Pushing ahead in an era of distraction

As 2017 comes to a close, I realize that this blog has seriously fallen by the wayside. Chief among the reasons is undoubtedly distraction. I’ve never discussed politics much on this blog before, and this may be as poor a time to start as any, but I have to say it:America is going downhill fast under Donald Trump. I could go on about all the many flaws of our current Commander in Chief, but it’s not worth it. More gripes would just add to the problem. The modus operandi for celebrities is “any press is good press,” and the Trump presidency is an extreme manifestation of this.

The man just needs to trounced in election after election — first in the 2018 mid-terms, and then in the 2020 presidential election. I seriously hope decency in America can resurface in America to the extent that we one day discuss “the Trump era,” the way that folks in my parents’ generation (the boomers) discuss “the McCarthy era” or “the Watergate era.”

Meanwhile, thoughtful people who believe in civility and the possibility of reasonable policy-making just need to push forward.  Rather than being intimidated or distracted by the latest shiny object dropped into the news-cycle, Americans need to rebuild our crumbling society brick by brick. I may get into what that might entail in future posts — now that this blog has taken up what’s honestly on my mind.

 

Swensen’s plain and effective advice for individual investors gets lost in the guru mystique

The New York Times recent feature story about David Swensen, “The money management gospel of Yale’s endowment guru,” paints a picture of one of the hardest-working and most ethical institutional investors on the planet.

The article, however, fails to point out that the type of investing depicted in the article, with a palette of  hedge fund managers selected by a committee of astute market analysts, isn’t what Swensen would recommend for individual investors. For us, Swensen’s advice is far simpler.

Swensen’s book for everyday investors, Unconventional Success—not mentioned in the article, but covered by the Times back in 2005—is a cornerstone for understanding how to assemble a reasonable and low cost investment strategy.

Bogleheads has a good one-page summary of this strategy, which is one of the so-called “lazy” portfolios, since the investor can set it up and then tune-out market news. Once or twice a year, funds can be re-balanced by buying and selling holdings to their strategic allocation.

The allocation, in a nutshell, per Bogleheads, is:

  • US equity:  30%
  • Foreign developed equity: 15%
  • Emerging market equity: 5%
  • US REITS: 20%
  • US Treasury bonds: 15%
  • US TIPS: 15%

I follow this allocation for all of my investments, with one slight tweak. Since the Vanguard Total International Stock Index Fund contains a proportional amount of the word’s emerging market stocks, I invest 20% in that fund, which makes my investing that much simpler.

You can learn to put together this portfolio without reading the book, but the advantage of reading Swensen is the strategy begins to make sense. Each of the elements is there for a reason, and in concert these elements work together nicely (except perhaps in a market free-fall, where everything is losing value, but the only words that matter in that situation are ‘stay the course’). Since the allocation makes sense, it’s easier to stick to it.

This echoes Warren Buffet’s maxim not to invest in anything you cannot understand. Buffet, perhaps the word’s most successful investment manager, also unironically advises everyday investors to keep it simple by buying index funds.

Unconventional Success is also kind of fun to read if you can get past Swensen’s dry prose style and the formulaic (like class notes) way the chapters are structured. He is absolutely brilliant at skewering rip-off artists in the market, and he does so plainly with a certain vehemence I enjoy. You can see shades of this in the recent Times article when Swensen criticizes how the interplay of a hedge fund and a pharmaceutical company (Valeant) resulted in skyrocketing drug prices.

Although I wish the article contained a bit more education for the general reader, I welcomed its appearance nonetheless. Having read that Swensen’s been battling cancer for a few years, I wish him well. Our nation needs more wise teachers like him.

Sapiens

Sapiens changed my life. This book by Yuval Noah Harari offers the widest possible aperture on human history. It focuses on our species’ favorite subject: ourselves. It also points to the devastation we’ve wrought on other human species (now extinct) and every other species we plunder. I cannot recommend it more highly.

My favorite aspect of the book is how it contextualizes big ideologies that dominate human affairs (Christianity and capitalism, to take two big examples). Rather than take sides about their merits, he points to their function for our species. This macro-scaling, while stepping aside from petty dogmatic questions, allows for his arguments to be simultaneously sweeping and well-founded.

This is a book to be read and re-read.

The Q Bus Lives

Today I checked the Washington Metropolitan Transit Authority’s “better bus” webpage and clicked on the slate of upcoming service changes for 2016. To my surprise and delight, the Q bus I ride each day between Rockville and Silver Spring will survive and live another day, at least for the time being. Metrobus will put aside a plan to chop the line in half and force folks to transfer at Wheaton Station.

Last fall they collected feedback the plan that would have ended the eastern (Georgia Avenue and Silver Spring) portion of the Q line, which extends to Shady Grove at its Western end.  The plan would have stopped the line at Wheaton Station, and passengers traveling to Silver Spring would have gotten a free transfer onto the Metro line. Going the other way, passengers transferring on to the Q line from the Metro line would ride the bus free.

Why was this idea seriously considered and almost implemented? Beltway traffic on Georgia Avenue north of Silver Spring is predictably snarled, particularly during the evening northbound rush. With Y line buses already covering this part of the route, why not remove the cross-county Q buses from the congestion?

I disagreed fundamentally with the plan. The buses are a engulfed in a sea of passenger-less cars. They are a rafts of sanity and fiscal sense on these nasty currents of wasteful driving. Why punish those trying to make a positive difference by taking public transportation? I realize something has to give, but cars can’t just win because they are harder to control. Seemed like punishing those with the weakest voice (poorer riders) to accommodate people rich enough to drive solo.

Along with 473 other riders, I filled out survey on the proposed change (in my case by going to their website). The results of the survey reflected some of my own concerns and are nicely summarized in the service change document, and I quote them below:

Route Q1,2,4 Service and Tariff Proposals (referred to as Q Line)
Q Line customers weighed two proposals which at first blush are offsetting: the first is to receive a free transfer between Q Line and Red Line and the second is to cut the Q service back at Wheaton station forcing a transfer. As you might expect, Q Line customers rated the free transfer as positive and the service reduction as negative.
A closer look was taken to segment customers who were positive of both changes, one or the other, or were negative about both changes.
Just 11 percent of Q Line customers were positive about both the free transfer and service proposal. Another 46 percent preferred one or the other, mostly positive toward the free transfer and negative by the service reduction. Finally, 43 percent were negative toward both proposals.
Written sentiments seem to echo this negativity. An additional in-house survey was conducted by the CSCM team on-board the Q2 and Q4 bus lines between 7:00 a.m. and 6:00 p.m. on Tuesday, September 29th, 2015 to collect additional data for the equity analysis. The survey results were consistent with the predominantly negative
sentiments reflected in the feedback gathered through the online survey, as described above.
Overall, service changes to the Q line would affect 76% of the riders surveyed on-board. The results showed a strong preference for bus over rail, with only 19% of respondents saying they would switch to the Red Line for access between
Wheaton and Silver Spring, if the Q Line service were to be cut. In terms of ridership, empirical evidence showed the north-bound Q line buses to be mostly full between 7:00 a.m. – 8:30 a.m., while the south bound buses were generally full throughout the day.
At the end of the document, Metrobus staff give their recommendation: “do not implement.”
Hurrah.
To put this in a larger context that’s easier to understand, I believe this represents a significant win for poorer riders–those who don’t have cars or can’t afford parking in particular–who need to commute across Montgomery county. Those going almost the entire route won’t be forced to transfer. Although this doesn’t solve the problem of snarled traffic, it at least doesn’t punish those who contribute to a more sensible commute for everyone. Now let’s start working on a better, cheaper, cleaner, transportation system.
Reading the document was also a refreshing taste of democracy in action. I learned how seriously Metrobus takes socioeconomic equity issues, and support the methodology overall. I might be signing a slightly different tune had the decision been opposite, but I still believe I’d respect the amount of work they put into their surveying (including sending out surveyors to capture the voices of riders unlikely to fill out online forms).

What is my risk profile?

Sophisticated algorithms are constantly gauging us online, calibrating the likelihood of various outcomes without our knowing about it. In financial life, these computations mostly involve risk. But they are hidden. What if, as financial citizens, we were able to view our own risk profiles? It would be an effective educational tool to know exactly where we stand. Too much debt to income? You might get a heads up about that. Something tells me this stuff is hidden because few people have asked for it. I think a startup could launch a  free “scan me” risk profile feature for those who don’t mind inputting their data using some of the industry-standard stuff that businesspeople use.

If this post seems short, it’s because I’m composing it while riding on a bus, and I just got to my stop.

Aristotle is my writing coach

Aristotle by Raphael (via Wikimedia Commons)
Aristotle by Raphael (via Wikimedia Commons)

In the Nicomachean Ethics, Aristotle writes:

“The beginning is more than half the task, and throws a flood of light on many aspects of the inquiry” (p. 17, Penguin Classics paperback edition).

This echoes something that Jon Franklin, my literary journalism professor at the University of Maryland (undoubtedly quoting someone equally famous as the philosopher of old) always said:

“The definition of writer’s block is not knowing what you are doing.”

Because I work as a writer, I interpret Aristotle’s statement in my own terms, and what he says is true. The hardest work is arranging a plan of attack, an illuminating principle, a beginning. Even if you don’t follow the classic “inverted triangle” of writing the most important facts first, the first sentences of any piece are Aristotle’s “flood of light.” If these sentences are no good, they leave the reader in the dark. If they cast the right light, the reader can sense they are in good hands.

It strikes me that good writers–particularly non-fiction writers, reporters, and essayists–fit Aristotle’s definition of the “sincere man”

“Such a man is to be commended. His inclination, if any, is toward understatement, because this seems to be in better taste, since exaggeration is wearisome” (p. 106, Penguin Classics paperback edition).

Exaggeration and hyperbole are everywhere, a function of much of the language we encounter being crafted by marketers and not artists. A worthwhile artist doesn’t insult the reader’s intelligence with hollow claims, which are “wearisome” to sort through.

The Mother of All Goals – Dropping to “Normal” Weight with StickK

 

By Dan Wilcock

Weight loss is a great American pastime, or perhaps a great American folly. Oceans of money are spent on it. Entire forests are cut down to publish guidebooks. The only times I’ve been fairly successful at it have been when I’m not particularly paying attention to it.

I set a goal for myself this week: drop enough weight to achieve normal BMI. I’m a 5’10” male, so that means 172 pounds. Right now I’m around 200, of which I’m not particularly proud. But there it is.

What makes me think I have a chance in hell of reaching weighing what I did when I entered college?

I’m going to nudge myself my using StickK, where I’ve created a commitment page and pledged to contribute $5 to charity each week I don’t meet my weight goal. The first few months of .5 pounds/week reduction targets probably won’t be that tough. I imagine that toward the end it will be a lot harder and I may need to cough up the cash.

Why aim at so-called “normal” weight when there are good reasons to be skeptical of BMI in the first place? Why try to be what Americans perceive as skinny when some studies suggest that being a little overweight is healthier over a lifetime? I agree with this skepticism. Muscle-bound people are sometimes considered obese using BMI since it’s such a crude measurement. Being a little overweight may be just the margin we need against wear and tear and the ravages of time.

All that being said, the goal and its attainment matter to me. Dropping to 172 would provide a lifetime benefit. Getting there will require setting a lot of new baselines from which to live—in terms of daily exercise (I love to run), nutrition, and sleep. I’m also fond of StickK’s methodology—setting up iterative real consequences over time for success or failure (your get to keep your money or fork it)—such that progress occurs in dripping drops. There’s a very popular social science book behind ideas like this called Nudge, which I recommend.

Failure is a real possibility, and I’m happy to pay for it. But, as I’ve written before here, archers aim high to hit distant targets. I’ll let you know how proximate to the mark I am as I go.

Have you tried using StickK or similar programs to meet a goal? Have you succeeded or failed? Drop a comment if you’d like.