Buy and hodl, buy and hodl…

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…

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…

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…

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.

Thanks for the tips…

Last week, much like this week, has been a bit of a broiler in the mid-Atlantic. As a result, my local electric utility sent out a bulk email with some “helpful” tips for dealing with the heat.

Tip #1: On hot days, use your grill to cook so you’re not adding heat to your house. Yeah, that’s a pass. It’s 95 degrees outside with 80% humidity and you want me to stand over and open flame flipping chicken or burgers instead of standing in the 70 degree kitchen where I can control the temperature to within a degree or two with a flick of my thumb.

Tip #2: Do laundry and run the dishwasher at night. Fun fact, night is when I sleep. I’m not staying up until the small hours to do laundry to save a fractional percentage cost of doing it during normal hours. Doing these chores during the non-peak hours you’ve designated doesn’t actually use less electricity, it just makes using the electricity I need to complete these tasks more inconvenient.

Tip #3: Close your blinds to reduce passive solar heating. Here’s the thing… I’m awake during the day, I like being able to see outside while I’m awake. I know I’m just weird like that. These big ass windows and the view they offer are part of the reason I bought the house in the first place. Otherwise I’d just stay up all night with no view doing laundry in the small hours of the morning like you so helpfully suggested.

All I see when a utility offers “helpful” tips such as these is a company that has opted to develop a network that they’re worried might not be up to meeting peak demand. With so much of my monthly bill being service fees rather than the actual cost of the electricity itself, I have very little sympathy in their desire to offload their problems onto the consumer rather than admitting they failed to design or maintain a sufficiently robust system to meet actual requirements.

Business versus vanity project…

Over the last few days, I’ve watched a handful of news segments and read several stories all striving to make a common point – that businesses from local mom and pop restaurants to heavy industry are having difficulty filling vacant positions.

Some of these stories cite the “Amazon Effect,” that has entry level new hires streaming to fill openings in warehousing and distribution. Others lay the blame with too much free money passed out in the form of federal stimulus payments and increased unemployment.

It seems to me that the most straightforward way to resolve this particular imbalance between the demand for these workers and their limited supply is to increase wages to the point where there are enough people to fill vacancies. 

Admittedly, I’m not a fancy big city economist, but raising wages feels like a fairly basic, tried and true way to attract people into a particular job or even into an entire segment of the workforce.  Yes, it means in some cases the products and services being offered by those businesses will cost more, but if your business can’t generate the revenue necessary to hire people to do the work, you have more of a vanity project than a business anyway.

Plague economics…

I can’t tell you how many times in the last 6 months I’ve heard or read someone say “Wall Street isn’t Main Street” or “the stock market isn’t the economy.”

That’s usually shorthand for telling your readers or viewers you want them to ignore record setting highs in the market in favor of focusing on more gritty, personal stories about small businesses. Those businesses are important. No one loves their small, local book shops more than I do, but I’m not going to sit here pretending that how the market does is irrelevant to the overall health of the economy or that it’s only “the 1%” who take advantage of its magical power of wealth creation.

Despite the popular press narrative that most people aren’t impacted by the stock market, the opposite is really the case. According to an article released by Pew Research in March 2020, “a majority (52%) have some level of investment in the market. Most of this comes in the form of retirement accounts such as 401(k)s.” If something north of half the people having a vested interest in Wall Street doesn’t count as having a deep influence on Main Street, I don’t know what would.

Yes, how “invested” someone is depends on many factors – age, race, and income, among others – but you really sound like an idiot when you write an article trying to convince me that I should feel badly that the market is booming. I’m never going to be upset by a story that tells me real money is being made by real people. Even when it’s painted as a story of winners and losers, I’d reminded them that there are winners and losers in ever field of endeavor – none of the great -isms of history have managed to change that beyond shifting a bit of who gets what. The wheel turns, but some group is always on top at any given moment – princes of the church, members of the politburo, or heirs to the House of Morgan – and they reap the reward of being in the right seat at the right time. I’ve never felt the need to hate them for that.

The two streets measure (mostly) different aspects of the economy. While I’ve made an effort to support local businesses with my spending during the Great Plague, I won’t for a moment feel bad about seeing growing equity prices. Both sides of the economy are important and while I’d love to see both go like gangbusters in an endless bull market, having half a loaf in this plague-ravaged environment is something to celebrate.

Going online…

I had a pretty normal undergraduate experience – 4 years, a couple of summer or winter classes, and done. I managed to earn a full academic scholarship at least for tuition, so fortunately I didn’t have to pay the freight for that education. I won’t say I loved every minute of it, but I look back very fondly on those four years.

In the early stages of my federal career I was on the road more weeks than not and opted for an online MBA. I don’t know what the fees for such a thing are now, but back then I was paying $1,850 per six week class, for a total of $24,050 by the time I earned my degree. My impression of online education, based on that MBA experience, is that you could get as much or as little out of it as you were willing to put into it. It wasn’t hard to slip through doing the minimum, but to really learn the subject you needed to put in extra hours beyond the homework and discussion boards. I didn’t love it, but I ended up learning a lot and it served its purpose for a guy whose schedule wouldn’t have otherwise supported getting a degree. 

I’m seeing articles indicating that brick and mortar schools largely plan on charging full tuition for their slate of online classes for the fall semester. I fully realize that these schools have sunk costs that they need to keep paying regardless of how instruction is delivered, but at the same time I can’t fathom by what logic an entering freshman would pay full price for severely reduced services. Better I’d think to take your intro level classes from the local community college, save your money, and transfer them on when your school of choice opens back up for learning in the flesh. Under the circumstances, I’d even argue a gap year could be a better investment of time and resources.

Pretending that you’re completely justified in charging full price for the undergrad college experience while providing significantly reduced service feels distinctly like perpetrating a fraud… although if you have a large enough group of people willing to unquestioningly pay the bill, I suppose you can take every cent they’ll willingly hand over. 

Carnival…

Carnival, the cruise line that I vaguely remember from life in the 80s and 90s as advertising vacations aboard the “fun ship,” is planning to start cruising again on August 1st. I’m sure that some courageous souls will be tempted aboard these plague ships buy unbelievably discounted prices, but I’m not sure you could tempt me to on board with an offer of giving me the actual ship at the end of the cruise.

With at least one of the other large cruise lines already flirting with bankruptcy, it’s not surprising that Carnival is chomping at the bit to get back to business. I’ll be curious to see how many people take them up on the opportunity, though. Are there enough people still holding onto their vacation money in the face of 20% unemployment who also have a wildly under-developed sense of self-preservation to make the effort profitable? Watching the increasing reports of asshattery from around the country, at first blush, the answer is a definite maybe.

I don’t suppose you’ll ever go too far wrong trading on the stupidity of the average person – even, or maybe especially, when the penalties for stupid range from debilitating viral illness on up through death. Go ahead and enjoy the buffet and that sweet, sweet balcony room though.

On tracking the virus…

I’ve written before about the decline of personal privacy. We slap RFID tags on our vehicles to make paying tolls marginally less painful. We carry around a mobile tracking device in our pockets. Many of us live with home security cameras that can see all but the most private moments.

The tech industry’s move towards developing apps that use our phone’s onboard GPS to track proximity to potentially infected people may sound like an altruistic use of technology to improve public health. Outside of saying they’re working on this “neat new thing,” not much is being said about the implications that come along with using such a personal tracker. Without knowing what, if any, legal safeguards will be in place, details of what beyond proximity is being collected, how long it will be stored, who will have access to it, how it will be used, and what control I will have over what’s collected, I have to say it’ll be pass from me. 

I’ve signed over some degree of privacy to big tech already because I value the services they provide. At its heart, though, my cell phone is nothing more than a tool. I have no intention of taking life guidance from it – or from Apple or Google or any of the other firms racing into this space. 

I won’t be wearing a tinfoil hat anytime soon, but I feel like sooner rather than later I’ll find my phone living in a Faraday bag except for moments when I need to use the damned thing.