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Apex Money Posts

Why haven’t home prices dropped?

Good morning, my friends, and welcome to Monday. It’s J.D. here with another week of Apex Money goodness for you all. Here’s what I’ve gathered to kick things off.

How to be enough. [Vox] — “Where we falter is believing that more money, more things, better things, better selves will ultimately make us happy…In one sense, the quest for self-optimization may be a means of asserting control over our lives when war, climate change, and political polarization wreak havoc around us, she says. All the wanting, though, leads to overconsumption, Dubey says.”

The man who couldn’t stop going to college. [The New York Times gift article] — “No one more fully embodies the nature of elite American higher education today, in all its contradictions, than a man who has spent so much time being molded by it, following its incentives and internalizing its values. But what are those values, exactly?” True story: When I was young, one of my ambitions was to spend my entire life as a college student.

Why haven’t home prices dropped? [Of Dollars and Data] — “If you want to know why home prices are unlikely to drop by a significant amount in the near future, this is your answer. Who wants to see half of their portfolio decline because someone built affordable housing nearby? No one. As a result, many homeowners end up fighting tooth and nail to prevent such future developments.” Meh. This is only one piece of the puzzle. According to my friends in real estate, another huge problem is institutional investors purchasing home inventory, driving up prices for actual prospective homeowners. I’m sure there are other causes too.

Today’s last feature has nothing (or little) to do with money. It’s a ten-minute film from 1976 (or 1982, the source is unclear) chronicling a day in the life of the Prudential building in Chicago. (Based on the clothing and the computers, I’d say this is 1982, not 1976.)

This video is a fascinating time capsule, for one, but it’s also relatively compelling for its intended purpose.

4 Types of Wealth

At my first job, a software engineer with Northrop Grumman, an older engineer said that life was about juggling a series of five or six balls. I don’t recall the exact names but it was things like your career, your health, etc. All of those balls are made of rubber, save one. The last one was made of glass and it represented your relationships.

You can drop the ball on your career and still recover. You can drop the ball on your health and still recover. Dropping the ball on your relationships, especially those closest to you, is much much harder. Sometimes impossible. That mental model has stayed with me for decades.

It’s very similar to what I’m sharing today, which are the types of wealth.

The first piece is an idea from James Clear in one of his 3-2-1 emails

“There are at least 4 types of wealth:

Financial wealth (money)
Social wealth (status)
Time wealth (freedom)
Physical wealth (health)
Be wary of jobs that lure you in with 1 and 2, but rob you of 3 and 4.”

And expanded on by Fritz:

The Five Types of Wealth [The Retirement Manifesto] – “When you think of “Wealth,” what comes to mind?

If you’re like most people, your first thought is of financial wealth. Money, houses, possessions, “stuff.”

If that was your first thought, today’s post is for you.

Yes, Financial Wealth is one of the five types of wealth. And yet, in our quest to live our best possible lives, is it the most important type of wealth? What are the other types of wealth, and what can we do to become truly “wealthy” in the broader sense of the word?

Today, I’m challenging you to become rich, in ways you’ve probably never imagined.”

While his fifth wealth, Eternal Wealth, focuses on religion, yours could be different. Either way, it’s definitely something to focus on, whatever form it takes.

At the risk of ending the week on too philosophical or heavy a note, I want to share this gem:

A Brief History of Time Travel [Sean McGowan on McSweeneys] – “The first successful instance of time travel occurred in 2306, when a group of Syracuse University researchers transported Tootsie, a chimpanzee, to the front lines of the War of 1812. The scientists were awarded a Nobel Prize, but despite deftly outmaneuvering the British Royal Navy in the Battle of New Orleans, Tootsie won no military decorations.”

Thorstein Veblen’s Theory of the Leisure Class

A Veblen good is one where demand goes up as price goes up. The theory behind this is that these items are such powerful status symbols that the higher price, and thus greater rarity, makes them even more desirable.

Think Birkin bags. They’re just expensive bags, but they are coveted by their fans.

Veblen is named after Thorstein Veblen and he had a lot of theories:

Thorstein Veblen’s Theory of the Leisure Class—A Status Update [Rob Henderson’s Newsletter] – “This explains why status symbols are so often difficult to obtain and costly to purchase. These include goods such as delicate and restrictive clothing, like tuxedos and evening gowns, or expensive and time-consuming hobbies like golf or beagling. Such goods and leisurely activities could only be purchased or performed by those who did not live the life of a manual laborer and could spend time learning something with no practical utility.”

Why Are ETFs (Sometimes) More Tax-Efficient Than Mutual Funds? [Oblivious Investor] – “In contrast, if you or I want to sell shares of an ETF, that’s a transaction that happens on the secondary market. We aren’t transacting with the fund itself at all. We’re just selling our shares to somebody else who wants to buy them. And that means that the ETF doesn’t have to do anything — doesn’t have to sell anything, and no tax costs are incurred by remaining shareholders in the fund.”

This next one is really fun:

How the Colors Got Their Names | Otherwords:

Keep life’s less admirable emotions at bay

I’ve long admired the thinking and work of Jonathan Clements, the owner operator of Humble Dollar (which we’ve linked to many many times in various editions of Apex Money). Though we’ve never met, I’ve read his writing long enough to feel like I know him.

Just a few days ago, he published a blog post in which he shared a grim cancer diagnosis.

As someone in my mid-forties, I’ve known several people who have battled cancer and most, but not all, of them won (though they will tell you, they’ve only won it “for now).

And for all of them, the path started in the same way – with something seemingly innocuous.

The C Word [Humble Dollar] – “The cliché is true: Something like this makes you truly appreciate life. Despite those bucket-list items, I find my greatest joy comes from small, inexpensive daily pleasures: that first cup of coffee, exercise, friends and family, a good meal, writing and editing, smiles from strangers, the sunshine on my face. If we can keep life’s less admirable emotions at bay, the world is a wonderful place.”

Life is short enough as is. Hug your loved ones. Find joy every day.

And “keep life’s less admirable emotions at bay.”

Restaurant service fees & surcharges

I’ve always found “service fees” at restaurants to be incredibly deceptive.

These are the fees they add on to the bill that are NOT a tip to the server. (mandatory tipping for large parties, that one I happily accept) Why not just increase the bill?

Our first article takes a look at that:

An Economic Perspective on Service Fees [Monday Morning Economist] – “Even though inflation has been steady over the past few months, it’s still higher than what we’re used to, and with minimum wage hikes spreading across the United States, restaurants have spent the past year looking for ways to stay profitable. One strategy they’ve adopted is adding service fees and surcharges when it comes time for customers to pay the tab.”

How to be enough [Vox] – “Our obsession with self-improvement is making us miserable.”

I think bridges are cool. I hope you do too!

See Every Kind of Bridge Explained in 15 Minutes [Practical Engineering].

Are credit-card rewards worth it?

I’m writing this installment of Apex Money next to my poor, sad hound. Tally (our beagle mix) had some fatty lumps removed yesterday, and she’s on vet-ordered bed rest for the next two weeks. She hates it. She’s miserable. And as a result, I’m miserable too. I basically have to stick by her side to make sure she doesn’t do anything fun — like chase squirrels. Not sure how we’re going to police her for thirteen more days. Even one day of this is driving me nuts!

Okay, enough grousing. Let’s look at the stories I’ve collected for you today.

Expensive mistakes that beginner real-estate investors make. [Afford Anything] — “Imagine walking into a casino and putting $100,000 on red. That’s how some people view real estate investing – as pure luck…Successful real estate investing is about strategy, not gambling. By educating yourself and avoiding common pitfalls, you can weather almost any storm.”

Is maximizing credit-card rewards worth it? [Of Dollars and Data] — “Maximizing credit card rewards can be a worthwhile endeavor if you know what you are getting into. Unfortunately, if you do this wrong, you can end up hurting your credit score and going deep into debt. For this reason, I only recommend considering this strategy if you have meet the following criteria.”

Why are Americans spending so much? [Vox] — “The pandemic saw Americans’ average percentage of income saved increase to an all-time high of 32 percent in April 2020 after many households received stimulus checks. That has helped fuel spending, but unlike in other high-income countries where consumers have proved more thrifty, Americans are close to depleting those savings.”

Today, we’ll wrap up with a video that actually is about money for once. It’s an eight-minute Vox piece about inflation: Why can’t prices just stay the same?

Like most folks, I’m stunned by how high prices are nowadays. It’s crazy. Some folks argue that this is merely a result of supply and demand, but I have a different view. I think that COVID and its after effects (especially supply-chain issues) caused demand-based price increases, but once things eased (and supply/demand returned to normal) companies kept those price hikes instead of dropping them. I think this reality is reflected in the record profits that large corporations have been enjoying.

Anyhow, the high prices are frustrating. But I suspect they’re here to stay. I wish I were old enough to remember exactly what price increases were like during the inflationary period of the late 1970s, but I wasn’t even ten at the time. In my world, the only real effect was that comic book prices jumped from 25 cents to 50 cents in a short period of time.

Okay, that’s it for today. Have a great weekend, everyone!

p.s. Here’s a GQ article about my favorite film of 2023: Godzilla Minus One. The film just arrived on streaming services, and I’m doing my best to encourage everyone to see it. It’s truly terrific.

What choice do you have?

Today is Thursday, money monkeys, and this is Apex Money. Let’s look at the stories we’ve gathered for you today.

Going sessile. [Ribbonfarm] — “One of the biggest changes in my personality with middle age is that I no longer really enjoy travel beyond local weekend getaways. Almost no destination has a pain/novelty ratio that makes it worth it. On the one hand, I’ve traveled enough that few places hold the promise of real novelty and stimulation. On the other hand, even though travel has gotten way more convenient overall…my tolerance for discomfort has plummeted.” Hahahahaha. I hate to admit, but I can sort of relate.

What choice do you have? [Money with Katie] — “I sometimes find myself wanting to scream into the void: ‘More, more, more to what end?’ The logic feels circuitous; it must get bigger so people can get richer and buy more stuff, which is important because that makes it bigger, which makes people richer, so they can buy more stuff. The U.S. economy feels stuck in the same doom loop that many US households are stuck in: a chronic case of losing the plot.”

What’s really happening to grocery prices right now. [Vox] — “For the past few years, several food and grocery retailers have embraced higher prices even at the expense of falling sales numbers. But the rush to signal that they’re now lowering prices may be a sign that the balance is tipping as companies chase higher sales over higher prices.”

Here’s a three-minute video that’s jam-packed with info that can help you so that you don’t get screwed buying a used car.

And that’s all for today. See you all tomorrow!

Time and quality of life.

Welcome to Wednesday, my friends. J.D. here with another round of money stories. Let’s look at what I’ve gathered for you today.

Time and quality of life. [Meaningful Money] — “How much time do you have left with your parents? How much ability do they have to enjoy time with you? It goes the other way, too. How much time will your kids have with you while you are mentally and physically healthy? How much time do you have left with your dog (or cat, if you’re a cat person)? Thinking about your life this way gives you the opportunity to think about how you want to spend your time, energy, and money while you and your loved ones are healthy enough to experience life together.”

How to navigate uncertainty in retirement calculators. [Can I Retire Yet?] — “The first thing I tell every planning client before presenting results is one thing we can be certain about with our projections is that they are wrong. The plan will constantly evolve as new information is presented.”

Our final story has nothing to do with money. It’s about animals, and animals are better than money.

Do animals know they’re going to die? [The New York Times gift article] — “I was…full of rage. I wanted to burn down the universe. I either wanted Moby back, which I knew was impossible, or I wanted nothing — no dog ever again. Life seemed to be some kind of scam, a little shell game, in which every living thing carried the pain of its own loss. And I was determined to never fall for it again.”

Related to that last story (sort of), here’s a fun eleven-minute video from the Howtown channel on YouTube: How do we know dogs are colorblind?

As a fellow who is fascinated by animal cognition, I thought this video was great. It does more than talk about colorblindness; it explores how dogs’ senses might affect the way they process information — and the world around them.

Okay, enough for today. I’ll see you all tomorrow.

How much is a memory worth?

Hello, Apexians! J.D. here with another week of stories about money (and more).

Our first feature today might seem a little woo-woo but it’s not. It’s wu wei. (Haha. I crack myself up.) It’s a discussion of one core concept of Taoism and how it can help you to be more content with your life.

Effortless action. [Money and Meaning] — “The Taoists…believed that society was a corrupting force; that culture created ways that prevent us from acting naturally. In today’s world, achievement and consumption culture: no one would work this hard, and this anxiously, if culture didn’t tell us we had to do to be accepted. The Taoists say that it’s only by unlearning what toxic culture had taught us, can we find our relaxed, natural state of being.”

True story: I re-discovered Taoism about a year ago. It has changed my life. I call it “religion without religion”. Taoism — and wu wei — help me to not get so worked up about the world (or about my own petty problems).

Banks in disguise. [Net Interest] — “One of the best known non-bank banks is Starbucks – ‘a bank dressed up as a coffee shop’…Starbucks got into banking in 2008 when the man that developed its brand, Howard Schultz, returned for his second (of three) stints as CEO. The company had offered a gift card since 2001 but Schultz revitalized it, pairing it with a new loyalty program, Starbucks Rewards, which he launched in April 2008. By paying with a reloadable card, consumers could access perks such as free wifi and refillable coffee. In 2010, Schultz put the card on an app, expanding its reach.

How much is a memory worth? [Mike Troxell] — “Ironically, one piece of this equation of memories growing in value is because our ability to recall is quite poor. It’s related to the ‘good old days’ syndrome. We think it was better back then. We think the fish we caught was bigger than it was…As time goes on, we also tend to remember the positive things more and block out the negatives.”

Let’s wrap up the day with a video. Here’s the Answer in Progress channel on YouTube explaining why fancy candles cost so much.

That’s all I have for you today. Come back tomorrow for more!

In Defense of Craft

Well well well, if it isn’t Friday!

Lifting weights is something I only discovered in college, forgot for a few years when I started working, and then picked back up again. Everyone should be doing resistance training, especially as you get older to combat loss of muscle mass and bone density, but the meditative aspects of it are important as well.

In Defense of Craft [The Growth Equation] – “Whether it’s stacking wood, lifting weights, running a mile, drawing a picture, recording a song, or writing an essay, I’ve come to believe strongly that there is something nourishing and gratifying about doing work where there is nothing and then there is something—and you are the only thing between the two.”

How Much is Enough of a Good Thing [The Financial Bodyguard] – “Most of us can think back to our childhoods and remember a time when we ate too much ice cream or sweets that turned the moment from feeling wonderful to feeling sick. In the investment world, the invention of the index fund (i.e. a fund that closely tracks a defined market index) was a moment when investors were handed a big bowl of index-flavoured ice cream. It is amusing to know that some in the US even declared index funds as ‘un-American’ as they were not trying to beat the market!”

Good conversations have lots of doorknobs [Experimental History] – “Givers think that conversations unfold as a series of invitations; takers think conversations unfold as a series of declarations. When giver meets giver or taker meets taker, all is well. When giver meets taker, however, giver gives, taker takes, and giver gets resentful (“Why won’t he ask me a single question?”) while taker has a lovely time (“She must really think I’m interesting!”) or gets annoyed (“My job is so boring, why does she keep asking me about it?”).”

Have a great weekend!