Pawns in the game…

Being that 99% of anyone who reads this blog are Americans, what I’m about to say probably falls into the category of an unpopular opinion. Fortunately, the older I get, the less of a damn I give about holding contrary opinions. That’s what you get in exchange for the perennially sore back and occasional spontaneous additional aches and pains, I guess. It’s probably a more than fair trade. 

In any case, my current unpopular opinion is that although it’s certainly unfortunate, I’m not losing any sleep about the two Americans who were captured in Ukraine and are now being held by the Russians. Before you start with the hate mail, hear me out – American citizens were warned off of traveling to Ukraine. The State Department withdrew its personnel from the country. The U.S. military is not taking an active role in the conflict.

The Americans in question, with full knowledge that they were going to be in an active war zone, beyond the operational reach of U.S. diplomatic and military support, decided to sign up to fight for Ukraine. Their decision, in many ways was heroic. They went where their conscience dictated, despite the personal danger in which it placed them. Doing so, of course, was as much foolish as it was heroic. That’s the catch, you see. Doing the heroic thing, by definition, meant that they accepted an awesomely high degree of personal danger.

Now that these men are in the hands of the Russians, the real weight of their decision has become obvious to them, their family, and those following along at home. I don’t wish these guys any ill, but the reality is they’re third country nationals caught out in someone else’s war. They’re strangers in a strange land. There’s probably a reasonable chance they’ll eventually be exchanged for someone the Russians want to fetch out of a deep dark hole somewhere at some point in the future. Maybe they’ll meet a different, less fortunate fate. For now, though, they’re just another pair of pawns in this new version of a very old game. 

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.

It’s sort of like going to the casino…

I know enough about the stock market to realize I need miles and miles of education before I’d consider managing my own account beyond throwing a few dollars here and there at penny stocks and hoping one of them turns out to be a runaway winner. What I’ve learned from occasionally gambling for small dollars is that letting me pick for myself is no better or worse than taking those same dollars to the casino. If I walk away eventually breaking even, it’s a good day. Usually, those penny stocks leave me with far fewer pennies than I started with, though. Overall, I’m happy letting a professional load any money I might actually want to have in the future into market-following funds and taking a very small commission for his trouble… comfortable knowing that in any 30-year period you’d like to name, the market has always been higher at the end of that period than it was at the beginning. 

Three or four years ago, when Bitcoin was making a big name for itself, I threw $100 in the pot. Like penny stocks, it was pure casino gambling. I still don’t know a damned thing about Bitcoin or how the crypto-currency market really works. As far as I can tell, you input things into the computer, witchcraft happens, and bitcoins fall out. That original $100 bet is now banging around between $350-$400. If I had any sense, I’d take my winnings off the table and walk away happy. That’s exactly what I tell myself I should do after I’ve had a good run on a slot machine, too. 

What I’m probably going to do is take those winnings and spread them around the crypto world in $25 or $50 increments in hopes one of those becomes the next big thing – another chance to double my money. If buying Bitcoin was a slot machine, this feels more like covering as many bets as possible at the roulette table and hoping the ball drops on just the right place.

It’s no better or worse than whatever “strategy” guides me during a day at the local horse track… and the only money that’s really at risk is my original $100 bet that I considered lost years ago when I plugged it in to a crypto exchange. If it goes bust, no great loss… but if it happens to go to the moon, I’d hate for it to be the lottery ticket that I didn’t buy.

I guess all of this is a long way of saying I’m starting to miss my periodic trips to the local casino and I’ll be replicating the experience, less the bells, flashing lights, and geriatrics as far as the eye can see, as much as possible from right here in my own living room. I can’t help but wonder if it wouldn’t be a better use of my bitcoin winnings to buy my own slot machine and cut out the middle man (and the accompanying downside risk).