Saturday, August 8, 2015


"Toledo was just another good stop along the good king's highway..."
- Yes, Our Song

Of the thousands of rock lyrics that have been quoted over the years, this may be the very first mention of the above line from the progressive rock band Yes.  While not to be confused with great poetry, there is nonetheless a hidden gem here.  Do you know why Toledo is called out?

Toledo is mentioned because on a previous tour, the band played a concert there in an arena where the temperature inside reached 126 F, and probably even hotter on stage.  But far from complaining, the band merely viewed the concert as "just another good stop" on the tour.  Such is the power of flow and the power of doing something you love to do.

Contrast that with a lot of early retirement blogs.  I actually feel sad when I read many of them.  So much time and effort is spent making extra money and scrimping on expenses, and yet in the end, a lot of people only seem to aspire to more of the same.  One early retiree posted his weekly time schedule:
  • 20% - Eating
  • 20% - Household Chores
  • 15% - Video Games
  • 10% - Blogging
  • 10% - Reading
  • 10% - Relaxing
  • 5%   - Working Out
  • 5%   - Child Care
  • 5%   - Misc
Really?!?  Wow.  The irony, of course, is that if you added work, the list would probably look exactly the same as before retirement.  In other words, all that effort throughout life was simply about being able to stop working.  Everything was about avoiding something they didn't like to do.  Nothing was about finding something they would love to do.  I was really surprised how proud the writer was about this schedule and how the readers all said they longed for the same thing.

But such is the way of the world, I suppose.  Rousseau said, "Man is born free, and everywhere he is in chains."  And too often, I am afraid, the chains are of our own making.

Friday, July 24, 2015

Investment Critics

"The person who says it can't be done should not interrupt the person doing it."
 - Unknown

One of the more enduring criticisms of this blog has concerned the active management of my investments. There has always been no shortage of people telling me I'm a complete idiot for failing to passively index everything. Over the years, I never responded to any of these critiques. In a way, they rather amused me, as I'm nearly certain that I've read far more EMH literature than all my negative commenters combined. I know very well what efficiency is and what it is not. But still, throughout life we always find an unlimited supply of novices that are so eager to shower us with advice.

So as this blog begins to wind down, perhaps I would like to respond just this one time. They say a picture is worth a thousand words. Five year trailing annualized...

Wednesday, July 22, 2015

Asking the Right Questions

"We thought that we had the answers.  It was the questions we had wrong." 
- Bono

More than 8 years ago, the very first sentence of the very first post of this blog began with a warning from Aristotle: "Those who wish to succeed must ask the right preliminary questions."

Nowhere is this failure to ask meaningful questions seemingly more evident than when discussing net worth.  Several of the big personal finance blogs have series where they profile high net worth readers.  Each article in the series features a different person, complete with a little personal background and then a rough breakdown of assets and liabilities.  Readers are then asked to comment.

While there are certainly exceptions, the vast majority of the comments fit into 3 categories:
  1. Acknowledgements.  These are the simple comments like "That's great!"  Now there's nothing wrong with positive reinforcement, but these are understood as courtesies, not information exchange.
  2. Dismissals.  A lot of people seem to take delight in dismissing the success of others by saying it was easy.  "Of course they were able to save money - they didn't have any kids!"  or  "Look.  The wife is a lawyer.  Any idiot can be a millionaire if they are a lawyer!"  or  "He started investing in 1982. Everyone would be rich if they started investing in 1982!" 
  3. Trivia.  These questions are baffling to me.  For example, if mutual funds are listed, they want to know how much is held in taxable and nontaxable accounts.  If that is given, then they want to know the cost basis.  If that is provided, they want to know lot information.  (I'm not making this up!)  People ask all sorts of irrelevant details about stock holdings, loans, and so forth.
The bottom line is that most people don't really seem interested in learning anything practical from these articles.  Instead, they dismiss the big items and ask a lot of meaningless questions about trivial details.

News flash: it doesn't really matter if people balance their portfolios quarterly or annually.  It doesn't really matter if someone's asset allocation is 3% over some benchmark.  It doesn't really matter whether someone includes their furniture or not in their net worth.  Stop focusing on all these trivial details.

Second news flash: People would be wise to stop dismissing major items such as occupation and timing, and instead ask what they can learn from others.  Yes, some fields pay a lot of money, and perhaps people should be asking how to get into those lines of work.  Yes, the beginning of a bull market is a fantastic time to start investing, but maybe people should be asking how that millionaire held on through the entire uptrend, because most people do not.  Ask what market is unusually cheap right now, because there is always a cheap market of some kind.  Every generation receives its own unique opportunities.  You can take advantage of them or discard them.

There is a lot to be learned from successful people in all walks of life.  But you have to ask the right questions.