Human Nature has been on my mind lately because I’m in the middle of an Audible book,  The Laws of Human Nature, by Robert Greene.  I can’t enthusiastically recommend it—it is an unusual book and unusually long (over 28 hours), and the paperback is 624 pages.  It is, nonetheless, an interesting take on the laws of human nature that, whether we know it or not, shape most of our actions.

My main objection to Mr. Greene’s book is his overly pessimistic interpretation of the motivations or interpretations of human behavior.  I believe he writes through the lens of someone who does not believe noble causes, intentions, or good deeds ever exist altruistically.  I don’t think Mr. Greene could accept a simple “good morning” without attributing the salutation to a devious, power-hungry human’s attempt to lower your defenses so as to rule over you.  His book can sometimes be very dark—Machiavelli would be proud.  But, thanks to my father’s influence, I had to finish the thing since I had paid “good money” for the book.

But this is a financial newsletter, not a book review.  So, let me move on to how human nature affects our financial planning and investing. Read More

The first six months of 2024 have been very good to investors.  Of course, it is just six months, and anything under the sun can happen in the next six months.  Short-term movements in the market are unforeseeable.  The only thing we have confidence in is that if we invest in a wide swath of good companies, they will reward us in the long run.  We measure the long run in years—preferably five to ten-year increments.

Daily, we hear about how the markets are doing and what this or that event will do for the markets. Read More

If there was any doubt about this being an election year, turn on your favorite television show and sit through the election year commercials.  They make my daily Jeopardy escape a chore.  The person who invented the mute button should have received a Nobel Peace Prize.

From what I can tell (w/o the volume) political commercials haven’t changed much.  This cycle, again, I see that Social Security (SS) is a hot-button political issue in 2024.  And why not?  In the program’s history, more people are getting SS payments or getting ready to take their SS than ever before.

As of March 2024, there are over 67.5 million beneficiaries on Social Security, and they collect over $119,837,000,000 per month[i].  Almost $120 billion per month!  Or $1.440 Trillion per year.  More than Mexico’s entire annual GDP, which, incidentally, is the 14th highest in the world at $1.414 trillion.[ii]  That’s a lot of money and a lot of votes. Read More

As we enter the last four months of 2023, I’m reminded that this time last year was not so pleasant.  September 6, 2022, the S&P closed at 3,908 on its way south to the low of the year on October 12 of 3,577.  We were fielding a few worried calls.  What made matters worse was that the asset class in our portfolios, which is designed to be the ballast, Fixed Income Bonds, also had their worst year in decades.  (Bond prices and rising interest rates are inversely correlated.)

But markets like 2022 are where real money is made.  Market downturns like CY2022 are opportunities to buy the best companies in the world (even in the history of the world) at significant discounts.  And the icing on top of those share-price discounts, the company dividends were increasing—up about 11% in 2022.  In most of our accounts, we’re reinvesting them.  So we buy or hold companies selling at a discount, reinvest our dividends into more shares of those companies, and voila, we have a great year in 2023.  Read More

If you’ve been a good saver and a salaried worker throughout your life, you more than likely have an IRA, 401k, TSP, or 457.  (These are called qualified plans.)  Many people have a combination of them and perhaps multiple accounts at different places.  And if you’re approaching retirement, you should have some pretty high balances.  These accounts were built by saving pre-tax money from your paycheck or business earnings.

Pre-tax money means you postponed paying income tax on the money that went into those accounts.  This is a great way to save on income taxes while working, at the same time stashing some income for retirement.  The US has a “progressive income tax,” meaning that the more income you earn, the higher the tax rate you pay (from 10% to 37%).  Deferring part of that earned money from the highest tax brackets makes perfect sense. Read More

The first six months are nearly in for 2023, and the markets are starting well.  Markets try to price in the economy six months ahead of time.  Many analysts are assuming a recession this year, which was probably priced in at the beginning of the year.  It’s what investors think will happen after that recession that’s being priced in now.  A popular Wall Street maxim is that Bull markets (rising markets) climb a wall of worry.  It seems that’s happening now—but we’ll see.

On the local level, we have been alerted that Pershing is raising the costs of mailing paper statements.  It’s already high—as in $1.25 per statement—but it’s going to $2 after August 31 and $3 after January 2024, then $5 by June 2024.  There is nothing I hate more than paying for a statement.  This annoyance is Pershing’s deal—they want to be “paper-free by 2023.” I guess they’re trying to be green.  I think they’re trying to add $5 (in green) to their bottom line.  (I ordered a 55-pound window a Read More

Welcome to May, when stockbrokers sell and go away.  This old saying is not as relevant today as a few decades ago when floor traders on Wall Street would vacation for the month in the Hamptons.  I imagine eleven straight months of screaming and shouting (bids and asks) at each other would take its toll.

Historically, May is not a big month on the markets.  Courtesy of Moneychimp.com, here are the S&P 500 monthly averages from 1960 to 2022: Read More