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.

 

Trails: the Washington, DC, area’s secret strength

Washington, DC,  and its environs may be known for prestige and politics, but these are among my least favorite aspects of this region I call home.

What is the best aspect?

The trails.

The trails frame the region’s abundant natural beauty. They flow through the traffic-clogged landscape, offering a secret source of strength and tranquility for anyone to discover.

The mighty Potomac river with its whitewater and rocky cliffs at Great Falls is flanked by one of America’s best dirt trails (the 184.5-mile C&O Canal Trail).

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The C&O Canal Trail (image:Wikimedia)

The C&O Canal Trail offers a superior walking, running, or biking experience. You can also fish in the canal or the Potomac. Parts can be crowded, such as the area around the Great Falls Overlook, but for the most part its a simple rustic wonderland. The views are excellent. You’ll also find 19th century ruins along the path.

This trail alone is consolation enough for the Beltway and Congress.

Want to take in the city’s architectural splendor from afar, check out the Mount Vernon Trail that stretches between the Key Bridge (across the Potomac River from Georgetown) and Alexandria, Va. This is a great way to see the Tidal Basin and the city’s low-profile skyline from the riverside trail.

Another gem is the Rock Creek Trail, which descends to Georgetown through Rock Creek Park from Lake Needwood near where I live in Rockville.

These are just three (admittedly my top three) in a region stacked with gems. Other favorites include the W&OD Trail and the Sligo Creek Trail. A bit north of the city is the epic Seneca Creek Greenway Trail, which is long enough for a trail ultra-marathon. These trails are likely a big reason why the DC often tops lists for America’s fittest city (this year it gave up the #1 spot to the Twin Cities, another place with awesome trails).

But you don’t need to be an endurance athlete to appreciate the DC area’s secret strength.  As Lao Tzu may once have said: a journey of 10,000 miles begins with a single step.

Krishnamurti – A surprisingly secular wise man

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J. Krishnamurti as a young man

Total Freedom, the Essential Krishnamurti is an excellent introduction to the profound thought and lucid writings of J. Krishnamurti (1895-1986). It begins with his renouncement of the Theosophical Society’s Order of the Star—an occult group which had groomed him to be their “world teacher”—in a blunt yet eloquent speech to the order’s followers. In this speech, which opens the book,  Krishnamurti, rejects any kind of cult. In words that launched his subsequent six-decade career as a philosopher, he makes a case against any one tradition:

I Maintain that truth is a pathless land, and you cannot approach it by any path whatsoever, by any religion, by any sect. That is my point of view, and I adhere to it absolutely and unconditionally. Truth, being limitless, unconditioned, unapproachable by any path whatsoever, cannot be organized; nor should any organization be formed to lead or coerce people, along any particular path.

Wow. That must have taken some courage. This rebellious stance surprised and impressed me. Looking over the book’s dust jacket with accolades from the Dalai Lama and other spiritual luminaries, I was not expecting anything so ardently secular.  This brings a refreshing (to me) non-dogmatic approach to the many themes he subsequently covers.

In his early writings, which comprise the first 100 pages or so in this collection, Krishnamurti presents creative intelligence as a master key to the good life and an antidote to otherwise endless suffering. This intelligence is honed by facing suffering directly. He writes “Through your own awakening intelligence, through your own suffering you will discover the manner of true fulfillment.”

In subsequent pages, Krishnamurti describes this “manner of true fulfillment” in various ways, most convincingly (to me) as the understanding of suffering’s sources and increasing the capacity for attention, awareness that can guide people to avoiding predictable traps in life. I perceive clear echoes of the Buddha, and also of ancient Greek thinkers such as the Stoics and Aristotle.

I think Krishnamurti’s philosophical essays are quite valuable to readers today. He is a tremendous idea synthesizer who nonetheless rejects the role of fixed ideas. He is a champion of dynamic discovery, and I can see why his writings remain popular. Just as Montaigne remains a vital and creative link between the ancient world and modern times, I think Krishnamurti is a valuable voice that deepens the secular experience.

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.

Bridge of Dreams – A Review of The World of the Shining Prince by Ivan Morris

 

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Screen depicting the Miotsukushi chapter of Murasaki Shikibu’s Tale of Genji, which is the centerpiece of Ivan Morris’s World of the Shining Prince (image via Wikimedia Commons)

The World of the Shining Prince  synthesizes a vast amount of Japanese history, anthropology, and aesthetics through the prism of the world’s first novel—The Tale of Genji by Murasaki Shikibu. From its sparkling prose to its lucidly conceived themes, this 1964 book by Ivan Morris must rank as one of the greatest achievements in liberal arts. Reading The Tale of Genji before reading The World of the Shining Prince is probably a good idea, and recommended, but not absolutely necessary. Morris’s book conveys most of the 1,000+ page novel’s plot—which spans 75 years around the turn of the 11th century and contains hundreds of characters—as well as its aesthetic flavor. The triumph of the book is that he adds so much more to the picture.

Morris writes that “The Tale of Genji gives a realistic and fairly complete picture of cultural life in the capital.” What his book adds is the context—historical, anthropological, political, artistic—that makes this picture more three dimensional. Reading The Tale of Genji is like being steeped in tea, soaking up dreamlike episodes linked by poems. Morris’s book is more clear-eyed, yet forms multiple bridges of understanding into the dream world.

The Shining Prince  in Morris’s title is none other than Prince Genji, the aristocratic ladies-man aesthete whose adventures are chronicled in the first two-thirds of The Tale of Genji. The author, Lady Muraski, was a noblewoman in the Heian-era court. Both main character and author are so absorbed in court life that a reader needs a guide like Morris to understand how unique, elite, and remote from other civilizations court life had become.

Genji’s era is known as the Heian, which lasted from 794 to 1185 and marked the rise of Chinese influence in Japan. The country became Buddhist during the preceding Nara period, and the borrowing of Chinese culture continued into the Heian. However, Morris makes an interesting point about the time period depicted by Muraski: that for 100 years the Japanese aristocracy had been purposefully distancing themselves from Chinese influence and retreating into a more insular and uniquely Japanese way of life.

This way of life could be extremely strange. Bureaucrats would often start their working day after nightfall and work into the pre-dawn hours, their dreary activities made more lively by drinking rice wine. Their lives were dominated by aesthetics such the turn of a poetic phrase that conjures meaning through allusion (Japanese are masters at speaking indirectly), the quality of a fabric, the thoughtfulness of an incense blend.

Why is this small cast of courtiers and their strange rituals worth studying? Because, Morris argues, they produced a unique and indelible flourishing of literature written by women (Murasaki and her contemporary Sei Shonagon being the most famous) that have not only stood the test of time but become increasingly renowned across the centuries. Only Shakespeare is trailed by more commentary.

The thing that really makes the book stand out to me—its heart, so to speak—is that Morris’s work builds upon Murasaki’s themes of dreamlike reality and impermanence. He writes toward the end:

Throughout the novel…Murasaki rings the changes on the image of dreams and thereby evokes one of her central themes—the nebulous, unreal quality of the world about us, and the idea that our life is a mere ‘bridge of dreams’ (the title of her final book), over which we cross from one state of existence to the next.

When I read this line, I thought that this theme is also a perfect metaphor for Morris’s own work.

 

A force at play: the more you pay, the less you get

One of Vanguard founder Jack Bogle’s axioms in personal finance is that the more you pay to buy investments, measured by the fees, the less you get over time measured by total return. This principle is illustrated very well in the PBS Frontline documentary The Retirement Gamble in which Bogle appears to introduce the idea.

Recently I started reading Phishing for Phools (2105) by Akerloff and Shiller, which takes thesis that market competition leads to hoodwinking of consumers. Shiller is known for his work on economic models of housing prices and his most famous book Irrational Exuberance. Akerloff is an economics professor at Georgetown. Both are Nobel laureates.

I hadn’t made it very far into the book when it struck me that Bogle’s axiom could be extended to more than just the trade offs between passively and actively managed mutual funds. In the very first pages, Akerloff and Shiller introduce the concept of reputation mining. In classic economics professor fashion (harnessing the undergraduate cliché of a basket of goods at the supermarket), they use a fruit metaphor:

“If I have a reputation for selling beautiful, ripe avocados, I have an opportunity. I can sell you a mediocre avocado at the price you would pay for a perfectly ripe one. I will have mined my reputation. I will also have phished you for a phool.”

The banal fruit metaphor becomes more provocative when they proceed to apply it to the way in which ratings agencies mined their reputation for credibility in the run-up to the subprime mortgage meltdown. For a good illustration of context of this chapter of American financial history, watch the 2015 film The Big Short.

When most customers get tricked into buying overpriced goods, collapse is possible when some part of the market wises up. My mind immediately leaped to another part of the economy that is arguably engaging in widespread reputation mining: higher education. Many people say that higher ed in the United States represents a bubble similar to the one built on bad mortgages in the United States. A few years ago the amount of student loan debt exceeded credit card debt at more than $1 trillion. Reportedly, more than 40 million Americans are paying down these loans, which tend to have more affordable interest rates than credit cards but cannot be expunged in bankrutpcy.

Have all these Americans been ‘phished for a phool?’

Much research shows that college remains a good investment. Yet as much as I love higher education, particularly the liberal arts tradition I benefited from at Kenyon College, I think a solid case can be made that the higher sticker prices of recent years, combined with the increasing use of part-time adjunct instructors, fit a pattern of reputation mining. According to PBS:   “Adjuncts now make up more than 70 percent of all college and university faculty, often juggling a course load at multiple universities, earning an average of $2,500 per course.” Meanwhile, according to an editorial in the New York Times,  “if over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000.”

Thus while the job security of the typical university instructor has vanished, which I think is a headwind against teaching quality, the product has (in the case of public universities) quadrupled in price. There are many factors influencing these trends, but they don’t seem sustainable. If tuition remained the same but classes were offered through prerecorded online lessons and proctored via algorithms, teacher salaries could plummet further. This would be blatant reputation mining. It would also mean that students and their families would be paying more for less.

Just like the mortgage market, these macro-trends oversimplify a very complex set of market interactions. I think reputation mining is going on at the same time as many university experiences represent genuine value for each tuition dollar spent. I’m still a big supporter of higher education, and believe that teachers will be more important than ever in our future as many jobs become obsolete through automation. Families now have to be strategic and savvy to avoid being ‘phished.’

In my own educational experience, I believe that my Kenyon degree, though expensive, represented real value. From that base I’ve been able to build a career as a writer and editor. My Master’s in Journalism at the University of Maryland was similar. During my time as a writer working for Georgetown, I got free tuition which I applied to earning a Master of Professional Studies degree in Technology Management. The ten courses I took were taught exclusively by adjuncts. Was this Georgetown mining its reputation for dollars? Tough call. I was glad that many of my teachers in technical subjects were practitioners of those subjects rather than academics,  so I valued that they all had relevant day jobs and moonlighted their expertise. But on the value spectrum between the residential undergraduate experience at Kenyon and the night-school-style Professional Studies degree, I think I got a lot more value in my earlier studies. As much as I enjoyed studying tech at Georgetown, had I needed to pay the tuition out of pocket, I likely wouldn’t have gone for that extra degree.

A lot of financial wisdom amounts to ‘avoid getting ripped off.’ Alas, we live in a world where market forces make that a tricky thicket. I’m looking forward to delving further into Phishing for Phools.

 

 

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).

No more Dave Ramsey podcasts

For the last few months, I’ve tuned into Dave Ramsey’s radio show via podcast. There’s a lot to like about his simple method of getting and staying out of debt. America would be a better place if more people did something to get a better handle on debt. Henry David Thoreau made a similar point about signing one’s life away, and lamented how most men led lives of quiet desperation.

But I’ve decided that despite Dave’s strength as a teacher, the human interest of the people who call into the show, and the clarity of Dave’s ‘baby steps,’ aspects of the show trouble me enough that I have a hard time listening any further.

The things that bother me are:

  • The endless promotion of his network of financial advisers, insurance agents, and staged appearances
  • His rejection of DIY passive investing (the kind you can learn about on Bogleheads.org), which is a good option for individual investors who hope to avoid being ripped off
  • The clear relationship between the first and second points above
  • And then personally, the references to collecting guns as a hobby. I kind of enjoy his political rants, even through I usually disagree with them, because I can learn more about the perspective of the religious right. Collecting guns for fun, though, just reminds me of America’s tragic problem with guns.

So while I am grateful to Dave for constructing a good system to think about debt, I’m not about to become his customer.

**

The Roman emperor Marcus Aurelius coached himself to  “waste no more time arguing about what a good man should be. Be one.” That was about 1,845 years ago. His words, and those of Thoreau, echo through time. Easy to say, hard to achieve.

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.