Category Archives: Business

Questionable indicators…

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The cool thing to do now is bitch and complain that inflation has made everything too expensive. Social media is full of discussions about the cost of everything. It’s one of the news media’s favorite topics when they have a few extra minutes or column inches to fill. I can’t remember the last time I went a day without seeing at least one passing reference to inflation and “out of control prices.”

Everyone is bitching that everything is too expensive, but every time I leave the house, I find that the shops are packed. The restaurants are packed. The roads are packed. There are scads of people crawling all over everything from morning til night. It doesn’t feel like the kind of behavior you’d see if everyone was trying to watch their pennies.

I’m left to wonder if it’s just the “very online” people who are broke (or at least keeping the narrative alive), because the sentiment isn’t matching my lived experience and personal observations. Given that Cecil County isn’t exactly an economically well-off region you’d think it’s something that should be noticeable. Maybe it’s just me being unreasonable, but it seems to me if there’s no money and everything is too damned expensive, more people would stay home.

It feels like consumer sentiment might just be a shit economic indicator. Chalk it up to another reason why I just don’t trust people as a group. I’ll be a lot more worried about the economy when people stop buying $1000 cell phones and I don’t have to wait in a line ten people deep at the local fast food spot.  

Nowhere near the panic button 

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Maybe if I were more financially savvy, I’d be alarmed by the collapse of several banks over the weekend. As it stands, I’m mostly just preparing myself to ride out some choppy financial waters in the short term. The markets don’t currently seem to be in a panic, so I’m opting not to be either. After all, if the markets do decide it’s time to panic, it’s mostly too late for me to do anything about it anyway. 

Over the last 20-odd years, I like to think my approach to most financial contagion has been to shrug and keep buying every other week. As a young, new investor, I bought into the teeth of the collapse of the dotcom bubble, then through the Great Recession, and most recently through the panicked COVID-19 sell off. Not being a finance guy or an economist, most of what I know comes from history – and that’s that every squirrely period of economic chaos eventually ends. Over a sufficient enough period, every bad time, including the Great Depression, has ended with markets making new highs. 

The trick, of course, is simply to hang on and don’t even think about locking in your losses. It’s a trick, because, as they say, the markets can absolutely remain irrational longer than you the individual can remain solvent. Assuming the House of Representatives doesn’t insist on allowing the federal government to default in a few months, I’m not especially worried about staying solvent. If it goes the other way, how well my philosophy holds up gets a bit murkier.

In any case, I’m nowhere near the panic button despite how much the finical news reporters insist on wringing their hands.

Making my bet…

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I mentioned a few weeks ago that I was considering taking the last of my retirement accounts – a long held Roth IRA – out of the hands of a new advisor and tending to it myself. Well, that transfer was finalized Friday afternoon. Exclusive of whatever a federal pension looks like in 12 or 13 years and discounting almost completely the idea that I’ll ever see a nickel of the cash I’ve poured into the Ponzi scheme that is Social Security, I’m now the chief cook and bottle washer for every last scrap of cash I’m counting on to keep me from living under a bridge and eating cat food in retirement.

I’m mostly feeling good about that decision. I’ll feel even better once I’ve unwound that account and gotten everything into low-fee, index tracking funds that just bump along into the upper right quadrant without needing a whole lot of thought or analysis. It’s not exotic or adventurous, but it’s the kind of thing that was good enough for Jack Bogle when he built Vanguard and for Warren Buffett to recommend for his wife. That should be good enough for me by any measure. 

So yeah, I’m going to go ahead and place a big (for me) bet that the international economic order isn’t going to blow itself apart in the next three decades… or if it does, there will be a 1950s style boom decade while it all gets put back together. Past performance, as they say, is not indicative of future results, but over the long term, I’m comfortable coming down on the side of people always wanting to make money and buy stuff. In fact I believe in free markets and free people so much, I’m staking the last third of my life on it.

The death of downtown is greatly exaggerated (probably)…

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I read an article this morning that more or less decried the death of the downtown business district due to the continuing popularity of remote work. The percentages cited are hard to get around. 

The city I’m most familiar with, having spent three years commuting into DC five days a week for three years back in the early stretches of my career, it looks like the in-person workforce is about 65% of its pre-pandemic high. Back when I worked in DC, my regular commute involved a 30-minute drive, a 40-minute Metro ride on the Green Line, and a 10-minute walk. So that was an 80-minute one way trip under perfect conditions and assuming I left the apartment no later than 5 AM. That time could easily double if there was even the hint of trouble on 95, 495, or the BW Parkway. The trip home in the afternoon? I never made that in less than 90 minutes and the worst day was 3.5 hours from door to door. 

You’ll forgive me, I hope, if I’m not surprised that the average employee isn’t knocking down the doors to get back into their downtown cubicle, burn up fuel, buy expensive downtown lunch, or generally feed the beast when they don’t need to do those things as part of getting their respective jobs done. It’s not captured in any of the articles or studies I’ve read, but if the downtown businesses that supported armies of office workers are losing out, it feels intuitively like there should be a corresponding uptick in the money being spent by these workers at the shops and stores closer to home. Those are more diffuse, of course, and necessarily harder to track. They’re not the story that the big players want to tell.

The death of the great urban downtown is, I suspect, being greatly exaggerated… but maybe there really is a crack in the idea that downtown must be synonymous with gleaming office towers only occupied from 7 AM to 7 PM five days a week. There really is a better way… of course that would involve real estate investors and management companies spending some money to bridge the gap between what was and what will be. Whether they’ll want to do that instead of just paying for bitchy articles about how much better it was when office buildings were full remains to be seen.

At least he’s entertaining…

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Elon Musk has always engendered my curiosity. From Tesla and The Boring Company to his new role as chief of fucking around and finding out with Twitter, the man may be a lot of things, but dull and uninteresting isn’t generally considered one of them.

As much as he captures my interest, I wouldn’t exactly call myself a fan. I tend to think he’s a guy whose demons are at least as big as his better angels. Still, he’s undeniably entertaining to watch if you come at it from a slightly nihilistic perspective.

Elon’s most recent hot take, that somehow Freedom of Speech equals buying ads on Twitter, is one of those times where he just makes my head hurt. He’s obviously smart enough to know that what we commonly call “freedom of speech” precludes the government from sanctioning you, the individual, (or you the company) from things you say. It doesn’t in any way protect you from other people or businesses deciding you’re absolutely crammed full of shit and opting to not work with you.

While Elon is perfectly free to say anything he wants and use Twitter in whatever way he chooses, what he isn’t, and can’t be, is free of the natural consequences of his words and actions. In the free marketplace of radical individualism that he seems to espouse, people (and companies) voting with their feet and their wallets, should be the thing he most welcomes. The fact that the big advertisers have left in droves, is sending a message, but Elon seems determined to misinterpret the signal.

Global wealth, exceptionalism, and mediocrity… 

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According to an article in The Guardian, in 2021 the number of millionaires in the United States increased by 2.5 million, bringing the total of millionaires in the US to 24.5 million. Put another way, approximately 7% of the people living in this country have a net worth of at least one million dollars. That number is so high compared to historical levels that according to the article “the number of millionaires was becoming so large that it was becoming ‘an increasingly irrelevant measure of wealth.’” 

In my mind, having 39% of the world’s millionaires knocking around the country is a good news story. It speaks to the unprecedented level of wealth creation the American economy and global trade have fostered. We’re creating wealth in greater amounts and more quickly than ever before in history and it’s a testament to what’s still possible with brains, effort, and a bit of luck.

The Guardian, of course, takes pains to point out that the largess of the global economy hasn’t been fairly distributed. As if anything in the world has ever been distributed fairly. Natural resources aren’t sprinkled evenly across the world. Intellect isn’t awarded equally at birth. Gnashing your teeth over issues of equity is, of course, the trendy take, but it’s not how the universe works. 

Personally, I’m far happier knowing it’s possible to be exceptional, somewhere towards the right end of the bell curve, than knowing for a certainty that we can all look forward to an equal share of mediocrity.

Buy and hodl, buy and hodl…

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For a stretch there from April 2020 until January of this year, any schmuck with an E-Trade account could make money in the stock market. It was very easy for people to get the impression that they were an investing genius thanks to what was probably the hottest market in my lifetime carrying the freight. Since January, though, there seems to be a whole lot of people who are confounded that the market can move down as well as up. 

I’ve got my own records going back to 2003. Looking at the charts, I can see clearly at least three other “big” down periods – 2008, 2015, and early 2020. The rest is slow, steady, upwards progress. Something about time in the market versus timing the market, I suppose. Looking at my May report, I can see I’m down a little more than 12% year to date. Sure, I’d be happier if it were 12% up for the year so far, but nothing I’m seeing feels like cause for panic. Pulling the charts back to look at the 5-, 10-, or 20-year trends tells me the important part of the tale.

Before long, I expect we’ll increasingly see stories about people bailing out – “fleeing to safety” – in some alternative investment. From where I’m sitting, panic decisions are just about the worst thing anyone could do to themselves. Over a long enough horizon, despite every historic crash, dip, and period of stagnation, U.S. markets have never gone down and stayed down. Past performance is no guarantee of future results, of course, so maybe “this time it really is different.” I doubt it. 

So, yeah, I’m 12% down. From where I’m sitting, it’s mostly a shrug and a so what. With at least 13 years to run before I could need a nickel of those funds, why wouldn’t I want to buy today at a solid discount to what I was spending on January 1st? If I were planning to retire on May 31st 2022 instead of 2035, I’d probably be more worried. If I had pulled the trigger and gone off into retirement at the beginning of the year, I’d probably be horrified at what it means for my sequence of returns… but I also wouldn’t have started that adventure all in on index funds instead of shepherding my lot into dividend payers, bonds, and allocations designed to preserve capital rather than chase growth.

The wider universe is going to do whatever it’s going to do. Our politics will swing between the extremes. Climate will continue to shift. There will be great breakthroughs and horrendous failures. Through it all, I’ll be over here quietly buying a little every week, planning for the best case and not-so-best-case future, and doing my level best to make Fortress Jeff my own haven in a turbulent world. As far as I’m concerned, reports of the end of history and impending financial doomsday have been greatly exaggerated. Through it all, there’s very little new under the sun.

Dodging a brick…

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I’ve been vaguely aware that 2022 was the year 3G wireless service was going to be discontinued here in the US for a while now. Other than being aware, I really didn’t put much intellectual rigor into wanting to know more about it. That was true until I glanced at an article yesterday warning that some cellular-based home security systems among other “background” services could be impacted.

After a quick check, it turns out that my system is going to be one that dropped offline sooner rather than later. Turns out, thanks to AT&T taking their network offline later this month, I was about a week away to losing my system. 

I’m not mad at them. Technology marches on and needs to be upgraded from time to time. I’m am, however, pissed as hell that I didn’t even get a warning notice from the monitoring company I’ve been paying every month for the last seven years to keep any eye out for home intrusion, flood, and fire. 

They were quick to confirm that I was about to have a problem when I called last night. If I hadn’t noticed that article and then taken the initiative to call them, though, there’s no telling how many monthly fees I’d have paid for them to monitor dead air. In all likelihood, I’d have never known it until the point when an alarm should have triggered but didn’t. 

That’s aggravating on any number of levels. 

To their credit, the company in question was quick to offer me an upgraded base station at no cost (as long as I was willing to sign a new one-year contract). No big deal there, as I’ve been going month to month with them for at least the last four years and don’t have any interest in building a new system from the ground up. Aside from this one pretty glaring issue, their customer service and equipment has been just about flawless. 

I should be at least temporarily future proofed by the end of the week, but if you rely on cellular as a primary or backup link for your alarm system and it’s of a certain age, you might want to give your provider a call and make sure you’re not about to be bricked.

That math can’t be right…

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My Tundra is 12 years old. It’s in fine mechanical shape. Aside from a few chips and minor scratches the body looks great. It’s been in one major and one minor incident. Thanks, most likely, to fanatical devotion to preventative maintenance, it still runs like a top even as it closes in on 140,000 miles on the clock. At some point, though, I know I’m going to need to buy a new truck.

Just out of sheer curiosity, I recently used the Toyota website to price out what more or less replicating exactly the truck I currently own would cost if I were in the market right now. It came out to $61,103… before taxes. So, we’ll figure a nice round $65,000 all-in cost for a middle of the range Tundra here in 2022. 

I’m sorry. What?

Part of the trouble, I know, is it’s been 12 years since I bought a truck… and back then it was in the middle of “all time high” gas prices and they were almost begging people to take the big V8s off the lot. Add in 12 years of inflation, plague related supply shortage, and the general growth in popularity for the pickup form factor. Intellectually there’s no reason I should be surprised at where the price points are now.

Emotionally, though, I’m stunned. Maybe some of it is just age. I’m old enough now to remember when $60,000 was the price of some of the most luxurious vehicles then widely available on the market. Way back in 1995, my used ’91 Chevy Cavalier cost the princely sum of $5,700. Sixty grand would have put me into a brand-new Cadillac Deville with $20,000 to spare. It would have put me in a C-class Mercedes and still left me with $5,000 or $10,000 in change.

I’m having trouble getting my head wrapped around it. Sure, I mean I could buy something that isn’t a truck or look for something coming off a lease, which leads to many other considerations… or maybe I’ll just keep Big Red on the road until the wheels fall off and the floorboards rust through. I damn near bought a whole house in 2001 for what a new truck would cost me 20 years later and just the thought of it is making my brain hurt.

On crypto…

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Scan the big news sites and it won’t take long to find an article where someone is decrying cryptocurrency as some kind of scam that swindled poor unsuspecting victims out of their life savings and now the bank will inevitably foreclose on the farm while Ma and Pa are tossed out to the ditch.

It makes an attention grabbing headline, but doesn’t garner any sympathy from me. It’s safe to say that most people don’t know the basics of how the Federal Reserve “creates money.” I’d wager that far fewer know with any kind of precision how an asset like Bitcoin really works, but here we are with scads of people wondering how they suddenly lost so much value, even when they didn’t know how it was generated in the first place.

You can almost hear the outcry now, begging for the government to place increasingly restrictive regulations on cryptocurrency and save the ill- and under-informed from themselves. Letting people live or die with their own decisions doesn’t play well in front of the cameras, I suppose.

In the interest of full disclosure, I hold a very small position in crypto. Mostly it’s a hedge against fear of missing out rather than any expectation of it ever shooting the moon. With much of it picked up back in 2017, I guess you can say I’m long on this brave new frontier of finance. I think some interesting things will come of it, even if no one seems quite sure what any of those will be yet.