Crown of thorns

I found this NYT article about the cellular biology of coronavirus fascinating.

Corona means crown, and the graphics in the piece show why this virus is called crown. It creates spikes like the top of a crown, which play a role in the virus’s ability to hijack cells.

One thing stood out to me: the virus takes over cells by merging its oily surface with the surface of healthy cells.

Here’s the crucial line: the virus’s oily surface ” falls apart on contact with soap.”

So wash those hands, everyone, and do what you can to stop touching your face until you have done so!

I’m hoping for good news in terms of controlling the pandemic as spring arrives in the northern hemisphere, but I think we should all prepare for the worst.

Changing the frame

Happy new year, readers. Like most people I set some New Year’s goals recently. A couple of them fall into the category of stretch goals. Both are seemingly hard tasks.

These goals are to run 2020 miles this year and to reduce my body weight to 172 pounds, which would put me in the normal range for my 5ft10.5in height.

When I first think about these goals, they seem almost impossible. Like most people, I perceive difficulty based on what’s normal for me.

But what would happen if I changed the frame of reference just slightly? It turns out that both goals fall within roughly 10 percent of what I already do.

In the case of running, I ran around 1870 miles in 2019. There were many fun adventures among those miles and many days I slacked off. It turns out I only need to up my miles by 8 percent to reach my stretch goal.

In the case of weight, I will need to lose about 21 pounds from my current weight of 193 pounds. I understand that BMI is not the best gauge of health, since it distorts the picture for athletic people with heavy muscles. But still, making it to the “normal” range is a good yardstick and goal. Here too, I’m roughly within 10 percent of my objective.

When I think about these goals outright, They seem arduous. Yeah if I simply ask myself the question “do you think you can do 10 percent more? ” The answer is yes. The first frame is likely futile and burn up willpower and lead to depression. The second frame perceives the same reality, but makes the task seem a lot simpler and more incremental.

I will check back on the schools from time to time throughout the year. Wish me luck. Hopefully I can enjoy going the extra 10 percent.

 

Indicators

Donald Trump’s presidency is an indicator of deep disorder and fear. One of the most shocking aspects of living in America these days is that roughly four out of ten Americans tolerate or actively support him. The man is an illiterate malignant narcissist with dangerous fascistic and racist traits. He infuriates more than half the country, including me. For the past few years, I have wondered why there aren’t more powerful countervailing powers against abusive and criminally-inept leadership. I think those forces exist (witness the testimony of Fiona Hill), but they are diminished in the face of dark tides.

In my opinion, Trump’s power indicates a few problems:

  • The rise of shameless media celebrities who have eclipsed accountable community-based figures (Paris Hilton goes to Washington)
  • The unshackling of sinister forces in politics through dark money and the tools of cyberwar
  • An unsustainable rise in income and wealth inequality which further undermines community and stokes fear-based thinking among all social groups
  • A sense of profound loss and alienation among those with the most to lose–older Americans with property and savings

If America is going to survive, these forces need to recede. Perhaps this will happen when we are fully confronted by a great common foe such as climate change when its impacts become undeniable. I think that day is coming. Although we are a phenomenally wasteful nation, we are also an ingenious one.

Trump to me is an unfortunate indicator. Though I support his impeachment, I think his removal won’t remove the dark forces I’ve listed above. In a future blog post, I hope to write about some positive ways that each person can make their own small to large push against this tide that will drown us all if we do not use our creative intelligence.

 

From Low Cost to No Cost–the Index Fund Has Won

This month, the investment giant Fidelity began to offer two broad-based index mutual funds with zero purchase and management fees and no minimum investment.

This is the latest salvo in a healthy competition between mass-market investment giants Vanguard (which started the index fund revolution under the leadership of Jack Bogle), Charles Schwab, and Fidelity. The result of the competition is a victory for main street investors, who traditionally have played the role of peasants forced to pay lordly fees.

As the Wall Street Journal quipped in their coverage of the story, “the race to zero in the investing world has finally reached bottom.”

Hurrah.

The two funds in question are variations on very broad indexes. One is US domestic (Fidelity ZERO Total Market Index Fund aka FZROX) and resembles the Russell 3000 index–a proxy for the total US market. The other is international (Fidelity ZERO International Index Fund aka FZILX), which buys the top 90 percent of stocks in terms of market capitalization in every market outside the US).

Fidelity also slashed the cost of most of its other index funds, which is great for folks like me with Fidelity retirement accounts.

Looking at their SEC filing to open these funds is kind of thrilling. Zeros all the way down. I got the filing from the message board Bogleheads, where there is a lively discussion about this development. If it were just marketing hype, these diehard index investors would be pointing it out, but the consensus seems to be that this is real, not smoke and mirrors.

An old chestnut on Wall Street, the title of a humorous book by Fred Schwed, is a rhetorical question: Where are All the Customers’ Yachts?

Nowhere. The customers got skinned. Their pelts where hung on the wall.Michael Lewis and others wrote some amusing books about this.

A businessman named Jack Bogle started Vanguard in the 70s with a counter intuitive idea: stop buying yachts and instead return the profits to shareholders. The company would function as a quasi nonprofit, where the shareholders functioned as owners. This structure allowed any profits to go toward making it cheaper to invest. For many years, Vanguard stood alone as the low-cost, investor-first option.

Within the past decade massive amounts of money have flowed into index (or “passive,” since they passively track market indices) funds for good reason. Here is some data from CNBC:

Flows out of actively managed U.S. equity mutual funds leaped to $264.5 billion in 2016, while flows into passive index funds and ETFs were $236.1 billion, according to data provided by the Vanguard Group and Morningstar. That was the greatest calendar-year asset change in the last decade, during which more than $1 trillion has shifted from active to passive U.S. equity funds.

This makes sense. Index funds usually reflect the best deal for a retirement investors and other casual market participants. Fidelity, Charles Schwab, and others such as Black Rock started to compete with Vanguard in order to capture as much of this avalanche of money as possible.

The big difference between Vanguard and these companies is that that they have a more limited ownership structure. Much of Fidelity’s owership is the private property of the Johnson family.

When a family-owned private company — one that built its reputation on active money management a la Peter Lynch — starts to offer market access without cost, that is a breathtaking development in my book.

So where will the competition go from here? Likely further in the everyday investor’s interest.A lot of the talk on Bogleheads was about how technically Fidelity’s move makes the cost of their funds comparable to Vanguard’s since Fidelity makes profit loaning stocks, whereas Vanguard returns these profits to shareholders. Yet Vanguard, which is massive, may move to match lower costs.

Of course many investors may retreat from index funds during the next protracted bear market. But for folks who can hold on throughout the cycles, no fee index funds are a gold mine.