZ1DsqikI0K0k8ih_BL5LsBaA-vi9LKrQyhARaxrET7al-Kh8qWC2Da5qcpe55W5GVXRUUGlc3cFSah-oNdH7kuFnpYCdbA__iWeNZ-9dT5ngIpa2SCfsvVABdUarmf4eWKlg1nXM3mRIHlhG5NhJi5qW_0GAFCqRM1mV3/s1020/James%20Hamblin.webp" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="612" data-original-width="1020" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggBPSUfwLpH0Su9uH0sKjZ1DsqikI0K0k8ih_BL5LsBaA-vi9LKrQyhARaxrET7al-Kh8qWC2Da5qcpe55W5GVXRUUGlc3cFSah-oNdH7kuFnpYCdbA__iWeNZ-9dT5ngIpa2SCfsvVABdUarmf4eWKlg1nXM3mRIHlhG5NhJi5qW_0GAFCqRM1mV3/s320/James%20Hamblin.webp" width="320" /></a></div>A couple of years ago I heard a young guy, James Hamblin, on National Public Radio talking about his new book, Clean: The New Science of Skin. He was challenging our modern norms on cleanliness. In his uncontentious style, he explained how important it was to wash our hands a lot. But he also questioned how necessary it was to suds up our forearms every day in a hot shower. Or do we need a daily shower at all?<br /><br /> I was intrigued by his comments and did a quick internet search on him. He's an M.D. who changed careers into journalism. He looks so young that he is still compared to Doogie Howser, the teenage physician from the sitcom by the same name.<br /><br /> I have heard similar things before. A friend of mine told me several years ago that his dermatologist told him he didn't need to wash his feet, that any water and soap from a shower is sufficient cleaning. I haven't deliberately washed my feet since, and they look about the same today as they always have.<br /><br />I heard that antibacterial soap is not good for your body and regardless, doesn't clean any better than Ivory. So I quit using antibacterial soap whenever possible.<br /><br /> Years ago when one of my sons was in college, he told me that he hadn't washed his hair in over a month. He claimed it was as clean as it had always been. I tried a lite version of what he was selling. I started washing my hair every other day, using as little shampoo as possible.<br /><br />I quickly noticed that I no longer had to add gel to my hair. My natural oils were apparently providing the same effect as some fancy French product. My hair feels clean but now it isn't nearly as dried out as it was.<br /><br /> Later, I asked the woman who cut my hair for years if she noticed anything different. She kept looking at my hair, ran her hands through it and, mystified, said it looked like it always did. I explained my new hair treatment and she told me that she mostly does the same. She said that shampoo is hard on your hair and shouldn’t be used daily.<br /><br /> I remembered back to my Saturday night baths as a kid. I loved baths, but like most kids, they were once a week. Between baths, I did what most kids in rural Northern Michigan did. I played outside when possible, including a lot of time in the grass and dirt. I don't remember feeling dirty.<br /><br /> By high school, I was into the daily shower, including a heavy lathering of my hair, a routine I maintained for decades, except for an occasional soap brand switch.<br /><br /> There was one notable exception. For three summers over an extended college experience, I lived canoeing and camping in the Northwoods. It was a life I loved, and in my dreams I would spend the rest of my life in a cabin.<br /><br /> My friend's wife found this interesting. She shared with me her longing for the American dream, a house with a white picket fence. I had no such dream. A one-room cabin with a water pump, wood stove and outhouse was all I wanted.<br /><br /> While living in the woods those summers, the daily shower wasn't happening. But I did spend a lot of time in the water. Other than regularly washing my hands, I cleaned up twice a week, mostly in a lake, using a small bar of soap and a bit of dish soap. No gel. No deodorant. No hairdryer.<br /><br /> Modern cleanliness is an attractant for flies, and the longer I was in the woods and the less I washed, the fewer flies I had to fight with. Eventually, I felt like I was part of the nature that surrounded me. I rarely felt dirty. Quite the contrary, it was the best my skin has ever felt, tanned and weathered, and a bit leathery.<br /><br /> My friend's wife got her white picket fence. Like her, I and most of my friends did the same. I have to admit that it is a comfortable life. I like my pick-up. I like being warm and comfortable. But in some alternative universe, a side of me could still spend at least a portion of my life living much closer to nature.<br /><br /> So when I hear someone challenge the value of a daily shower, I'm curious. After listening to Mr. Hamblin's simple and clear message that modern society has probably overdone what it means to be clean, possibly to our detriment, I started on a new journey, cautiously following the path of less may be more when it comes to clean. My wife notices nothing different. And the only difference for me is my morning bathroom drill is faster than ever.<br /><br /> I finally read Mr. Hamblin's book. It is quite intriguing. It is not a scorched earth assault on modern life and he never suggests that the world follow his lead. What he does, though, is present a short history of cleanliness and the factors that may have pushed our society too far from its roots. He is suggesting a more moderate approach to health and cleanliness, one that may appear more radical than it actually is.<br /><br /> Mr. Hamblin has done extensive research exploring how we got here, examining both the science and the culture of clean. He talks to various medical doctors, scientists, marketeers, capitalists and many others exploring the meaning of clean and its effect on our bodies. He finds that contrary to public perception, the concept of cleanliness is tied up more with class and beauty than with heath and germs.<br /><br />It is said that we all come from nature and we all eventually return to nature, so staying close to nature may be a good plan for your time alive. This has been my experience.<br /><br /> The currently accepted theory for many diseases is that they come from germs. Modern life leans heavily on removing these pathogens from our environments, which leads neatly into keeping ourselves and our environments clean.<br /><br /> However, contrary to what many want to believe, our bodies do not exist alone. Rather, they are part of a microbiome, the microbes such as bacteria, fungi, viruses, and their genes that naturally live on our bodies, the people we connect with and all of nature that surrounds us.<br /><br /> Humans cannot live apart from their microbiome. Each of us has literally trillions of microorganisms that live inside us and on our skin. We and these microorganisms have evolved together.<br /><br /> In our efforts to rid ourselves of “germs,” Mr. Hamblin presents strong evidence that we have introduced new medical problems. These problems could come from daily showers, over-processed food, sanitizers, separation from nature and the outdoors, and even antibiotics.<br /><br /> Mr. Hamblin’s suggestion is that we move closer to our microbiome that we are inexorably connected with, that we slow down this senseless fight and that we instead embrace the complexities of the nature that we are intricately part of, that is itself an extension of ourselves. His claim is that our obsession with being clean is harming the microbiome that keeps us healthy. That is, cleanliness is probably bad for our health.<br /><br /> So how did we get here? Here is what I have learned.<br /><br />Soap is a product that has been available for a very long time, and works about the same today as it always has. The basic process is trivial and most soaps are nearly identical chemically. The rest is sales and marketing. Surprise, surprise that capitalism and our obsessions with ourselves can get us so far off track.<br /><br /> Soap became a household product once it could be produced economically, and then it went from being a luxury to a requirement for living in modern society. Now to even speak of not showering is, as it has been put to Mr. Hamblin, "not really dinner conversation."<br /><br /> Cleanliness is about more than just the broad availability of soap. In past eras, many more people died of infections and injuries than from chronic diseases. Because of advancement in healthcare, including our ability to fight infections, our life expectancy has risen and chronic disease has now become our leading cause of death.<br /><br /> Eczema, acne, psoriasis, multiple sclerosis, diabetes, Crohn’s disease, asthma, allergies and many other autoimmune diseases are all on the rise, some as much as three times what they were just a few generations ago. For example, hay fever was once almost exclusive to isolated, well-off individuals, while farmers who were regularly exposed to higher levels of pollen almost never got it. Today, it is widespread. And this rise in autoimmune diseases is in spite of advances in skincare and modern medicine.<br /><br /> For example, Mr. Hamblin provides evidence that adolescent skin problems are probably worst today than ever possibly because of our efforts to keep unnecessarily clean. He suggests that it is at least worth a try at dropping the common skin remedies, and instead to start washing our faces far less often.<br /><br /> Some of this rise in chronic conditions is because so many people now live longer than in generations past. But other factors include our move from a rural society to an urban society, and our obsession with cleanliness, at least partially because our brains still disproportionately fear infections.<br /><br /> Excessive cleanliness and urban life both further remove us from our microbiome, which may be a big part of our problem with rising chronic illnesses. He notes how children who grow up on farms tend to have lower rates of asthma, hay fever and allergies compared to city kids. Microbiologists have found that Amish people, who spend most of their lives working on farms, have very low rates of autoimmune conditions and associated inflammation.<br /> <br />There is strong evidence in reverse, that low rates of asthma, allergies, eczema and skin problems, are strongly correlated with low rates of skin cleaning.<br /><br /> Science is coming to understand that there is a complicated relationship between our bodies and microbes. This includes their important role in developing our immune systems. Most skin microbes are harmless. They create antimicrobial substances that protect us from pathogens by competing with them for space and resources, lessening the likelihood of autoimmune conditions.<br /><br /> If we scrub off these microbes and the natural oils on which they feed, we lose some of our exposure to the microbes that surround us, microbes that are mostly needed by our bodies, and this may contribute to the increase in autoimmune diseases.<br /><br /> This “biodiversity hypothesis” doesn’t propose that hygiene is bad but that the loss of different kinds of microbes is bad—that modern inflammatory and autoimmune diseases are linked to us being deprived of exposure to the microbes we evolved to be exposed to, including pathogens, as well as beneficial and neutral microbes. And we aren’t just deprived of them by washing and using antibacterial products, but in all the ways we are today isolated and sterile, living in a world that may be too clean.<br /><br /> When people now spend most of their lives indoors, scrubbing all the microorganism they can, they are lacking the wealth of bacterial particles that used to temper our immune systems.<br /><br /> The best advice right now is to think of hygiene as similar to medicine—extremely important in some scenarios, and also very possible to overdo. The same goes for exposure to microbes. Historically, exposure has been a much bigger danger than over-cleaning. Now, in much of the world, it is the reverse.<br /><br /> Which brings us back to our morning shower, sudsing ourselves with our favorite antibacterial deodorant soap, making sure our forearms are clean enough for modern society. I’ve known people who carry the daily shower over to other areas, daily washing every towel and every piece of clothing worn by the family, including the kids’ pajamas.<br /><br /> I spent some time researching this topic, and found little written on it. Most of the mainstream websites – Mayo Clinic, WebMD, CDC, Cleveland Clinic – sell the same message as soap manufacturers. They even note that a daily shower may be needed for your mental health.<br /><br /> Wikipedia has an entry on the “hygiene hypothesis.” It notes that studies have shown that various immunological and autoimmune diseases are much less common in the developing world than the industrialized world, and that immigrants to the industrialized world from the developing world increasingly develop immunological disorders.<br /><br /> I found suggestions that kids shouldn’t be protected from dirt, that eating some dirt is probably good for your system and its ability to fight off infections.<br /><br /> About the only consensus, though, is that you should wash your hands a lot, brush your teeth every day and avoid antibacterial soap. The rest is up for discussion.<br /> <br />Mr. Hamblin suggests a measured, more minimalist approach. As for showers, the consensus is to use them “conservatively." Mr. Hamblin once went five years without a shower.<br /><br /> I quit washing my feet years ago, I quit showering every day and my hair gets a small fraction of the shampoo it once did. I brush, floss and shave daily. After that, it varies. My wife notices nothing different, and I’m sure no one else notices anything different, either. My hair isn’t nearly so dry. I use a lot less water.<br /><br /> I’m being far more cautious than Mr. Hamblin, but I intend to keep pushing the parameters, taking a measured approach. I’ve always maintained that fighting Mother Nature is a bad plan. For all our Western independence, we’re far more locked into the living world we inhabit that any of us want to believe.Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com1tag:blogger.com,1999:blog-7262592647331026432.post-43955160952760422742022-05-11T17:51:00.002-05:002022-07-23T20:32:02.979-05:00I Bonds Are Back!<p></p><p style="line-height: 100%; margin-bottom: 0in;">
<span face="Liberation Sans, sans-serif"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghmZw1I2W0pxEztMaZa6UbaZy7UBsXTeYn2AyHhNN5RFetAs1rzBTW7Fccnd9mUkhSLfAZXMCGbSbzPDqflXQAINzq2Nlm_9PNRaiMeKgHbWKL89O4XtsLWmrSVtXsPs7XNoZ2gAkenZbueuZqDIzyW3hrsnYX-te1Co3jM9rODvO7Ba6ZvFl7dMZi/s1068/series-i-savings-bonds-1068x713.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="713" data-original-width="1068" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghmZw1I2W0pxEztMaZa6UbaZy7UBsXTeYn2AyHhNN5RFetAs1rzBTW7Fccnd9mUkhSLfAZXMCGbSbzPDqflXQAINzq2Nlm_9PNRaiMeKgHbWKL89O4XtsLWmrSVtXsPs7XNoZ2gAkenZbueuZqDIzyW3hrsnYX-te1Co3jM9rODvO7Ba6ZvFl7dMZi/w320-h214/series-i-savings-bonds-1068x713.jpg" width="320" /></a><span face="Liberation Sans, sans-serif"></span></div><p>U.S. inflation is now 8.3% and our president has made fighting inflation his top domestic priority. It's no surprise, then, that I bond sales are up over ten times what they were a year ago. Yes, these boring inflation adjusted savings bonds are the new rage, providing a high rate of return on a very safe investment.<br /><br /> I bonds are a great long-term investment for just about anyone, and always have been. Technically, they are Series I savings bonds. There are also Series EE savings bonds, the savings bonds we are more familiar with that were first available around the time of World War II.<br /><br /> I bonds are issued directly from the U.S. Treasury Department at no cost and no fees ever, and come with a variable rate of return based on recent inflation. Therefore, your money is protected from inflation.<br /><br /> This makes I bonds probably the safest way to protect your money, safer than dollars that are exposed to inflation. Although their guaranteed rates of return are low, comparable with savings accounts, they quickly adjust upward to any rising inflation, something a bank account does not do.<br /><br /> Because of the current rate of inflation, new I bonds are now returning over 9.6%. Compare that with 3% for a 10 year Treasury or less than 1% for a savings account, money market or CD.<br /><br />I bought my first I bonds nearly twenty years ago, making random purchases over several years. I heard some boring National Public Radio guy talking about them, noting their zero expense ratio and their variable rate of return that essentially guarantees you will never lose ground with inflation.<br /><br /> They have worked as advertised. Since I have had them, their rate has been as low as zero (I bonds can never return less than zero) but today some are returning over 11%! During the Great Recession when some bond funds lost nearly 40% of their value, my I bonds were returning over 6%, a nice balance during an otherwise horrible bond and stock market.<br /><br /> I bonds were introduced in 1998 to offer any long-term investor the ability to set aside money for safety against inflation. They are not savings accounts and they are not marketable securities.<br /><br /> I bonds have an annual purchasing limit of $15,000, you cannot cash them in for one year and if cashed in less than five years, you forfeit 3 months of interest. You can also buy them separately for your spouse and kids, allowing more money to be invested in them.<br /><br /> I bonds have a variable yield based on inflation. The bond’s interest rate consists of two components. The first is a fixed rate which will remain constant over the life of the bond; the second component is a variable rate adjusted every six months from the time the bond is purchased based on the current inflation rate.<br /><br /> The fixed rate is determined by the Treasury Department; the variable component is based on the Consumer Price Index for urban areas (CPI-U). New rates are published each year on May 1 and November 1.<br /><br /> As an example, if you purchase a bond in June, the fixed portion of the rate will remain the same throughout the life of the bond, but the inflation-indexed component will be based on the rate published the prior May. In December, six months after the purchase month, the inflation component will change to the rate that was published the month prior (November). Interest accrues monthly and is compounded to the principal semiannually.<br /><br /> The bonds mature in twenty years but if not cashed, are automatically renewed for another ten years at the original fixed rate. The interest earned is taxed but only by the federal government, and if you prefer, you don't have to claim the interest until you cash them up to thirty years later.<br /><br /> I bonds can be part of a program to cover your child’s future college expenses. If you use an I bond to pay for qualified higher education expenses such as tuition, books, and room and board, you do not have to pay any taxes on the gains if your modified adjusted gross income (MAGI) is under $83,000 (2021 single) or $125,000 (2021 married).<br /><br /> My suggestion for long-term investors is that they use I bonds as part of a diversified portfolio. They will never have the allure of some hot stock, hedge fund or cryptocurrency, but they also will never shock you with losses. They are just a plodding way to ensure you reach your goals, minus the drama.</p><p>One idea is to buy a certain allotment each month or year and hang on to them until you can either use them for education or retirement. You can also setup an automatic payroll deduction through your employer to make regular I bond purchases throughout the year.<br /><br />Here are some additional details on I bonds. Check out more information at TreasuryDirect.gov:</p><ul style="text-align: left;"><li>I bonds are only available from TreasuryDirect.gov or the IRS. The minimum purchase is $25 and the maximum is $10,000 a calendar year. In addition, you can purchase $50 to $5,000 of printed I bonds from the IRS using a portion of a federal income tax refund (see Form 8888). </li><li>You must have a Social Security number and be a U.S. citizen or resident, or a civilian employee of the U.S. government. </li><li>The website is dated and sometimes painful. Further, it is difficult to find the specific details of your interest gains. But it works and it's totally free. No fees—ever. </li><li>You can provide a beneficiary who can then retain the bonds for the full thirty years. </li><li>At thirty years, the bonds remain but do not earn any more interest, and you must claim all unclaimed interest earned to date to the IRS. </li><li>You can purchase the bonds into a trust or other entities but transferring them from an individual into a trust is more complicated. </li><li>During times of deflation, the negative inflation-indexed portion can drop the combined rate below the fixed portion, but the combined rate cannot go below 0% and the bond cannot lose value.</li></ul>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-34184526013292925532021-08-29T10:26:00.002-05:002022-07-23T20:36:17.123-05:00Proverbs for Today<div class="separator"><a href="https://1.bp.blogspot.com/-Ql2A7KCr8E0/YSukV-5qS8I/AAAAAAAARuQ/JUzCFe2U3MUJHWvvzY-z9VeL442MjuqPwCLcBGAsYHQ/s632/Ancient%2BLiterature.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="131" src="https://1.bp.blogspot.com/-Ql2A7KCr8E0/YSukV-5qS8I/AAAAAAAARuQ/JUzCFe2U3MUJHWvvzY-z9VeL442MjuqPwCLcBGAsYHQ/w200-h131/Ancient%2BLiterature.jpg" width="200" /></a>During the turmoil in the U.S. the last several years, I have occasionally taken a fresh look at what people were saying, regardless of how little sense it has made to me. The commentary I struggle with has come from both sides, left and right, and all generations.<br /></div><br />For example, Modern Monetary Theory violates everything I’ve ever thought regarding government finance. From the right, it’s still hard for me to realize that behind Trump’s personally offensive behavior, he actually had some policies that were broadly supported, such as extricating us from a decades-long war in the Middle East.<br /><br />We have the cancel culture telling us there’s only one right opinion on their subjects. Tucker Carlson, a brilliant media marketing person, is working to out-do Trump, and the Squad torments even Nancy Pelosi. We have people who don’t think vaccines are safe or needed and believe that more people pulled a lever for Trump than for Biden. And the world is consumed by a pandemic that has made many of us lose track of some basics, such as time.<br /><br />And for a while it seemed that lynching blacks was going to once again be acceptable behavior.<br /><br />In the mix, Me Too and Black Lives Matter have both gained momentum while too many accept holding immigrants in cages. Equality and identity politics have become the rallying cry for everything, both concepts that have little history of driving cultures.<br /><br />In my ponderings, I wondered what Proverbs would have to say about my struggles. So I read the book, along with some additional commentary. Assuming for a moment you won’t consider writings from thousands of years ago fake news, today I’m sharing my experience with this ancient book. My observation is that it has a lot of good advice for anyone - any religion or not, any political persuasion, any country, any time. Here’s what I learned.<br /><br />A proverb is a short, traditional saying, often in metaphorical form, that expresses some obvious truth or familiar experience which may be applied to common situations; an adage; a maxim.<br /><br />Examples include “a path is made by walking,” or “be swift to hear, slow to speak.” “Haste makes waste.” “Practice makes perfect.” “A penny saved is a penny earned.” Or from Afghanistan, “You have the watches, but we have the time.”<br /><br />The first proverbs came from Egypt about 3000 B.C. About 600 years later Ptahhotep, an Egyptian minister, attained high repute for his wisdom. He wrote the first known piece of Egyptian wisdom literature, “The Maxims of Ptahhotep.” It is possibly the oldest known book in the world. This Egyptian "wisdom literature" was meant to instruct young people in appropriate behavior, with speculations about the very worth and meaning of human life.<br /><br />Wisdom literature is universal among more advanced cultures, including Egypt, Sumeria, Babylonia, Persia, India and Israel. It was pervasive throughout the ancient east.<br /><br />The most famous examples of wisdom literature are found in the Old Testament, including Proverbs, but also Job, Psalms, Ecclesiastes and Song of Solomon. I grew up with the protestant Bible and have read it most of my life.<br /><br />Proverbs are probably the oldest existing documents of the Hebrew wisdom movement, generally attributed to Solomon. Both the Jewish Bible and the Quran consider Solomon a prophet, and a wise and famous king of Israel, dating to the 10th century B.C.<br /><br />Proverbs is put together from numerous independent collections around the 4th or 5th centuries B.C. Its earliest collections came into being about 700 B.C.<br /><br />The word proverbs comes from the Latin word proverbium, “a common saying, old adage, maxim.” It literally means “words put forward.” The Latin comes from the Greek, pro,which means “forth,” which is derived from the Proto Indo European (PIE) language root, per, meaning “forward, in front of.” Verb is from Latin verbum, “verb” or “a word,” from the PIE language root were, “to speak, say.”<br /><br />About half of Proverbs is short, catchy sayings implied by the English word, proverb. But the other half is made up of longer poetic units of various types. These include "instructions" formulated as advice from a teacher or parent addressed to a student or child; dramatic personifications of both Wisdom and Folly; and the "words of the wise" sayings. <br /><br />Proverbs is composed of 31 chapters, divided into several distinct sections, each section sometimes its own collection of wisdom literature. The first nine chapters are an invitation to the young to take up wisdom as a model for a successful life. The next thirteen chapters, the bulk of the book, have hundreds of sayings, often contrasting the wise person with the foolish person.<br /><br />The third section (three chapters), titled the thirty sayings of the wise, appears to be a facsimile of an Egyptian wisdom text written by Amenemope (“The Instructions of Amenemope”), dated to 1250 B.C. The fourth section picks up from the second section, focusing now on social awareness, contrasting the just and the wicked, and the rich and the poor. <br /><br />The final section (five chapters) is attributed to Hezekiah, who according to the Hebrew Bible was a famous king of Judah around the 8th century B.C. The remainder of the book is a mix of appendices that cover a multiple of random subjects.<br /><br />So what does Proverbs have to say for today? I looked through the current issues plaguing the U.S. and address three areas: prudence, justice and temperance.<br /><br /><b>Prudence</b><br /><br />Prudence is the importance of wisdom, discipline and reason. Today, we see a country that seems to have left these traits behind, whether instant gratification, avarice, debt, dishonesty, foolishness or general disregard for inner human qualities.<br /><br />Proverbs first challenges us to seek wisdom versus folly. It asks again and again, “Do you see persons wise in their own eyes? There is more hope for fools than for them” (26:12). “The wise lay up knowledge, but the mouth of a fool brings ruin near” (10:14). I wonder where the anti-vaxxers lie on the wisdom-fools continuum?<br /><br />Or the notion that we can borrow our way to prosperity? If this is such a great idea, why didn’t we do it centuries ago? (Countless countries have tried, and for the most part failed miserably.) Does anyone but a fool believe our recent election was “stolen”? If so, by whom?<br /><br />“Do not answer fools according to their folly, or you will be a fool yourself. Answer fools according to their folly, or they will be wise in their own eyes” (26:4-5). We would be wise to answer today’s fools accordingly.<br /><br />The wisdom of Proverbs doesn’t say we’re all equal, a common notion of modern society. Instead, it says that “One is commended for good sense, but a perverse mind is despised” (12:8). Or "<span class="verse v5" data-usfm="PRO.24.5"><span class="content">Wise warriors are mightier than strong ones... </span></span><span class="verse v6" data-usfm="PRO.24.6"><span class="content"></span></span><span class="verse v7" data-usfm="PRO.24.7"><span class="content">Wisdom is too high for fools;</span></span><span class="verse v7" data-usfm="PRO.24.7"><span class="content"> in the gate they do not open their mouths.</span></span>" (24:5-7). Or “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty” (21:5).<br /><br />Think buying things you can’t afford. Hasty comes only to poverty, says Proverbs. “How much better to get wisdom than gold! To get understanding is to be chosen rather than silver” (16:16).<br /><br />And finally a word to those who see debt as their ticket to freedom: “The borrower is the slave of the lender” (22:7).<br /><br />Instead, today, we have an abundance of people who value those who talk over others, whether our leaders or our media. Proverbs has plenty to say to them: “To watch over mouth and tongue is to keep out of trouble” (21:23). “One who spares words is knowledgeable; one who is cool in spirit has understanding. Even fools who keep silent are considered wise” (17:27-28). “The mind of one who has understanding seeks knowledge, but the mouths of fools feed on folly” (15:14).<br /><br />Shame, mouths of the wicked, babbling fools, perverse minds, mouths of fools, folly, haste. I see too much of it in our society.<br /><br /><b>Justice</b><br /><br />Proverbs speaks clearly in support of justice, including social justice, and despises injustice, depravity, decadence and laziness. This includes respect for righteousness, harmony, charity and generosity.<br /><br />“When justice is done, it is a joy to the righteous but terror to evildoers” (21:15). “Whoever sows injustice will reap calamity” (22:8). “The evil do not understand justice” (28:5) “Some give freely, yet grow all the richer; others withhold what is due, and only suffer want.” (11:24). “The righteous know the rights of the poor; the wicked have no such understanding” (29:7).<br /><br />George Floyd’s nine minute strangulation by four police officers - all on video - has challenged the notion that the U.S. provides proper justice and charity to its minorities. The video vividly shows how little terror exists within parts of our police, and at times how truly wicked they can be. It brutally displayed the lack of respect segments of our society have for other groups.<br /><br />I acknowledge that the U.S., with 4% of the world’s population, is incapable of taking in all the millions of people around the world that would so welcome immigrating here. We are in the enviable position of having to secure our borders, not to keep people in but to keep others out.<br /><br />At the same time, people seeking to immigrate here are often in difficult circumstances, badly in need of help. So, although we justifiably cannot fix the problems of all those asking our help, we can still be kind, generous and sensitive to their issues. Washington - both parties - has been negligent in developing a reasoned approach to this complex problem, compounding the suffering.<br /><br />Still, this is little excuse for our sometimes insensitive and even callous behavior. An example is our policies to punish so-called sanctuary cities, where our citizens are trying to provide a modicum of social justice. Other examples include indefinite detention, separating families and efforts to arrest illegal immigrants while engaging in otherwise legal behaviors.<br /><br />What does Proverbs say regarding those who are not in power? “Open your mouth for the mute, for the rights of all who are destitute. Open your mouth, judge righteously, defend the rights of the poor and needy” (31:8-9). Those who are generous are blessed, for they share their bread with the poor” (22:9-11).<br /><br /><b>Temperance</b><br /><br />Proverbs values temperance, the quality of balance and moderation, restraint, discipline and decorum. Compare these values with many so prevalent in today’s society: a bad tongue, arrogance, obesity, anger, pride and vainglory.<br /><br />“Pride goes before destruction, and a haughty spirit before a fall. It is better to be of a lowly spirit with the poor than to divide the spoil with the proud” (16:18-19). “When pride comes, then comes disgrace, but with the humble is wisdom” (11:2). “Before destruction one's heart is haughty, but humility goes before honor” (18:12). “Like a city breached, without walls, is one who lacks self-control” (25:28). “Do not boast about tomorrow, for you do not know what a day may bring. Let another praise you, and not your own mouth—a stranger, and not your own lips” (27:1-2).<br /><br />Ironic, isn’t it, that white evangelical protestants were primarily responsible for giving us a leader who has little value for temperance or justice, and not a lot of prudence. And this same group persists today, willing to lead an insurrection for a man who is the antithesis of Proverbs. Decorum, restraint, harmony, charity, judgement. These are words that he does not know.<br /><br />I wonder how such church-going, religious Christians can reconcile their leader with a Bible that shouts otherwise. <br /><br />Proverbs presents a picture of the proper human life that is far different than much of what we see today. It emphasizes wisdom versus folly, temperance versus excess and extremism, and justice versus inequality and bias.<br /><br />But a world that dismisses wisdom is hardly much interested in what anyone said thousands of years ago. I would ask, though, that we consider for a moment that people are rarely as smart or independent as they think they are, and some quiet contemplation may present a better way forward than today’s shouting match.<br /><br />And for those who don’t share my Judeo-Christian heritage, I suggest that you look into your own traditions. Wisdom literature and proverbs are widely found in probably all cultures. And I suspect their observations are quite similar.Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-59208756428485014402021-03-10T16:03:00.002-06:002022-07-23T20:37:29.134-05:00The Case for Coverdell Education Savings Plans<div data-en-clipboard="true" data-pm-slice="0 0 []">Much is written about 529 plans, the standard tax-advantaged savings plan for a college education. (They are legally known as “qualified tuition plans,” authorized by Section 529 of the Internal Revenue Code.) Their benefits are wonderful - nearly unlimited savings and tax advantages, flexibility and sometimes a state tax credit or deduction. </div><div><br /></div><div>For those few with significant resources, it is the no-brainer choice for putting away tens of thousands of dollars into a tax-free college fund for your children's college education.<div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-bTQjXAYs-00/YElB6O4gvJI/AAAAAAAAQ7M/0q85TqrERjQ4bxKI8UHxmPaX9LKFoJtjgCLcBGAsYHQ/s1024/ESA.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="515" data-original-width="1024" src="https://1.bp.blogspot.com/-bTQjXAYs-00/YElB6O4gvJI/AAAAAAAAQ7M/0q85TqrERjQ4bxKI8UHxmPaX9LKFoJtjgCLcBGAsYHQ/s320/ESA.jpg" width="320" /></a></div><br /></div><div>But for most parents, a Coverdell Education Savings Plan (ESA) not only works just fine, they generally provide more investment options and lower fees. Further, withdrawals can be used for qualified elementary and secondary education expenses as well as for college. </div><div><br /></div><div>Coverdell accounts limit contributions to $2,000 a year per child for those with an adjusted gross income under $220,000 (joint). But the vast majority of households are under this income limit. Further, for the average family with about two children, saving $4,000 a year is realistically about their college savings limit.</div><div><br /></div><div>Both 529 plans and Coverdell ESAs offer great benefits. They allow for tax free growth as long as the proceeds are used to pay for qualified education expenses. The plans remain your assets, not your child's, which means you are not committed to giving them this money. </div><div><br /></div><div>And because the assets are yours, they have significantly less negative impact on financial aid. (Note that if funds are not used for education or other purposes the IRS approves of, the gains are eventually taxed with an additional penalty.)</div><div><br /></div><div>529 plans are set up separately in each of the fifty states and their rules vary by state. In general, contribution limits are much higher than Coverdell’s, there are no income limits for contributors and have no age limits for beneficiaries.</div><div><br /></div><div>Further, some states offer a state income tax deduction or credit for contributions to 529 plans but not for Coverdell plans. Again, these are great benefits for high income families trying to save a lot of money for their children's college expenses.</div><div><br /></div><div>But at the more modest income and savings levels most of us live, a Coverdell ESA is often the better plan. Further, even if you have a Coverdell ESA, you can also have a 529 plan. Here's how the Coverdell works.</div><div><br /></div><div>Coverdells are widely available at large brokerage firms, such as TD Ameritrade, E-Trade and Charles Schwab, with low minimum balances and no annual fees. You can generally invest in most of what they sell, which is just about everything, usually with no trading costs. Further, they offer broad very low-cost indexed funds, which are considered the best investment for most investors.</div><div><br /></div><div>For example, you can open a Coverdell at Charles Schwab with no minimum and no maintenance fees. They charge no commissions on online equity trades with no minimums on trades. They also offer standard indexed funds with fees as little as .03%. Note that this is three hundredths of one percent, which is essentially zero. For a typical education savings account of $25,000, the fee comes to less than ten dollars a year.</div><div><br /></div><div>Here’s some quick math on such a Coverdell. Over the past 100 years, the S&P 500 index (an index of the 500 largest U.S. stocks covering approximately 80% of the U.S. market capitalization), has returned a little over 8% a year after accounting for inflation.</div><div><br /></div><div>Let’s assume you invest the maximum $2,000 a year into an S&P 500 indexed fund with near zero expenses. Assuming an average rate of return, your child will have about $80,000 in their Coverdell account in today’s dollars, which would cover most of the expense of a 4-year in-state college degree.</div><div><br /></div><div>Let’s compare this with a 529 plan. My quick check found that most firms admit to fees up to 1% a year, an amount that could cut your total return significantly. 529 plans generally invest in a limited number of mutual funds, which tend to have higher turnover in their accounts, raising the total fees for these funds.</div><div><br /></div><div>In life, simple and easy is not always preferable to complex and difficult. But in the financial world today, simple and easy usually means cheaper and better. In the past several decades, largely because of software and the internet, complex financial dealings have become simple products readily available at ultra-low costs to almost anyone.</div><div><br /></div><div>But financial firms have struggled moving to a world where much of their former work has become largely valueless. Therefore, many work hard to obfuscate how little is needed to get a great return on your investments, instead encouraging products and services you probably have little need for.</div><div><br /></div><div>This appears to be the case with 529 plans. Most aren’t set up, as are Coverdell’s, to have you simply invest your money in a near-zero fee indexed exchange traded fund, where the firm receives little income and you receive almost all of the gains from the underlying investments. </div><div><br /></div><div>I did some research on 529 plans offered by Edward Jones. They quickly told me that “investing is personal” and immediately wanted my name so they can put me in touch with one of their financial advisors “to help.”</div><div><br /></div><div>Unfortunately, these financial advisors are probably not going to help show you that your best option may be an ultra-low-cost Coverdell account where their firm will get less than $10 a year in fees. No surprise, Edward Jones doesn't even offer them. Instead, they quickly try to convince you of all the benefits of their 529 plans.</div><div><br /></div><div>I tried to find fee information for their 529 plans. I never found any figures but I did find this buried away in their documentation: “529 plans will have fees and expenses, which will lower the rate of return. 529 plans generally carry sales charges (and) built-in operating expenses that affect the fund’s return (including) distribution and marketing fees (12b-1 fees), management fees, networking fees, annual account maintenance fees and transaction fees. Edward Jones receives a portion of the sales charge on 529 plans, and your financial advisor receives a percentage of that sales charge. Further, Edward Jones receives ongoing service fee payments, provided by the 12b-1 fees, and your financial advisor receives a portion of those ongoing service fees.”</div><div><br /></div><div>Sales charges, distribution and management fees, networking fees, annual maintenance fees, transaction fees, sales charges, service fees. Only a fool would believe their fees are anything close to the $10 a year a typical education savings plan can cost you in a Coverdell ESA with a low-cost brokerage firm.</div><div><br /></div><div>In comparison to these often complicated plans, a Coverdell ESA is just a simple brokerage account with IRS tax advantages. Otherwise, they function as another brokerage account, often including ultra-low costs.</div><div><br /></div><div>Coverdell accounts have one other great feature, and that is they generally allow you to purchase almost any investment sold by the brokerage firm. In comparison, 529 plans are often limited to a subset of their mutual funds, often with higher fees than low-cost indexed exchange traded funds broadly offered by brokerage firms.</div><div><br /></div><div>If you have a 401(k), this may sound familiar. 401(k)s are great retirement savings plans, but a little investigation shows that the same money in an IRA with a low-cost brokerage firm offers far more investment options at a lower cost. That is why whenever you are given the option, it is normally wise to transfer a 401(k) into an IRA, but that’s another topic.</div><div><br /></div><div>529 plans are a great plan for many, especially for high-income taxpayers, primarily because they have few upper limits for income and contributions, and can offer a state deduction or credit. But when these are not considerations, which is true for most of us, a Coverdell account is a better option. They generally are easy to set up, have lower costs and more investment options, and provide more ways that the money can be used for a child’s education.</div><div><br /></div><div>As always, 529 plans are different for each state and Coverdell accounts are different with every brokerage firm, so you are encouraged to do your own research before investing in anything.</div>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-11732423323612380622021-01-11T12:45:00.003-06:002022-07-23T20:43:59.739-05:00Investing for 2021<p>We just closed out one of the most dramatic years for investing in a long time. The NASDAQ rose nearly 50% in the past year and has nearly doubled in the past two years; the S&P 500 rose 18% in 2020 and is up nearly 50% (including dividends) in the past two years. Tesla is up about nine times in a year, 25% so far in 2021, and bitcoin nearly five times in a year.<br /></p><div>Ignoring for a moment the short and steep COVID drop this past March, 2020 continued what may be the biggest and best bull market ever. It started just weeks after Obama took office twelve years ago. From that low, the S&P 500 has risen over five times.</div><div><br /></div><div></div><div>So where do we go now with this "everything rally" continuing to climb? I'll start with my general investing thoughts for any time.</div><div></div><div> <br /></div><div><div style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em; text-align: center;"><br /></div>The message that may be hardest to hear in a moment like this is that market timing is a bad plan. But it is still the plan that the human mind naturally goes to. A short history in human evolution shows that for most of our existence, the longest time frame normally needed for survival is one revolution of the earth around the sun. That's a good time period for growing crops, hunting animals and selecting a place to live. <br /></div><div><br /></div><div>And that's about the timeline that people unfortunately use for many aspects of modern life, specifically investing. Whereas following the crowd has been solid fishing advice for eons, it's not very good advice for investing. Buying now into any of 2020s hot investments is most likely a bad timing plan, but it is the prevailing thought.</div><div><br /></div><div>Unlike fishing, market timing normally turns into "buying high, selling low." The people that make money in hot markets are those who were in early and stayed in. The people who lose get in late and then leave after they've lost.</div><div><br /></div><div>Market timing mostly devolves into chasing returns, sometime referred to as "managing for mediocrity." The adage "a fool and his money are soon parted" aptly applies.</div><div><br /></div><div>So what can we do in a hot market like today? One of the first things is to evaluate how you are currently invested. What is the allocation you earlier established for your investments, if any? The simplest thing to do is to reallocate back to where you said you wanted to be. That's an easy way to "sell high."</div><div><br /></div><div>Whether or not you have an allocation established, this is a good time to revisit that allocation. Consider how, regardless of recent returns, you should have your money allocated for the next several years. A good approach, regardless of age, is to keep any money you need in the next five years in cash or fixed income investments, and invest the rest in equities. Equities can safely be kept in a simple, low-cost S&P 500 index fund. They also can be partially allocated into foreign markets.</div><div><br /></div><div>Another good review of your investments is to figure out the expenses incurred with each investment. Modern technology has made equities available to even the smallest investor at almost no cost. If you have funds charging over .5%, they should go.</div><div><br /></div><div>Many "no-cost" investments have insidious hidden fees. Funds with high turnover are indirectly charging you for all their trading costs. 401K's are notorious for high fees. If you are able to transfer out, fees are normally considerably lower in an IRA with a low-cost brokerage firm than in a 401K. (But be careful with any transfer to ensure you are not taxed or penalized.)</div><div><br /></div><div>If you are using a professional investment manager, make sure you understand where they make their money. They are professionals not just at managing your money, but also managing it to ensure they are paid well for their services.</div><div><br /></div><div>As part of a review of your investments and allocation, also be sure you include all your investments, including you (and your spouse's) 401Ks, IRAs, savings accounts, savings bonds and brokerage accounts.</div><div><br /></div><div>Do you understand everything you own? If not, either research the investment so you do understand what it is, or sell it and buy something you do understand. The two easiest investments for a well-managed portfolio of any size are an S&P 500 indexed fund and an indexed U.S. bond fund (commonly indexed to the Bloomberg Barclays Aggregate U.S. Bond Index). Both are widely available at almost no cost, either as mutual funds or exchange traded funds.</div><div><br /></div><div>I've survived two horrendous market crashes, the 2000 dot-com crash and the financial crisis of 2007-2008. The first was a bubble in tech stocks where the NASDAQ lost 78% of its value. The second, part of the Great Recession, was broader, with the S&P 500 dropping 56%. I suspect we are in some form of equity bubble today.</div><div><br /></div><div>But bubbles can expand for years longer than imaginable. And they can quickly crash unceremoniously, or they may drag out poor returns for years. That is, timing what will happen in the next few years is nearly impossible.</div><div><br /></div><div>I've vowed that I will never again be caught surprised by a crash, but here we are again. For any of you who think it is time to get out, ask yourself what you will do if the market doubles in the next few years. I've known people who waited years after the last crash for still bigger drops. They lost out on most of this current bull market.</div><div><br /></div><div>And if you do get out, when will you get back in? After a 20% drop? 30%? 50%? There's no guarantee any of these benchmarks will ever be reached. In fact, the market may never again be lower than it is today.</div><div><br /></div><div>So here's my 2021 advice. Take this opportunity to familiarize yourself with your current investments and to revisit your target allocation. Understand where your costs are and where you have essentially duplicate investments. Then quickly reallocate to your plan, possibly with some consolidation of equities. Don't buy anything you don't understand and don't buy anything you aren't comfortable owning for several years.</div><div><br /></div><div>And stay there. If the market changes dramatically, up or down, deal with the changing environment by reallocating.</div><div><br /></div><div>For years I have done this. When markets are raging, I will occasionally and painfully sell some equities. When markets head down, I just as painfully take the opportunity to buy into a market I do not like. Occasionally, only by accident do I get it right, selling at the highest point and buying at the lowest point. But in total, I'm buying low and selling high.</div><div><br /></div><div>When surrounded by wonderful stories of stocks doubling and more, it can be tempting to want to buy some individual stocks. Normally, the returns don't justify the risk but it's not all bad thinking. If you do, be sure you understand what you are buying and why you believe it is at least a stable investment.</div><div><br /></div><div>If a stock drops quickly, you may want to sell before you get in too deep. If it rises, be aware that stocks can rise for a long time, even after their financials don't support it. At its worst, you may learn something about yourself. A safe place to start is the list of S&P 500 Dividend Aristocrats, the bluest of blue-chip U.S. stocks.</div><div><br /></div><div>At a larger level, your 2021 resolution may instead be to find yourself a financial advisor who can help with all your financial needs, such as insurance, debt, kids' education, emergency funds and retirement. But like your investments, be sure you understand their fees. A danger sign is when they offer their services, including personally directly all your accounts, for free. These are normally the highest cost services, mostly hidden from you. Your best start is with a Certified Financial Planner who works on a set fee.</div><div><br /></div><div>Good luck. And let's hope that our investments are our biggest problem in 2021!</div>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-34246292114543140722020-12-20T07:35:00.003-06:002022-07-24T19:26:43.253-05:00A Very COVID Christmas<p class="MsoNormal"><span style="font-family: inherit;"><span>Just over a year ago, my wife Ann and I had a grand Thanksgiving
celebration in San Francisco where two of our three sons lived, living the high life in the tech center. The whole family plus several orphans were there,
a gathering from four states. We made a week of it, flying into San
Diego the weekend before. We stayed in a boutique hotel in downtown San Diego
before heading north along the coast to San Francisco.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>You may remember, though, that while we were away, the
Midwest was dumped with snow - twice. To get home we spent two nights in a hotel
at O'Hare airfield. We were scheduled on five different flights before finally landing
in Duluth, Minnesota, where we've lived for twenty-five years.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>One of the planes - a full-size Boeing twinjet - flew less
than a dozen of us more than half-way home before they realized that the Duluth
airport was closed. Technically, airports don't close. But they stop airplanes
from taking off and landing. </span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>During this ordeal, I told myself more than once I'd never
get on a plane again. Little did I know, it was an omen for 2020.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Lots happened with our kids this year. Jason and his wife,
Nicky, moved back to the Twin Cities from Austin, Texas, over a year ago. This
spring, they bought a house in a St. Paul historic district (Dayton's Bluff)
overlooking the Mississippi River. It was built not long after the Civil War. It's
very cute and very them.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>To round out the place, they got a dog, Pecos (named after
the Pecos River, a tributary of the Rio Grande, which is named after the Pecos
Tribe of New Mexico). We've been down several times to visit. It's a great area
to walk.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>In March, our youngest song David started a new software job at Uber in San
Francisco. By week three he was already working from home and soon facing a 25%
layoff. He survived the layoff. When he was told that the earliest he may need
to work out of their offices was next summer, he move to Redmond near Seattle.
He, too, got a dog, Freyja (old Norse: the lady).</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Ben also switched jobs. Last year he moved to Airbnb. Not to
be outdone by Uber, they, too, had a 25% layoff. Ben survived that turmoil and
Airbnb has since gone public (go figure). He, too, has moved to the Seattle
area. He hasn't gotten a dog, though, but he did get engaged. In fact, he
proposed on Minnesota's North Shore of Lake Superior. Like so much of life, COVID has
the wedding on hold, too.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>When Ben realized he could be working from home for another
year, he asked us if he and his soon-to-be fiance could stay with us for a
month while working, which they did for October. This was one of our highlights
of the year.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Ben and I soon got in our own morning kaffeeklatsch,
discussing work, stock markets, the election and so much more. If you sat in on
one of these sessions, you might conclude that we're related.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>We spent a long weekend up the shore during amazing peak
fall colors. After a day kayaking in the Boundary Waters, Ann, Ben and Xin
realized canoes are for portaging, not kayaks. They still had a wonderful day.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>A couple of years ago, Ann bought me a subscription to
Ancestry.com. This has become my latest adventure. It didn't take long, and I
was back hundreds of years to Nils Jonsson, born in Ostra Boda, Sweden. I've
identified 155 of my Swedish grandparents, half of my DNA. The Finnish side, the superior half, goes deeper still,
back as far as 1460, mostly from the two small towns in northern Finland my
grandparents were born in.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>We also had our DNA tested, and now I can match DNA into my
family tree. I've verified that my parents and grandparents are indeed mine.
I’ve done the same with many of my aunts and uncles. </span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>I found a woman living just a few miles north of here in
Duluth who I share DNA with. After hours of research I verified that we are
connected through four different sets of great-grandparents, one on my maternal
grandfather's side and three on my maternal grandmother's side. The oldest DNA connection
was 7th great-grandparents born in 1674.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Ann and I continue to run Celebrate Recovery, a program she
started at our church twelve years ago. Celebrate Recovery is a 12-step recovery program from </span></span><span style="font-family: inherit;"><span>Saddleback Church in Lake Forest, California. A year ago, we had well over a hundred people weekly,
including kids, adults and volunteers. Then as quickly as I was sent home from
work, our church locked its doors for five months to anyone not in a space
suit.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>No worries. We missed one week and then reorganized on - you
guessed it - Zoom. Ann also setup a weekly Facebook Live. We continued our
recovery step program, graduating over a dozen people who refused to be done in
by a virus. Ann also organized food deliveries.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>But some were done in by the upheaval. Two people involved
with us died and several were hospitalized, none for a virus. There has been
more to the societal toll than the COVID death count.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Once spring arrived, we moved outdoors. That's when I
learned Duluth has 129 parks. Ann, I and others organized outdoor meetings
where we could again meet in person. BYO chair, drink and snack. Stay six feet
apart. Don't share your food. And no hugs. OK, but not everyone.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>We even pulled off the men's 8th annual camping trip deep
into the Superior National Forest. Over a dozen guys came, one to a tent, two
to a canoe. There's just nothing quite like a northern Minnesota lake in
July. We swam, fished, sat around the eternal fire, drank coffee and ate
wonderfully.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>By late summer, we got back into our church, with numerous
restrictions and lots of hand sanitizer. We restarted the band, teachings, and
small groups. Even when cases skyrocketed in the area, we've continued without
a known infection.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Early in the summer, Ann and I realized that a great place
to safely vacation is the North Shore of Lake Superior. We made several trips
there. Jason and Nicky joined us for the 4th of July, Ben and Xin in the fall.
But we weren't the only ones that had figured this out. We’ve never seen so many
people up north. Maybe our rural outdoors shtick is catching on. Finally.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Work was its own challenge. But I soon realized I'll never
return to five days a week in an office. Ann and I walk most mornings, and
occasionally again in the afternoon. We usually have lunch and dinner at home,
sometimes ordering a delivery.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Keeping in touch with people has been especially trying for
both Ann and me. But we've pasted together a collage of ideas that together
help, whether for church or for coworkers. Zoom, phone, text and email all
work, obviously. But many were comfortable with a walk, backyard coffee, outdoors
at a coffee shop, lunch in our vehicles or carry-out to a park.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Like most of you, we haven't enjoyed 2020. But there were
many nice points to it. Although Ann continues to do most of the cooking, we
now occasionally work together on meals. I've taken to watching Netflix movies.
I've discovered that Curb Your Enthusiasm can improve any day of mine. And I've
gotten back into occasionally taking some pictures, a long-lost pastime.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>I have one resolution for 2021: Within 48 hours after Ann
and I are both relatively immune to COVID, we will be on an airplane to
anywhere!</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Great talking. Wishing a blessed Christmas and holiday
season to you.</span></span></p><span style="font-family: inherit;"><span>
</span></span><p class="MsoNormal"><span style="font-family: inherit;"><span>Ann and Jon</span></span></p><p class="MsoNormal"><span style="font-family: inherit;"><span><a href="https://photos.app.goo.gl/zi4A5cT8ChBfyW927">Here are some pictures from the year.</a> <br /></span></span></p><span style="font-family: inherit;"><span>
</span></span>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-53619367739162154312020-05-25T16:52:00.002-05:002022-07-23T20:48:55.070-05:00Of Booms and Busts<p dir="ltr" id="docs-internal-guid-11c7b054-7fff-cd9c-8add-5c06a6f78119" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"></p><div><a href="https://1.bp.blogspot.com/-fMGBeW4pfKA/Xsw3wRl87RI/AAAAAAAAPHA/FGaVQU7HzAsqhpapJQTVQZWxWBGxMCsGgCK4BGAsYHg/boomandbustcycle.png" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="440" data-original-width="680" height="129" src="https://1.bp.blogspot.com/-fMGBeW4pfKA/Xsw3wRl87RI/AAAAAAAAPHA/FGaVQU7HzAsqhpapJQTVQZWxWBGxMCsGgCK4BGAsYHg/w200-h129/boomandbustcycle.png" width="200" /></a>I am now in the midst of my third career bear market. I have memories of what I think I did in the past two but our minds play tricks on us. So I went back twenty years into my investment records in Quicken to uncover the truth. Here is what I found and the lessons I have learned for surviving market turmoils.</div><div><span></span><span><div><br /></div><div>Let me first share a little of my investing habits. Since I started my career, I have saved regularly into a 401(k). That is, I dollar-cost average. I also have made no loans or withdrawals from my 401(k). Until I got older, almost all of my savings went into equities. (When I refer to "savings," I mean money that my wife and I do not intend to use until after we have retired.)</div><div><br /></div><div>I have managed mine and my wife's life savings as a single unit, regularly reallocating our total savings to a set mix of fixed income and equity securities. Until we were in our forties, almost all of our savings were in equities.</div><div><br /></div><div>Over many years, we have slowly increased our allocation of fixed income to over 40%. Regardless of market swings, I have stayed close to whatever allocation we have agreed to, reallocating whenever we have strayed from our goal.</div><div><br /></div><div>Because of job changes, most of our savings are with Charles Schwab, invested mostly in indexed funds plus some individual securities. We have a joint taxable brokerage account plus separate traditional and Roth IRAs for each of us.</div><div><br /></div><div>My first bear market was the dotcom bubble that burst in early 2000, wiping out over half of the U.S. market value over nearly three long years, based on the S&P 500 index.</div><div><br /></div><div>My second bear market was the Great Recession, which almost unbelievably was worse yet. In exactly 15 months, the S&P 500 lost 57%. But we survived both, not because I can pick good stocks and not because we are lucky but because of how we invested along the way and how we responded when the market dropped.</div><div><br /></div><div>(Please note that all market value and S&P 500 figures refer to the S&P 500 index, excluding dividends. All references to our returns include dividends and all securities, including fixed income. My point is not to compare how our equities did with the market but to suggest how you can invest your money without taking extraordinary risks.)</div><div><br /></div><div>At the start of the dotcom crash in 2000, we had three small kids. We had our savings allocated into 19% bonds and 81% equities on March 24, 2000, when the S&P 500 started its slow descent.<br /></div><div><br /></div><div>But I continued my regular 401(k) contributions through this terrible time. I also regularly reallocated back to my 20/80 fixed income/equities allocation. This required that I sell bonds that were doing fine and use the proceeds to purchase falling equities, a tough discipline. At the market's low point, we had 82% invested in equities.<br /></div><div><br /></div><div>During this bear market, I averaged losing about 16% per year. But if I ignore the monthly, weekly or even daily noise, and instead only look at year-end values for 2000, 2001 and 2002, we averaged losing less than 11% per calendar year for three years, or a total of 29%. This is primarily because we maintained a set allocation of equities and continued to make new contributions into equities.</div><div><br /></div><div>This is far better than the 51% the S&P 500 lost from top to bottom. When considering a lifetime of saving, for most of us this is occasionally acceptable.</div><div><br /></div><div>Bear markets do end, and from the market lows of 2002 the S&P 500 nearly doubled over the next five years. During those years, our total returns, including fixed income investments, actually outperformed the S&P 500. This was primarily because of international equities that performed very well, another allocation that can help to keep your total returns from swinging widely with the S&P 500.</div><div><br /></div><div>But bull markets end, too. The Great Recession started in late 2007, and was brutal for investors. The S&P 500 lost 57% of its value in less than 18 months and our equities did about the same. Coming into the bear market, because of our ages we had increased our allocation of fixed income. Even with these fixed income holdings, which were also pummeled, top to bottom we lost 43% of everything we had saved over decades, a sobering loss.</div><div><br /></div><div>Again, this isn't the complete story. The market rose for most of 2007, dropped significantly in 2008, and early in 2009 started a steep rise. So if I continue to ignore the monthly, weekly and daily noise, while the market gyrated dramatically, we lost less than 1% during the total of these three calendar years.</div><div><br /></div><div>Yes, that is correct. Rather than the huge loss that the S&P 500 experienced top to bottom, we instead did not gain or lose much over three years, which is very acceptable. Keeping a larger perspective can be critical to good investing.</div><div><br /></div><div>And as it did in 2002, the terrible lows in early 2009 were the start of the longest bull run in U.S. history that ran into early 2020. During these eleven years, the S&P 500 went up five times (plus dividends). And although we had a higher allocation to fixed income, we still averaged 10% per year return for 11 years, nearly tripling our savings.</div><div><br /></div><div>So, what have we learned? Based on my sample size of two, I suggest the following for this and any other bear market. First, any money you may need for the next five years should be in cash or other fixed income securities. Markets can fall fast and recover slowly.</div><div><br /></div><div>Second, agree to an allocation that you can live with over several years, regardless of market turmoil. I also urge you to keep at least half of the money you do not need for the next several years in equities, regardless of your age or circumstances. Then reallocate your current portfolio to this allocation and stay at this allocation for years, regardless of market changes.</div><div><br /></div><div>Third, if you are working, continue to save and dollar cost average, preferably into equities. And do this regardless of what the market pundits report with every rise or fall in the Dow Jones. CNBC and Fox Business News provide you with little useful information. If you want to know more about how to manage your investments, read an investment book.</div><div><br /></div><div>Good luck. Stay calm. There’s little magic with investing. It's mostly a little education and a heavy dose of emotional control.</div></span>
</div>Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-80172724945344098622020-04-12T19:22:00.001-05:002022-07-23T20:51:04.808-05:00Investing in Turbulent Markets
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Markets have gyrated wildly since the impact of COVID-19 become obvious. High to low, the S&P 500 had dropped a third before a strong rebound. You probably have to return to the Great Depression to find greater market swings in such a short period of time. I'm occasionally asked what to do in a market like this. Here is my general response.<br />
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Long before there was money and markets, the brains we live with today evolved to survive in a hunter-gatherer subsistence society. Most of these traits are still useful in a modern society (which raises another question regarding how advanced we really are). For example, following the pack provides a degree of safety today as it did nearly 2 million years ago.</div>
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However, many of our traits developed for surviving in a primitive society do not apply well to investing. For example, extreme caution when securing a food source is very applicable to pre-modern life where a month without food can end one's life. But this same loss aversion does not work well with investing where it is reasonable to make long bets with money you may not need for decades.</div>
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So in today's turbulent markets, your primitive brain may want to sell out, probably a poor long-term move. But logic that ignores some common human instincts may see new potentials in a cheaper market. Simply, buying low and selling high, a good rule of thumb for investors, is a modern investing construct but not one of our natural traits.</div>
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Also remember that market timing is mostly a loser's game, and probably even more so in today's virulent markets. Market prices are at least partially a reflection of the collective confidence of future business and profits.</div>
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There are reasonable but conflicting arguments that it will take us two years just to recover from this virus; that business will quickly return to normal; that there is no going back; that significant numbers of people will not return to their profligate borrowing, spending and busyness; that the economy will be worse than the Great Recession.</div>
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With this mix of forecasts, here are my suggestions for you. First, do not make net sales from your equities. They are relatively low and it is generally best to buy low and sell high.</div>
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If you have decided that you have taken on more risk than is appropriate, then write out what you believe your allocation should be. When the markets return to their recent highs only then make this change to your allocation. If you do wait and then hesitate to adjust your allocation, a common behavior, have a conversation with yourself as to why you are quick to sell low but then hesitant to sell high.</div>
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Second, holding is OK, and what I recommend until the markets at least stabilize. However, this could be a long wait. The 2000 dot-com market crash took nearly three years to reach its lows.</div>
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Finally, if you can do it (and this is what is probably hardest to do with our primitive brains), the best path forward is to do some periodic buying into equities while they are below their 2020 highs.</div>
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Here are some further considerations before changing your past strategies. If you can't stop yourself and you do make some transfers out of equities, I urge you to write down what you do and then check how it feels once the markets return to highs.</div>
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Consider your emotions at this time. With very real illness and death surrounding us, volatile markets are probably not your greatest fear. Excessive stress does not help us make what should be careful, long-term investment decisions.</div>
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There are exceptions to every rule. But my guess is that most exceptions are excuses to go back to bad investing choices that will probably get you the opposite of what you seek.<br />
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Finally, by historical standards, the market is still not cheap, which mixes up your options even more. Good luck and thanks for listening.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-58289993668542837662020-03-02T06:07:00.000-06:002022-07-23T20:52:58.715-05:00McCormick Lodge<div style="-en-clipboard: true;">
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In 1964, after years of wrangling between environmentalists and competing interests, President Lyndon Johnson signed into law the Wilderness Act. The act created a formal mechanism for designating wilderness, and immediately set aside several million acres of land across dozens of federal land areas to be managed by the new National Wilderness Preservation System.</div>
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<tr><td class="tr-caption" style="text-align: center;">The entrance to McCormick Wilderness</td></tr>
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Under the Wilderness Act, the land is to be restrained from human influences so that ecosystems can change over time in their own way, as much as possible free from human manipulation. As the Act puts it, "the earth and its community of life are untrammeled by man."</div>
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Today, there are over 750 wilderness areas in portions of our national parks, forests, wildlife refuges and other public lands, managed across various federal agencies, primarily the National Park Service, U.S. Forest Service and the U.S. Fish and Wildlife Service. They total over 100 million acres across all but a handful of states.</div>
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The McCormick Wilderness is one of several wilderness areas in the Upper Peninsula of Michigan, where I am originally from. But when I was a kid, my aunt and uncle worked at what was then the McCormick Lodge, a lavish, mostly abandoned but perfectly maintained lodge hidden away in one of the most remote areas of the U.P., a land that itself is mostly unknown to the world.</div>
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This is the story of the McCormick Lodge, and how it came to be part of the National Wilderness Preservation System, one of America's environmental treasures, and how this allows all of us to forever enjoy one small piece of primeval northern forest.</div>
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In 1778, just after the Revolutionary War, Robert McCormick emigrated from Ireland and settled in the Blue Ridge Mountains of Virginia. McCormick made several models of a reaper but none proved successful.</div>
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His son, Cyrus Hall McCormick, studied his father's records of failed reapers and eventually developed a working version of the reaper. In 1834 Cyrus received his first patent on the reaper, a machine which dramatically altered farm production methods.</div>
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Cyrus continued working on the design until, in 1847, he moved to Chicago and opened a reaper factory which eventually became The McCormick Harvesting Machine Company. He continued developing the McCormick business until his death in 1884. He died a well-known and very wealthy man.</div>
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His son, also Cyrus Hall McCormick, was born in 1859 and at age 25, upon his father's death, took over officially as president of his father's company (although his mother actually controlled the company). In 1902, at the suggestion of JP Morgan, McCormick merged the McCormick business with several other companies that had also developed harvesters and reapers, forming the International Harvester Co.</div>
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At age 36, McCormick became the first president of the new company. Cyrus Bentley was a young attorney who represented the McCormicks in this transaction. The Bentley and McCormick families had known each other for years, and the Cyruses had become close friends.</div>
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The same year his father died, 1884, McCormick also went on his first camping trip. While at Princeton, he had become close friends with one of his professors, William C. Gray, an avid outdoorsman who often camped throughout the U.S., but especially throughout northern Wisconsin and the U.P.</div>
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One day Gray invited McCormick to accompany him on one of his camping trips. They traveled by train to Champion, Michigan, just down the road from where I grew up. They followed the Peshekee River, a river I know well, north to a campsite on the edge of a then unnamed lake.</div>
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<tr><td class="tr-caption" style="text-align: center;">Yellog Dog Falls</td></tr>
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Gray had wanted to visit the Peshekee River area as much for its geological interest as for its abundance of wildlife and rugged scenery. Its lakes and swamps contained the headwaters of four river systems, the Yellow Dog, Dead, Huron and Peshekee, three flowing into Lake Superior and the Peshekee flowing south to Lake Michigan via the Michigamme and Menominee Rivers.</div>
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In the following years, McCormick and his attorney, Bentley, began to frequent this area. They would set up a temporary base camp on a small rocky island in this lake which they eventually named White Deer Lake.</div>
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Separately, along Lake Superior miles northeast of this island, community executives from the local county seat, Marquette, set up an exclusive club in the Huron Mountains, which still exists today as the Huron Mountain Club. It is a large tract of land along Lake Superior comprising thousands of acres, including several inland lakes.</div>
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In 1902, Bentley accepted an offer to join the Huron Mountain Club. Bentley was an avid hiker, and often hiked to White Deer Lake from the Huron Mountain Club. He had an idea to build a trail along the same route.</div>
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McCormick, who also was a member of the Huron Mountain Club, liked his friend’s idea, and together in 1903 he and Bentley purchased nearly 160 acres for less than $500 that included the island they camped at so often, and the west end of White Deer Lake.</div>
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Through nearly a dozen additional purchases, they established a tract of several thousand acres. In 1904 McCormick started building on the property, beginning with several cabins on the island. Soon they moved construction to the main shore.</div>
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Eventually, there were seventeen massive log lodges, boathouses and outbuildings scattered across the island and the surrounding woods, built of log and chinking, with verandas and balconies. But they still referred to this place as the “Rough Camp."</div>
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At the same time, Bentley completed his cabin at the Huron Mountain Club on Lake Superior at the mouth of the Pine River, along with his trail to White Deer Lake. This trail, and various other trails along a similar route, were referred to as the Bentley Trail.</div>
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The Bentley Trail developed into an elaborate trail system built between 1904 and 1920 by Bentley and many hired men. Most of it was made to be walked by anyone, even women in dresses with their parasols. The trail was about thirty-eight miles, the last ten miles covered by boat and wagon.</div>
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For years, the two Cyruses, their families and many hired men built trails and cabins, lodges and dams, and even a dredged channel in the area of White Deer Lake. By the 1920s, well maintained trails led to lakes and waterways, where boathouses sheltered light, swift Rushton rowboats. Some of the pathways around the main lake became level boulevards three feet wide, with hewn log walks at the water’s edge equipped with pole railings.</div>
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Cabins and more amenities were followed by sailboats, rowboats and canoes. They sank well points for water, imported a generator and installed telephones. Electricity and plumbing were installed. An entire staff of chefs, wagon drivers, butlers, cleaners and errand boys were hired to keep the lodge operating smoothly. The camp acquired a fleet of motorcars, including a Model T coupe.</div>
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Friends and business associates of both families, young and old, visited McCormick's Lodge year round. Guests often arrived in formal attire, ill prepared for the camp life of fishing and hiking. They were furnished with a trail map in a folded leather case with their initials embossed in gold on the cover. A supply of rain coats, hats, boots and other clothing, fishing equipment and other gear were kept on hand.</div>
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<tr><td class="tr-caption" style="text-align: center;">Chimney Cabin</td></tr>
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Guests hiked, fished, swam and picnicked on lakes and rivers throughout the area. They drank whiskey and fine French wines. In the evenings, they would clamber into boats and canoes, sitting on the water listening to classical and popular music pouring out from one of the cabins. The lavishness of the entire McCormick Tract can hardly be overstated.</div>
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Life at White Deer Lake now was comfortable for both families, although Bentley still preferred the less stoic life of the Huron Mountain Club. The McCormicks dropped their club membership in 1920, but the Bentleys spent more and more time there.</div>
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Cyrus McCormick eventually retired from International Harvester so he could spend more time at the McCormick Lodge. Later, a rift developed between Bentley and him. Their partnership was dissolved and McCormick became the sole owner. Shortly after, Bentley’s health failed and he died in 1930.</div>
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By the 1930s, McCormick's sons, Cyrus and Gordon, made much more use of the property, including boating, swimming, ping pong and tennis on a clay court. October 1935 was Cyrus McCormick's last visit to the site. He died the next year at the age of 77. Ownership to the McCormick Tract went to his son, Gordon McCormick.</div>
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Gordon, an architect, began a renovation project of all the buildings that continued into the 40s. They built a new boathouse. Central heating was installed, roof beams were raised, chimneys rebuilt, stories added, plumbing modernized, interiors repanelled, roofs and porches extended, and balconies moved from here to there and back again.</div>
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Fanciful bridges and rustic gazebos crowned stream crossings and scenic spots. Curiosities included gnarled furniture, a floating tennis court and a driving range where guests hit floating golf balls onto the lake.</div>
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During the forties, Gordon spent little time at the lodge. He visited briefly in 1947 and never returned. For the last twenty years of his life, he would plan visits. Supplies would be ordered, and everything made ready. Then, invariably, he would fail to appear.</div>
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For years the camp ran pretty much as always, under the direction of a hired superintendent and several men. The camp stood as a beautiful museum of northwoods craftsmanship and culture, year after year, its forest untouched, the trails, bridges and walkways kept in perfect shape for the man who never used them.</div>
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In the 1960s, my aunt and uncle, Ina and Leo Wuorenmaa accepted positions as caretakers of the McCormick Lodge. Aunt Ina was responsible for feeding the workhands. My uncle had what he described as the best possible job, living and working in the woods he dearly loved. He and the other workers maintained the trails, land and lodge.</div>
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Because of our relationship, we could visit McCormick's. The old Native American trail along the Peshekee River that Cyrus McCormick first traveled was now a paved road along an abandoned railroad bed. At the turnoff to the McCormick Lodge was a narrow one-lane road that wound through the woods, ending at the lodge at White Deer Lake.</div>
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Our uncle showed us the beautiful buildings, the boat house, the hand-drawn ferry to the island, and the lodges and accommodations. He showed us drawers full of new, fine clothing - shirts, pants, underwear, sweaters - anything Gordon would have wanted on a visit.</div>
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As years went by, competing parties, recognizing the value of the McCormick Tract, and realizing the health issues with Gordon, worked on plans to assume ownership of the McCormick Tract. The state of Michigan worked with the McCormick estate to make it into a state park. About a half-dozen other groups had plans for the property, including the Nature Society, several universities, the Boy Scouts of America and the Nature Conservancy.</div>
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But Gordon had his own ideas. He considered the nature groups and strongly wanted the area to remain a wilderness. He decided, though, that it would have more protection in the hands of a government agency.</div>
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<tr><td class="tr-caption" style="text-align: center;">White Deer Lake</td></tr>
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Gordon died in 1967. Knowing his health was failing, just days before his death he transferred ownership of the entire McCormick Tract to the U. S. Department of Agriculture, to be added to the U.S. Forest Service. This was his best bet that the land would be preserved much as his father had found it.</div>
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It worked. A year later, the Forest Service auctioned off the entire contents of the buildings, an event I attended. Eventually, most of the buildings were removed or destroyed, and the entire 17,000 acres that Cyrus McCormick had purchased were established as a wilderness area in the Ottawa National Forest, renamed the McCormick Wilderness.</div>
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Today, the McCormick Wilderness has returned to about how it was two centuries back when Cyrus McCormick was first tent camping there. There are very few people, but lots of wildlife, including bear, moose, otter, mink, fox, deer, pine martens, beaver, fisher, bobcat, coyote and wolves. And very rarely a lynx or cougar. Roaming through the land, you can occasionally find remains to the dozens of buildings once on the property.</div>
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The glacier-scoured hills of McCormick Wilderness were last logged in the early 1900s. There remain small patches of huge virgin white pine scattered among rugged rock outcrops. The land remains the pristine headwaters of four river systems. Its mostly rocky and hilly terrain with cliffs and outcrops contains eighteen lakes plus numerous swamps and muskegs. The few people who journey onto this land get to experience one of the country's great pieces of primeval forest.</div>
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<tr><td class="tr-caption" style="text-align: center;">Trails Today in the McCormick Wilderness</td></tr>
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The Bentley Trail to the Huron Mountain Club is gone, but in place are several new rustic trails, including several miles of the North Country Trail, a 4600 mile footpath that when completed will take you west to North Dakota and east to Vermont.</div>
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There are a few ways to access the McCormick Wilderness. The most common is County Road 607 (Huron Bay Grade), 3 miles west of Champion, Michigan, along U.S. 41, just a couple of hundred feet west of the Peshekee River bridge. Go north 9 miles and the entrance is on your right. One trail follows the original road to White Bear Lake. The North Country Trail also cuts through from this same point.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com5White Deer Lake, Michigan, USA46.675473300000007 -88.001681446.653685300000006 -88.0420219 46.697261300000008 -87.9613409tag:blogger.com,1999:blog-7262592647331026432.post-25010580518824202912019-07-06T07:48:00.001-05:002022-07-23T20:53:56.046-05:00Just Do the Math<div style="-en-clipboard: true;">
Overweight and obesity have become national and world problems that do not seem amenable to easy fixing. My experience with the problems reveals an easy concept that obviously isn't easy to do. <br />
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Since I can remember, I've often said "just do the math." Very young, I came to trust math as a system that holds true regardless of time, space or life itself.</div>
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Most of my life, I've also been aware of my weight and the prevalence of diets. It seemed that my mother tried them all, including the Air Force Low-Carb Diet. I don't remember any of them working. <br />
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The diet plans are endless: Grapefruit diet; low-carb, low-fat, low-proteins diets; Atkins, zone, fasting, Keto, Weight Watchers, South Beach, vegan, paleo, and of course, the Subway diet.</div>
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Tens of millions of Americans are on a diet each year. Amazon lists thousands of diet books. My hunch is there isn't much new said in most of them and that they mostly don't work well. I suspect that our society - busyness, cheap and processed food, a focus on wealth and prestige, and the low cost and availability of food - lends itself to easily gaining weight.</div>
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From young, I was mostly tall and thin until middle school when I gained some weight. I vividly remember moving into the "husky" sizing at that time. I lost the weight before I entered high school and one of my life goals still is to be buried in the same sized Levi's I wore as a teenager.</div>
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Over the past several years, I had gained a few extra pounds, and set out to lose them. I found that technology has come up with some quite accurate and helpful health tools. Mostly, they can track your exercise ("steps" plus more specific activities), what you eat, your weight and lots more. I have spent over a year logging everything I eat, my exercise and my weight.</div>
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What happened and what did I learn? Most of all, I learned how amazingly accurate your body is at balancing calorie intake and calorie burn. Yes, your body does seem to have some different responses depending on the food source and timing, and how they are burned. But mostly, it is just simple arithmetic.<br />
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When you ingest more calories than your body burns, you gain weight. When you burn more calories than you eat, you lose weight. Yes, it isn't much more than that. Most discussions to the contrary are seemingly justifications for bad behaviors.</div>
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I quickly learned that if I ingest less than 2300 calories a day, regardless of their source, I steadily lose weight. If I increase the calorie input a bit or reduce my exercise, I quit losing weight and if I increase my net calories just one or two hundred a day, I start gaining weight.</div>
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I'm tall with a small build. I have often been told that I have a tape-worm and that I'm lucky to be able to eat so much and not gain weight. But that is not what the math says. The math says I move a lot and I don't eat excessively. My protein and fats are high and my simple carbs are low. That is, I mostly eat what the computers recommend.</div>
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I did learn some other things that seem to be true. There is ample evidence that how your get your calories can be significant to your health and diet. High protein foods stem hunger more than carbohydrates. The saturated fat story is overblown. I returned to whole milk a couple of years ago and it has had no negative effect on my weight nor my cholesterol.</div>
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Finally, I've learned that for me, it's much easier to control what I eat if I have to log it. I'm a grazer and it's a bit shocking how many calories I can eat if left to myself.<br />
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There are scores or even hundreds of ideas for controlling our weight. Most of them probably have some merit and have surely worked for someone. But behind these diets is some simple math that your body can't fight: They either are trying to reduce your caloric intake, increase your caloric burn or some of both. </div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com1tag:blogger.com,1999:blog-7262592647331026432.post-90019434182244768782019-01-31T11:15:00.000-06:002022-07-24T19:27:07.422-05:00Life at -53 Degrees<div style="-en-clipboard: true;">
Yesterday morning, the windchill at our house was about 53 degrees below zero. We live in a very nice refurbished old home in one of the original neighborhoods of Duluth, Minnesota, one of the coldest urban areas in the lower US.</div>
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I have lived most of my life in this climate. I remember getting bragging rights as a grade-schooler because we were in school with air temps in the thirties below zero. </div>
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At these temperatures, anything outside can be difficult. Putting out the garbage is its own chore. There are safety concerns, too. If you find yourself accidentally locked outside picking up the paper in your boxers, embarrassment aside, you only have minutes to get yourself into a neighbor's house.</div>
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A few years ago a local young woman died from hypothermia very close to her home. Inebriated, her friends dropped her off after a late-night party and drove away before she got inside.</div>
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So yesterday I took my own extreme measures to get to work. I wore my silk long underwear and flannel lined jeans, a warm Henley and a wool vest. Wool socks and winter boots are nonnegotiables in this weather.</div>
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I ran my vehicle for several minutes before leaving. Finally, I put on my ski jacket and mittens, grabbed a beanie and facemask, and headed out.</div>
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Vehicles do not like cold weather. Left outside, any vehicle, old or new, may or may not start at these temperatures. They require gasoline to vaporize, and that's a challenge in the cold. The best insurance that a car operates in extreme cold is to check the battery in the fall and check tire pressure before the cold arrives.</div>
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In a garage, almost any vehicle will start at almost any temperature. Windchills affect vehicles as they do people, and protection from wind is a big advantage. I initially keep my speeds low, but once warm, cars run fine.</div>
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I made it to work and soon realized that like many aspects to our lives, cold is another issue to deal with. But even at -53, once I accept my extreme cold routine, I can get through my life fine with about the same discomfort as walking in a cold rain.</div>
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When I was a kid, I knew nothing else and it never occurred to me that you could spend a winter without winter jackets and Sorels. Today it's -29 and, yes, I'm getting used to it.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-25923146360431056882018-12-19T16:50:00.001-06:002022-07-23T20:55:09.586-05:00Revitalizing a Rural Economy
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Much has been written about the problems of our economically distressed rural areas. The reality is that many of the reasons these communities were developed - agriculture, mining, forestry - although still important industries, have dramatically reduced their need for labor. </div>
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I grew up in Ishpeming, a small city nestled in the gorgeous Upper Peninsula of Michigan, surrounded by amazing waters and forests, with four striking seasons that rotate from beautiful summers and falls to frigid cold and endless snow. It was once booming with its numerous mines. </div>
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But I've spent decades watching this wonderful city deteriorate economically, and I understand why: The same mining industry that brought my relatives here from Finland and Sweden now operates on less than a quarter of the labor required to produce the same amount of iron ore.</div>
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However, I am very familiar with one idea for helping many of these rural areas, and that is the domestic version of offshore software development. It goes by various names, including onshoring, domestically sourced IT, domestic outsourcing and rural outsourcing. Regardless of name, it's a relatively easy concept that works.</div>
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Unlike most jobs from a few generations back, software development does not require people to work in proximity to each other. For a variety of reasons, the cost of living in rural areas can be half or less that of an urban area. </div>
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Somewhat surprisingly, it is not difficult to find highly skilled technical people like myself who are very happy to leave an urban life behind and live in a rural community. Economically, this is a win-win for clients and communities. Not surprisingly, this concept is catching on across the United States.</div>
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So how is this done? The simplest way is already widely done across the country, and that is securing a telecommuting arrangement with an employer and moving to wherever you want, provided it has high-speed internet access. With a phone and a laptop, you have most of what you need to work.</div>
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However, few will take this risk, and need a more structured environment to make this change. This essentially is a company that finds clients that accept remote software development and software engineers to work for them. </div>
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Getting from a single telecommuter working out of a spare bedroom to a large organization with dozens or even hundreds of highly skilled technical people earning high salaries in rural areas takes more than a few steps. Let me share my experiences in this area.</div>
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The initial problem, as in many startups, is getting launched. The first decision is where to locate. This may be easy because, like me, you may have once lived in a rural area that has broad appeal to many, such as a tourist destination. You probably need some sort of small urban anchor that can provide families with the basics of modern life, such as retail, services, education and healthcare.</div>
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So how to start? My standard answer for several young techies wanting to jump start their moribund metro life in a Dilbert cube is to rent a large home in one of these areas, and all live and work in one place. That is, return to their college dorm days.</div>
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Most likely at least a couple will be able to get their current employer to agree to let them continue their employment as telecommuters. However it is done, the idea is to accept a period of hard work and low income, not so unusual with a new business.</div>
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From here, it's critical to name yourself, put together a marketing plan, keep expenses and rates low, and build a foundation to survive in the somewhat turbulent world of consulting. Marketing starts with a website and a LinkedIn company page. </div>
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Then move onto Twitter, Glassdoor, Indeed, Facebook and other social connections. I suggest you don't end the day without someone posting something somewhere that has your name and what you do on it. Monitor and grow connections to your LinkedIn company page. This is all critical even when everyone is working "60-hour" work weeks because eventually you will need more clients and workers.</div>
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A word on expenses. Your competitive advantage will always be price, so never abandon this. Make sure any potential client knows that you are "30-50% off metro rates," and make sure that you really are. Otherwise, you are just another bunch of techie prima donnas who at best are somewhat better than the millions of other IT workers that are much more accessible than you are working from some mountain hut. </div>
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And don't fool yourself into believing you can be just as effective working remotely. All things being equal, it is almost always an advantage to have people working in proximity to others. Both communication and relationships are easier and better. But organizations will often gladly put up with your work-style inconveniences if they can significantly cut their costs.</div>
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The concept of offshoring originated outsourcing the Y2K fix to cheaper emerging markets such as India. These countries have remained strong competitors in US software development, and rural outsourcing will continue to compete with them. To some degree, you will always find your pricing sandwiched somewhere between them and Silicon Valley.</div>
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But foreign resources have several of their own problems, such as language, culture and time-zone barriers, plus sometimes legal issues with foreign services. These all present opportunities for the rural outsourcing firm.</div>
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One misconception of low-cost rural organizations is that people are glad to give up the financial rewards of urban life in order to life a substandard life in a rural environment. This simply need not be true. Even with significantly lower rates, employees working in a rural environment, from a cost-of-living perspective, can easily earn as much or more than high priced urban areas.</div>
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From the start, it is important to structure your environment so that it works regardless of location. Connect everyone electronically via cloud services, including your phone system, email, documentation, company systems and software development tools. Everyone should be able to move to another location and your company should function well.</div>
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These disciplines will ensure that you are as virtual as possible, so that people and clients can literally be just about anywhere and your operation runs as seamlessly as possible. These steps will all help compensate for your big negative: You are geographically located in an inconvenient area.</div>
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If you start with a couple of developers supporting a couple of clients, it doesn't take much for you to need more help. This can be tricky but eventually you will learn that there is a strong cadre of people that are very interested in migrating out of a city. Online advertising, a LinkedIn company page and social networking are critical in getting these connections developed before you need additional workers.</div>
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You will find that hiring into a rural community is very different than normal hiring. Your pool of resources is probably not nearby. Further, your first challenge is less about finding a specific skill and more about finding an individual who wants nothing more than to live in an area like yours. And to make things more difficult, these individuals may not even be aware of the opportunities you offer.</div>
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Therefore, posting ads and searching online databases probably is not going to help you much. Instead, you need to get your name out into areas where individuals you seek may live, realizing that these individuals may not have even considered the opportunities that you are offering. You also may find yourself hiring great raw material that you then train into your particular technical skill-set.</div>
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But once you develop a network to proper areas, you will find people who already understand that urban salaries can become play money when a basic house with barely a yard sells for a million dollars. They are looking for a sense of security and a set of basic benefits, such as access to healthcare, paid time off and a 401K. But otherwise, you may not need to sell yourselves as much as you think.</div>
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Since your costs will be significantly lower than what your clients normally pay, if you market yourself properly, there is almost unlimited work available in software development, and your growth will probably be limited most by your ability to secure resources. That is why recruitment is so important from the start - by the time you need the people, you may not be able to find them. But eventually you well may be able to build an organization with scores or even hundreds of software developers.</div>
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Once a structure for formal telecommuting is in place, the same model can work in other IT areas besides software development. We have expanded into business analysis, quality assurance and project management. Other avenues to consider are database and system administration, plus other areas outside of technology, such as engineering, that can also be done using the same concepts.</div>
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And because you have establish an environment that works regardless of location, you may find yourself able to hire people that telecommute from other low-cost areas. We have had people working remotely for us in six different states from coast-to-coast. Depending on the area, they may be seeds to a whole new set of resources.</div>
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<span style="font-style: italic;">If you have any questions or are interested in additional information or help in engaging in this area, feel free to contact me via this site; or Twitter, LinkedIn or Google via JonJosephA.</span></div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-36422926231544515112018-09-16T08:00:00.000-05:002022-07-23T20:56:13.971-05:00A Low Cost Investor
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We hear repeatedly that the best returns are generally found with lower cost firms and financial instruments. Over twenty years ago, I accepted this mantra and opened an account with Charles Schwab. I was intrigued by their low cost indexed mutual funds, the vast amount of information they then would mail me, and their mostly zero account fees.</div>
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Fast forward and now there are multiple brokerage firms, including Schwab, that often charge nothing for maintaining an account, close to nothing for an exchange traded fund and often nothing for a trade. </div>
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They charge me nothing for my bank account, nothing for my American Express Credit card (with a 1% cash refund) and nothing for new checks. All fees for cash withdrawals from any ATM world wide are refunded. They also charge nothing to trade and hold US Treasuries.</div>
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One day I realized that I could put all of my wife's and my money into a couple of low-cost stock and bond ETFs, and a basket of individual stocks and Treasuries, and it would incur very close to zero fees forever.</div>
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We now have most of our life's savings with Schwab, and I have wondered to myself, if they charge so little, how does a firm like Schwab make its money from me? So I walked through all of our Schwab accounts and their transactions from the past twelve months. Here is what I found. </div>
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First, Schwab probably does not make much money from us. Much of our money is in very low cost ETFs, plus some international and bond funds that charge a little more. All of our funds in total have an annual fee of about .12%. I also made 6 trades during the year at $5 apiece.</div>
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Second, they do get some significant money from us through their bank. We averaged a bank cash balance of $6,000, which they loan out to others and pay us almost nothing in interest. We also have a home equity line of credit that incurs about $2,000 a year in interest.</div>
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Further, our overdraft account ran up $200 in interest. Although we get cash back on our credit card, Schwab has surely received something back from the tens of thousands of dollars we charge on it.</div>
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I reviewed Schwab's 10-K report and found that they make half of their money from their banking operations, which is consistent with where they make their money from us. The rest comes primarily from asset management and brokerage administrative fees, their next source of money from us. Finally, less than 10% of their revenue is from trading, where we provide them almost no revenue.</div>
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Being one of the lowest cost operators in the industry has made Schwab one of the largest brokerage firms and banks in the country. And they did it primarily by providing great products and services at a very low cost.</div>
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So, no, Schwab does not receive a lot of revenue from our investments, but at the same time, it doesn't cost them much to hold them. Low-cost, online investing is primarily a rich set of software that automates what was once a labor-intensive manual process. </div>
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When I sign onto their website to either get information or to transfer money in or out of accounts, funds or financial instruments, this all happens electronically. The incremental costs for any of these actions are close to zero, regardless of how much money is transacted. Software doesn't operate differently whether transacting $100 or $100,000. Once software is running, your investments are reduced to bits on a disk that are either on or off.</div>
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What does it mean for my wife and me? It means that we retain nearly all of our investments and their gains, one of the most important figures to consider when investing. Compare this with many funds and services that normally charge 1-2% of your investments, regardless of how they perform, and hedge funds that normally charge 20% of gains.</div>
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Low-cost, online brokerage and banking services are one of the great wins available to all from the past couple of decades of technological advances, and make available to the lowliest investor amazing opportunities at close to zero cost. Yes, it's for real. And it works.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com36tag:blogger.com,1999:blog-7262592647331026432.post-62397523665798747992018-07-16T08:33:00.000-05:002022-07-24T19:22:07.557-05:00A Brief History of the Metric System<i>From Quartz Obsession, Jul 14, 2018</i><br />
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<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3Dpu9n0ps8hGF44zTMfA2zQfuw0AqqYWHRZmC-2BpaAArOsFl4UnecoITkW6UQ6uQBOT5F6V1vKTiU-2BhV0kcm39-2B48JBmERqliOGteNqbLUbF7g-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gCs-2BkfeyP2SSccniXNy7w5NZJymQkTFO04Z-2BbjGSzhq8Tm0n0e6W11eEFx9i-2B8EmiIhtW3iY-2F55Vkx1A-2F3dVHdYvkUROKqjY9uLqpQ5tEuEoN6qT1B2PN8lfY4cL-2Fwrf9-2B8xX5t41jXryLyskv5TufKRyaAxk4thYynTApyFdwnyHDZw1nBEdVRnYAjqraDTV6AvOobCTcLejXXXXOWqMLp28TKGB-2BZd8YKf4BHckIzMiP8uanlgf0IkluKgsWwuV&source=gmail&ust=1531769210254000&usg=AFQjCNErVILYbj98bTNlGFEAWh-j0b6b3w" href="http://email-tracking.qz.com/wf/click?upn=pu9n0ps8hGF44zTMfA2zQfuw0AqqYWHRZmC-2BpaAArOsFl4UnecoITkW6UQ6uQBOT5F6V1vKTiU-2BhV0kcm39-2B48JBmERqliOGteNqbLUbF7g-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gCs-2BkfeyP2SSccniXNy7w5NZJymQkTFO04Z-2BbjGSzhq8Tm0n0e6W11eEFx9i-2B8EmiIhtW3iY-2F55Vkx1A-2F3dVHdYvkUROKqjY9uLqpQ5tEuEoN6qT1B2PN8lfY4cL-2Fwrf9-2B8xX5t41jXryLyskv5TufKRyaAxk4thYynTApyFdwnyHDZw1nBEdVRnYAjqraDTV6AvOobCTcLejXXXXOWqMLp28TKGB-2BZd8YKf4BHckIzMiP8uanlgf0IkluKgsWwuV" target="_blank"><b>1215:</b></a> <span style="font-weight: 400;">The Magna Carta declares that there should be national standards for the measurement of wine, beer, and cloth.</span></div>
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3Dpu9n0ps8hGF44zTMfA2zQex8xZdLPauYhoiobJv88vQxkt-2B21GNrCunSI0I-2Fwb1XLi5bsPEv1BPAOt1BhEnL1dT9cuvWRiqJSNrV9DDK934-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9go7OYOshLXA0-2B-2FE3cVQ2QQqP52iMSEDkyTaoj5-2FEAXw94DzFhxcLyG4vLu-2FYi3DGtXJHz4yT850pjE19uWm0PfCWnRqO8oJ452kcfyYUIA5RMs5t2g9yAho7evYxhmFIwEKeayBsIy1QBub2Idpl-2BbHk-2FICVGhLCLvFPP1OM0kMsvdMs-2FSpliPcu8Fv4qvv-2F-2F8MJAeN7PjYrxNVF4FZ9dHOlF0H8U1CFbKx24U-2Fx6DqyioegUf6QVeEcOGeonMaWX&source=gmail&ust=1531769210254000&usg=AFQjCNElmwwb0fZhDGpcY2eZ9jJzddGgkg" href="http://email-tracking.qz.com/wf/click?upn=pu9n0ps8hGF44zTMfA2zQex8xZdLPauYhoiobJv88vQxkt-2B21GNrCunSI0I-2Fwb1XLi5bsPEv1BPAOt1BhEnL1dT9cuvWRiqJSNrV9DDK934-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9go7OYOshLXA0-2B-2FE3cVQ2QQqP52iMSEDkyTaoj5-2FEAXw94DzFhxcLyG4vLu-2FYi3DGtXJHz4yT850pjE19uWm0PfCWnRqO8oJ452kcfyYUIA5RMs5t2g9yAho7evYxhmFIwEKeayBsIy1QBub2Idpl-2BbHk-2FICVGhLCLvFPP1OM0kMsvdMs-2FSpliPcu8Fv4qvv-2F-2F8MJAeN7PjYrxNVF4FZ9dHOlF0H8U1CFbKx24U-2Fx6DqyioegUf6QVeEcOGeonMaWX" target="_blank"><b>1678:</b></a><span style="font-weight: 400;"> Anglican clergyman and philosopher John Wilkins publishes <i>An Essay towards a Real Character, and a Philosophical Language,</i> which proposes a universal language and system of measurement, based on units of 10.</span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3Dpu9n0ps8hGF44zTMfA2zQVOiQCJ9dXDKA9iJH33KA5n-2FAgWsQDnsA5j0MpWpDfolSJLmHDzFF1jBlHtyO-2B-2Fuu73sS7IPjGdJIBhx65TGTUX6KqDSsZ1kE6tSjGSwdy-2B75JMcllm9eRwc1vaJP0aFDw-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9g3oUE85hsKy-2BYr6cy7PrvR-2BiCg-2FSR0kNq0FrEQvebK-2Fn1X3L9-2BHLnOai3weV2K2cwvnyHydQu6QaDQX-2BFqaQ9O-2F9REWGHFCd1wowOYj2zo2nk87LWVCT-2B1khpWYnFBi0TTAHwo1iQUBhRdqQmVcjAfS3e7eJKHbg0mbQJTawTscH8O-2F2Zxzjxxo-2B6lx-2FRuECSDE1kOiBV6T9owGiVHF-2Fu9CRVmi-2B-2FdvPXH5L5MPtvPTYiYXJiLUw1-2BqkSsLA-2F6l3c&source=gmail&ust=1531769210254000&usg=AFQjCNGEIakDbFWgDN6GrWy6I-jZTGQhXg" href="http://email-tracking.qz.com/wf/click?upn=pu9n0ps8hGF44zTMfA2zQVOiQCJ9dXDKA9iJH33KA5n-2FAgWsQDnsA5j0MpWpDfolSJLmHDzFF1jBlHtyO-2B-2Fuu73sS7IPjGdJIBhx65TGTUX6KqDSsZ1kE6tSjGSwdy-2B75JMcllm9eRwc1vaJP0aFDw-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9g3oUE85hsKy-2BYr6cy7PrvR-2BiCg-2FSR0kNq0FrEQvebK-2Fn1X3L9-2BHLnOai3weV2K2cwvnyHydQu6QaDQX-2BFqaQ9O-2F9REWGHFCd1wowOYj2zo2nk87LWVCT-2B1khpWYnFBi0TTAHwo1iQUBhRdqQmVcjAfS3e7eJKHbg0mbQJTawTscH8O-2F2Zxzjxxo-2B6lx-2FRuECSDE1kOiBV6T9owGiVHF-2Fu9CRVmi-2B-2FdvPXH5L5MPtvPTYiYXJiLUw1-2BqkSsLA-2F6l3c" target="_blank"><b>1790:</b></a> <span style="font-weight: 400;">The
National Assembly of France drafts a committee to establish a new
standard for weights and measures that would be valid “for all people,
for all time,” in the words of mathematician (and revolutionary) Marquis
de Condorcet.</span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3Dpu9n0ps8hGF44zTMfA2zQXxXPZYHsr16jUzQu0r9YsjwZ8fdhVdLp1Co2kmRpQuvG-2BWbea9vFJNrSHUcMkP-2Brxiyv0QQ-2B1MwWfIr7AQIue0P4J3WDiRatSYDr6vOWn7U_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gIhS1RzdH84WlQmdILrewwA-2B3Vfzrh39dvHN7o1Sx67yvDbNJdR2TRti-2Fbk56kC7-2FuLEG2Ll5rsORbxJv5tURrlnvPOhgHnZb8s8inQr6cKx6kYs1LYRywfdEjkAkMQ7rx0dHXp6x7jWjkG00kgzKbHbpWM-2FgrQ0uMqXyfmv2tHI38WFJG0iy1YLClsrgp2-2B4aqWVvVPIJ5qjuyARswncYKMHoUGAgfSzDOKAmEzoIH0EUvpJmBCfqMiJ3wbsl56P&source=gmail&ust=1531769210254000&usg=AFQjCNFjMSPb0GNodfQOWxW_MkEi2oR3dA" href="http://email-tracking.qz.com/wf/click?upn=pu9n0ps8hGF44zTMfA2zQXxXPZYHsr16jUzQu0r9YsjwZ8fdhVdLp1Co2kmRpQuvG-2BWbea9vFJNrSHUcMkP-2Brxiyv0QQ-2B1MwWfIr7AQIue0P4J3WDiRatSYDr6vOWn7U_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gIhS1RzdH84WlQmdILrewwA-2B3Vfzrh39dvHN7o1Sx67yvDbNJdR2TRti-2Fbk56kC7-2FuLEG2Ll5rsORbxJv5tURrlnvPOhgHnZb8s8inQr6cKx6kYs1LYRywfdEjkAkMQ7rx0dHXp6x7jWjkG00kgzKbHbpWM-2FgrQ0uMqXyfmv2tHI38WFJG0iy1YLClsrgp2-2B4aqWVvVPIJ5qjuyARswncYKMHoUGAgfSzDOKAmEzoIH0EUvpJmBCfqMiJ3wbsl56P" target="_blank"><b>1799:</b></a> <span style="font-weight: 400;">The distance of the meter—named after <i>metron</i>,
the Greek word for measure—is fixed at 1/10,000,000 of the length
between the North Pole and the Equator, arrived at after two French
surveyors spent six years measuring the distance between Dunkirk and
Barcelona, which was used to calculate the longer distance. A platinum
bar officially one meter long is cast.</span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3DnnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGMG-2BmDb3DmvSybBEv016Wdzk9er2Zi75y2XPZCysSmnug-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gqRqpSP-2FBR5bWlo3Htl6Eu9TCcjbTXqYTd1Ls4s-2FLUyBYcs4QwGS8o7LEgSTVKIRCTJROBWKMq4OG-2FuDdcd1kolHgqJ77CKREEgPPZcy8HCCCbAtGW4LtqegIDLm-2B-2FqBLropJJaSV6uSM5PKvtAR2jNIwjU7mC99pq6tqG7UssIok5VQzLhOf2VUmEManEaGpeotsrbRPTtSCdAdr1StTghpdQc0kMYkux0dZ874NuK-2B7ER5pKvlJ-2BCFGzQPdiE4S&source=gmail&ust=1531769210255000&usg=AFQjCNFBOqT3s83-DB4m6v9Boy6wu_rMFw" href="http://email-tracking.qz.com/wf/click?upn=nnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGMG-2BmDb3DmvSybBEv016Wdzk9er2Zi75y2XPZCysSmnug-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gqRqpSP-2FBR5bWlo3Htl6Eu9TCcjbTXqYTd1Ls4s-2FLUyBYcs4QwGS8o7LEgSTVKIRCTJROBWKMq4OG-2FuDdcd1kolHgqJ77CKREEgPPZcy8HCCCbAtGW4LtqegIDLm-2B-2FqBLropJJaSV6uSM5PKvtAR2jNIwjU7mC99pq6tqG7UssIok5VQzLhOf2VUmEManEaGpeotsrbRPTtSCdAdr1StTghpdQc0kMYkux0dZ874NuK-2B7ER5pKvlJ-2BCFGzQPdiE4S" target="_blank"><b>1840:</b></a><span style="font-weight: 400;"> The metric system becomes compulsory in France.</span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3DnnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGPgsJ3j670-2FAoshZhxh3txQpKeXob5Su06CaziZnFpHyw-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9ggBThMRLlbgj12iwWzzjGqZ8jHzSs6S20ZaUjem81LmDZKrSCX3Xox82PStca-2F3GZaI1ZACj9vnYs9Hhw3TBu2Qs3H0GgTDzfbXkGftEXAI6BgIFRkGaMD0A6wNkIvP79kYzKreHy8sYwI9nEWPf2m-2Bh-2FdwYKfCRCEybkfo1-2B6oObpc0SmYlej5Lwtz54WJS8ldegcPu0ESWFuESLJO8senN6LlO2dRXl5dDbDAnnJ9k52mMtHzPJXXhKFHCGu4JF&source=gmail&ust=1531769210255000&usg=AFQjCNG-vArWPtnbO3yItIrLuLpLV1X83Q" href="http://email-tracking.qz.com/wf/click?upn=nnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGPgsJ3j670-2FAoshZhxh3txQpKeXob5Su06CaziZnFpHyw-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9ggBThMRLlbgj12iwWzzjGqZ8jHzSs6S20ZaUjem81LmDZKrSCX3Xox82PStca-2F3GZaI1ZACj9vnYs9Hhw3TBu2Qs3H0GgTDzfbXkGftEXAI6BgIFRkGaMD0A6wNkIvP79kYzKreHy8sYwI9nEWPf2m-2Bh-2FdwYKfCRCEybkfo1-2B6oObpc0SmYlej5Lwtz54WJS8ldegcPu0ESWFuESLJO8senN6LlO2dRXl5dDbDAnnJ9k52mMtHzPJXXhKFHCGu4JF" target="_blank"><b>1875:</b></a> <span style="font-weight: 400;">Seventeen
nations (including the US) sign the Treaty of the Meter, creating
international bodies to standardize weights and measurements worldwide,
according to the metric system.</span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3DnnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGOMnJgGHYX6QMXZq-2FxJJ-2BFri0N8F2NeocaKQ0zmIELBFA-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gDcqiIc-2FH59lketb-2BfngneZLsbzIbnjzR7F8Bj7rN3gmXEFpwMK7jovB9VuOPUQ8srleG-2FFk1vrPJM4ChaulH0ONf6EfHCNLnk60w7UoL6wESYl1gdEzFEsUkMOe0HhQiRt7kf4-2BqjoHzra62Q2HzzDI6dJsc1jqkD-2FJN1B7ZL2zgwAaGqManUVck-2BDGdaK-2BILuvqVlK2ImFQnpG7gDpHx2ekyXA-2BT7XmZip0ocTIF1mHpbvEMoanW8ZS1VKtzPun&source=gmail&ust=1531769210255000&usg=AFQjCNFMoagRAhKAyRDfic88issLzPGglA" href="http://email-tracking.qz.com/wf/click?upn=nnqZ0gDDZwEq6FtFfmnIOEiLVJoLaBy7AXcWtSLpaGOMnJgGHYX6QMXZq-2FxJJ-2BFri0N8F2NeocaKQ0zmIELBFA-3D-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gDcqiIc-2FH59lketb-2BfngneZLsbzIbnjzR7F8Bj7rN3gmXEFpwMK7jovB9VuOPUQ8srleG-2FFk1vrPJM4ChaulH0ONf6EfHCNLnk60w7UoL6wESYl1gdEzFEsUkMOe0HhQiRt7kf4-2BqjoHzra62Q2HzzDI6dJsc1jqkD-2FJN1B7ZL2zgwAaGqManUVck-2BDGdaK-2BILuvqVlK2ImFQnpG7gDpHx2ekyXA-2BT7XmZip0ocTIF1mHpbvEMoanW8ZS1VKtzPun" target="_blank"><b>1975:</b></a> <span style="font-weight: 400;">US
president Gerald Ford signs the Metric Conversion Act, declaring the
metric system the preferred (but voluntary) system and establishing the
US Metric Board, to speed America’s conversion. </span><br />
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3Dpu9n0ps8hGF44zTMfA2zQTVRiZbtQc26AUjoASTfooCWEVBMEmHtwdp8LFcV3QkbjNk9YGZTX3XMh5zTORbwyhXoiAzPfpC4tExshEBCT1qegR9isK3Cg1YqYwJb01ofrlkgH5UhX-2Fow12JQJ4kxhjGWDpkDdlrvgjLoyGUFYi8-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gW5KCXFaT6k-2F-2BZoAss8BwPV7q8KAP7F2J4FADlTrVxPvkNT0LnCkNLb6BF2bHEjAt5EPTxWfKLt3VoACLuezOZ4JuHPQy803VrJuP6EBpWRTH23FYLSfqjEqwR4mICMBII2rhzDOhWrDb3zJNpK7ubRu1IHn7NnmDvLbcgZ-2Fh4x8TvFDCkVTg0RQ8eNjV9SAb07ab8-2FsJeJ6fri45GB5nXv1FzaaAOfnQ3rLjFTkg-2F-2BOWvgTuMnn4q0WDS35-2BA0vP&source=gmail&ust=1531769210255000&usg=AFQjCNEKGzYlt9m04cAT2-PROUUehMpO3g" href="http://email-tracking.qz.com/wf/click?upn=pu9n0ps8hGF44zTMfA2zQTVRiZbtQc26AUjoASTfooCWEVBMEmHtwdp8LFcV3QkbjNk9YGZTX3XMh5zTORbwyhXoiAzPfpC4tExshEBCT1qegR9isK3Cg1YqYwJb01ofrlkgH5UhX-2Fow12JQJ4kxhjGWDpkDdlrvgjLoyGUFYi8-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9gW5KCXFaT6k-2F-2BZoAss8BwPV7q8KAP7F2J4FADlTrVxPvkNT0LnCkNLb6BF2bHEjAt5EPTxWfKLt3VoACLuezOZ4JuHPQy803VrJuP6EBpWRTH23FYLSfqjEqwR4mICMBII2rhzDOhWrDb3zJNpK7ubRu1IHn7NnmDvLbcgZ-2Fh4x8TvFDCkVTg0RQ8eNjV9SAb07ab8-2FsJeJ6fri45GB5nXv1FzaaAOfnQ3rLjFTkg-2F-2BOWvgTuMnn4q0WDS35-2BA0vP" target="_blank"><b>1982:</b></a><span style="font-weight: 400;"> US president Ronald Reagan dismantles the Metric Board.</span><br />
<div class="m_636801475802733924last">
<a data-saferedirecturl="https://www.google.com/url?q=http://email-tracking.qz.com/wf/click?upn%3DnnqZ0gDDZwEq6FtFfmnIOJhVXsxw27JPNYO8JGcEsqDnlG7anHYseJ4yHEhOUsCsS4tB8jU6qcTcyrPj0mtlKXHjhEjM9hjP4gPd4GqR-2Bc0-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9g1wCYzOt-2F7Uktm0-2Fxk4j7u67RbDWZjArVvHKqv57a68TEia8FxwdjqzLllq8zVWPG5cgPZ2tDrhW5FMToDF2mqtqzzueLrAGfR6apttAfAeyQ4cyMry88jGZ5EfvO-2FDP61kA-2BM4Gt2371bDi-2B8LtWP9eqWrE4cT4kQ50L5FOZRqm0nw0nn-2BHAc-2B4BZZMnwh7NrGjsyr6DBdz22ZjrBCxKT9vflefTfPZUnPGZGfcLIGI-2FbRdbSgwFHjlm-2BSTxpa2Y&source=gmail&ust=1531769210255000&usg=AFQjCNGvwSlMOrjaqYfxeRhqaoZdHCPWHg" href="http://email-tracking.qz.com/wf/click?upn=nnqZ0gDDZwEq6FtFfmnIOJhVXsxw27JPNYO8JGcEsqDnlG7anHYseJ4yHEhOUsCsS4tB8jU6qcTcyrPj0mtlKXHjhEjM9hjP4gPd4GqR-2Bc0-3D_INOBU-2BBF4FpQfTnfWjipS49eIhls2z-2B3R0E1Fq2aK3-2Fxj7EGwItYBFrzUHPUXcVKWt951SWgBU-2F5vuVoInVWqdvU-2BJ1-2FkJ8og7JmgZSKuDPrzJHG0ZuNX9Ljp-2B3G9JqQlfpwg15lGxAESrD4w8PO1IIDW5dIUCwTZCZ6-2FeUwnfsCFHZtDDpIEuC9hcod-2FDz-2FmjyDZDlDBRnhlm1-2BncD3aNawvDdPTUuMW4Nl3bqV-2FbyHYtn1EqRpnuyH9jPnPk9g1wCYzOt-2F7Uktm0-2Fxk4j7u67RbDWZjArVvHKqv57a68TEia8FxwdjqzLllq8zVWPG5cgPZ2tDrhW5FMToDF2mqtqzzueLrAGfR6apttAfAeyQ4cyMry88jGZ5EfvO-2FDP61kA-2BM4Gt2371bDi-2B8LtWP9eqWrE4cT4kQ50L5FOZRqm0nw0nn-2BHAc-2B4BZZMnwh7NrGjsyr6DBdz22ZjrBCxKT9vflefTfPZUnPGZGfcLIGI-2FbRdbSgwFHjlm-2BSTxpa2Y" target="_blank"><b>1999:</b></a><span style="font-weight: 400;">
Mars Climate Orbiter, a $328 million satellite, disintegrates over Mars
because software produced by Lockheed Martin, the contractor, generated
numbers in the English system instead of the metric system, as
specified by its agreement with NASA.</span></div>
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<br />Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-38161624253990191272018-06-12T10:33:00.008-05:002022-07-24T19:30:44.421-05:00An Amateur Investor's Worst Investments
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<a href="https://blogs.wsj.com/moneybeat/2018/06/08/everyone-makes-investing-mistakes-even-warren-buffett/" target="_blank">Jason Zweig</a> recently wrote, "If I had to write one sentence that is true always and everywhere, it would be this: Smart investors did stupid things again today." He was referring to <a href="http://theirrelevantinvestor.com/author/theirrelevantinvestor/" target="_blank">Michael Batnick</a>'s new book, "Big Mistakes: The Best Investors and Their Worst Investments."</div>
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<a href="https://1.bp.blogspot.com/-yr773unQtt0/Wx_on1rfglI/AAAAAAAAKnA/SSmgkH_Axy0D7NqK4G8wrFOOveUZfyD8gCLcBGAs/s1600/Big-Mistakes-ok%25C5%2582adka.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="499" data-original-width="331" height="200" src="https://1.bp.blogspot.com/-yr773unQtt0/Wx_on1rfglI/AAAAAAAAKnA/SSmgkH_Axy0D7NqK4G8wrFOOveUZfyD8gCLcBGAs/s200/Big-Mistakes-ok%25C5%2582adka.jpg" width="132" /></a></div>
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Mr. Zweig then reminds us that making mistakes with your money is normal, human and hard to avoid. I will add that making mistakes in life is normal, human and impossible to avoid.</div>
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So I asked myself, what stupid money mistakes have I - an amateur investor - made? Here they are.</div>
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While vacationing in Alaska with our family a dozen years ago, I learned about the Pebble Project across the bay from Homer, Alaska. It's a mostly uninhabited area of Alaskan tundra that claims to be the "most significant undeveloped copper and gold resource in the world." Northern Dynasty (NAK) is the Canadian firm that owns the rights to its minerals.</div>
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Copper is critical for electrical wiring and eventually we'll need this copper, I argued. I purchased a significant amount of its stock over several years, not appreciating that the Obama administration could block the mine, which it did. The stock eventually dropped to 32 cents/share, about where it is today. I've lost 75% of my money while the S&P 500 has more than doubled (including dividends). The mine may still be developed but this was a bad investment.</div>
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I purchased USG Corporation (USG) fully aware of its asbestos liabilities, believing that a strong balance sheet could beat the courts. The courts won and in twelve months I lost 80% of this investment. Ironically, one of my first stocks I purchased was Manville Corporation, where I also lost most of my money due to the same asbestos lawsuit.</div>
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In 2007, when the real estate collapse was in full swing, I purchased Thornburg Mortgage REIT, seeing it as an opportunity to buy low. Six months later I got out after losing 86% of my investment. It soon went to zero. I didn't appreciate the severity of the coming Great Recession.</div>
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For years, I have had a probably unfounded belief that Mexico is a great investment. My argument goes something like this: they have a capitalist and growing economy, a functioning democracy, a young population and a northern neighbor that likes to spend money. They also live mostly outside the commodity/manufacturing yin-yang between Brazil and China.</div>
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Over the past dozen years, I've invested in a dozen Mexican companies and still have six of them. They have not done well and a few have been disasters, including Cemex (CX) and Empresas ICA.</div>
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Maybe I shouldn't trust places like Mexico but I seek some risky investments, believing they can also give great returns. And if the investments are uncorrelated, in total they needn't be that volatile. I have a similar faith in Russia and India. I may struggle with them but not much more than I do financial organizations, cash, bonds and China. And I often struggle with indexes, too.</div>
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My all-time failure is Peabody Coal. At the right price, I saw them as the no-brainer company that sells virtually unlimited cheap energy to a world that seeks a modern life. Eventually their stock reached a good price and I bought it three times on its way to zero. I missed the impact of shale natural gas, which mostly did them in. Peabody (BTU) has never stopped mining coal and remains the world's largest private coal producer.</div>
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Losses hang in the air much longer than the quiet gains of, for example, US broad index funds that have gone up four times in less than ten years. Looking through two decades for the big misses, I am surprised how few I have had. Not because I'm cautious or lucky but because in the long haul, most investments work out fine, some better, some worse.</div>
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If you avoid fees and trading, stay close to a set allocation, keep your eye on the big picture and largely ignore the sometimes painful noise underneath the covers, investing should work fine, even for an amateur.</div>
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Finally, note that big investment mistakes can be papered over with big wins. That's not so true in life where a big mistake can have serious consequences. This is largely why your emotions that are so useful in most of your life are often not of much help with investing.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com0tag:blogger.com,1999:blog-7262592647331026432.post-12244380892817717632018-05-08T08:56:00.001-05:002022-07-23T20:58:16.158-05:00A Church in Finland<br />
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For Christmas, my wife bought me a subscription to Ancestry.com. My maternal grandparents were born in Finland and my paternal great-grandparents in Sweden. So I set off to learn a little more about where I came from. I didn't expect this to be the start of a Great Adventure that will not end.</div>
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It didn't take me long to find several Swedish 5th great-grandparents, including Nils Jonsson, born in 1691 in Ostra Boda, Sweden. At the other end, I also located several distant cousins in the U.S., many that I remember from when I was young, a flash back to a world so long ago. </div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-vOIFQiscAqM/WvGiYv0BZPI/AAAAAAAAKb0/fj4QAmRnJroDQH5ooarnMtQSrVM_hXdCACLcBGAs/s1600/Isokyr%25C3%25B6_church.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img alt="" border="0" data-original-height="1200" data-original-width="1600" height="240" src="https://2.bp.blogspot.com/-vOIFQiscAqM/WvGiYv0BZPI/AAAAAAAAKb0/fj4QAmRnJroDQH5ooarnMtQSrVM_hXdCACLcBGAs/s320/Isokyr%25C3%25B6_church.jpg" title="Old Church of Isokyro" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Old Church of Isokyro</td></tr>
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But I wasn't prepared for what I found in Finland. My maternal grandparents immigrated separately to the Upper Peninsula of Michigan around 1902 when they were about 20. They married and brought up ten kids in the hovels of Ishpeming, my hometown. My grandfather and later my uncles worked underground in the iron ore mines. </div>
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I heard endless stories of life without plumbing or central heat, sleeping three in a bed, living off poached fish and deer. But even with the deprivations, they all made it to adulthood, all held reasonable jobs, all married and only one divorced. Together they had 27 kids, nearly half of whom completed bachelor degrees. Not bad for grandparents who never spoke English.</div>
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I found 2nd great-grandparents from my grandfather's side. I discovered that he wasn't born John Wuorenmaa, as I had I always known him. He was born Juho Kustaa Vuorenmaa and anglicized it when he arrived in the U.S., a common immigrant practice.</div>
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On my grandmother's side, though, I discovered 34 great-grandparents going back twelve generations to the 16th century. For those twelve generations, they mostly lived and died in and around Isokyro, a small village thirty miles inland from Vaasa on the west coast of Finland, on the Kyronjoki River. It's not far from where my grandfather and his family lived in Kauhava. I suspect the records of these twelve generations (and more) come from the Old Church of Isokyro, a massive grey stone church built in the early 1500s that is still standing. </div>
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At this time, Finland was governed by Sweden. Presumably my relatives were peasants living generation after generation in the same small area, probably engaged in farming and fishing, with not much changing through dozens of decades. Eventually, Russia took control from Sweden and before Finland was freed to be their own country, my grandparents had relocated to the U.S. </div>
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This was part of mass migrations from this area due to a lack of jobs and Russia's repressive attempts at Russification of Finland. Still today, 16% of the Upper Peninsula is Finnish, with some small townships approaching 50%. I've heard that the U.P. has the largest concentration of Finnish people outside of Finland. Ironically, two generations later, I immigrated to Minnesota due to a similar lack of jobs.</div>
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Most of my life, I've heard about premodern life without medicine, electricity and cars. But now it's more than some esoteric discussion. I have the names, birth and death dates, and towns across centuries where half of my DNA comes from. Maria Bertilintytär ("Bertil's daughter") Kiikka was born June 1, 1725 in Isokyro before the U.S. was established, and died there at age 74 on March 16, 1800. </div>
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Which was another shocking revelation. Yes, many died before reaching adulthood but if you survived long enough to procreate, at least my relatives lived to a median age of 64. Contrary to impressions given by life expectancy data, centuries ago even peasants apparently did not normally die of old age at forty and some lived to eighty.</div>
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Walking through generations of my ancestry, I'm struck by some aspects of life. First, people are born and die at a time and a place, and they are given a name that remains a fact regardless of whether it is changed (which they are for more reasons than marriage). Second, marriage and children helps in giving one a place in life's book, which is the closest to immortality many of us will get. </div>
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Finally, most of the rest of our lives - our thoughts, work, accumulations, successes and failures - are lost behind the amazing fact that we have been part of a DNA chain that's still alive. My wife and our three kids are by far the highest priorities in my life. As they should be.</div>
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Also, when I envision the life a dozen generations of my ancestors lived in Finland over hundreds of years, I'm also aware of some similarities. By choice, I live in a geography and climate that is very similar to where they lived. By choice, I live in a smaller urban area and we have a vacation home in a small rural community north of here.</div>
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We have a garden with asparagus, lettuce, beets and peas. We regularly hike in the surrounding boreal forests and I still occasionally hunt and fish. And although we have central heat, Internet and SUVs, we live a somewhat minimalist life focused on experiences, nature, relationships and simpler pleasures. Finally, like my ancestors, we are involved in a church that, unfortunately, will probably not be around in half a millennium. </div>
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So where next? I'm not done flushing out my maternal grandparents. I'm trying to solve why one lineage in this same area ends so abruptly (I suspect an incorrect name translation). Then I intend to do the same look at my Swedish lineage. A cursory look through my wife's relatives gets me back at least two centuries into Norway, Ukraine, Switzerland and England. When I'm comfortable with my findings, I will share them with any of our relatives that care to look, and I may even pay a professional to review it.</div>
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And I finally have something on my bucket list: I am going to visit Isokyro and its medieval church.</div>
Jon J Andersonhttp://www.blogger.com/profile/10858307993965770637noreply@blogger.com1