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Another investing letter worth reading

Every year, I read Warren Buffet’s letter to the shareholders of Berkshire Hathaway. It’s entertaining to read and offers a glimpse into his approach to investing and, in many ways, life. (and I ogle at the dividend yield of his stock holdings)

Today I want to share another letter, this one by someone who is also very successful but perhaps not as well known – Howard Marks.

I’m suggesting it because it offers a good framework for understanding the what and why behind investing in a low interest rate environment. He offers his opinions and predictions, or more accurately a series of probable outcomes, and it’s a good framework to understand what the future might hold.

Coming Into Focus [Howard Marks, Oak Tree Capital] – “In this way, low rates make risk aversion a challenging thing to practice and risk taking much more palatable. The alternative is to accept today’s lower promised returns. But most people opt for the former, and that means risky asset classes become crowded with eager capital, something that’s not beneficial for risk-adjusted returns. Bad things tend to happen when FOMO – the fear of missing out – takes over from risk aversion, or the fear of losing money.”

How My Investing Has Changed After Financial Independence [Physician on Fire] – “I recently read Dr. Bill Bernstein’s The Investor’s Manifesto. Dr. Bernstein, a retired neurologist, financial historian, prolific author, and manager of ultra high net worth investors, is famous for saying ‘If you’ve won the game, stop playing.’ What he means is, if you have all the money you need to live the life you want, why not dial down the risk and shift your investments to safer, less volatile assets, i.e. more bonds and fixed income instruments, and a lower percentage of stocks.”

How to waste your career, one comfortable year at a time [Valley Girl Newsletter] – “A friend of mine told me this story about wild ducks — Wild ducks migrate in the winter not because of the cold but because of the food. If you feed them, they won’t migrate. Keep feeding them for a few years in a row, still won’t migrate. Then stop all of a sudden, they won’t migrate, and they’ll die. The moral is that you can tame wild ducks, but you can’t wildify tamed ducks (that’s why there isn’t even such a word as wildify). So you have to be careful not to lose that hustle.”

A Brief History of Word Games,/a> [The Paris Review] – “When I began to research the history of crosswords for my recent book on the subject, I was sort of shocked to discover that they weren’t invented until 1913. The puzzle seemed so deeply ingrained in our lives that I figured it must have been around for centuries—I envisioned the empress Livia in the famous garden room in her villa, serenely filling in her cruciverborum each morning­­. But in reality, the crossword is a recent invention, born out of desperation.”

See you tomorrow Apexian!

I am an Uighur who faced China’s concentration camps. This is my story.

Today’s post has nothing to do with money but it’s so important that I wanted you to see it.

It is not easy to read and recounts stories of torture, so I would not be upset if you decided it wasn’t for you. But if you can, read it. When you hear about what China is doing to Uighurs in Xinjiang, such as this CBS News Hour piece, this is what they’re talking about.

I am an Uighur who faced China’s concentration camps. This is my story. [Varsity] – “In the first installment of our new series shedding light on current humanitarian crises, Victor Jack sits with Ӧmir Bekali, a Uighur Muslim who recounts his imprisonment, torture and indoctrination at the hands of the Chinese state.”

We’ll return to our regularly scheduled programming tomorrow.

How to live like you’re already retired.

Welcome to the weekend, my friends. I’m a few hours late with the Friday edition of Apex Money — and that’s okay. Here are the links I’ve collected for you:

Apartment rents are plunging (especially in rich cities). Is it time for you to negotiate? [Bloomberg, so possible paywall] — “With remote working in vogue for everyone from banks to tech companies, and the quirky shops and bars that made living in a city fun curtailed, the equation about where to live is changing. And so is the balance of power between landlords and tenants.”

How to live like you’re already retired. [Incognito Money Scribe] — “There is a lot of research that shows what things unequivocally help retirees live a healthier, happier and more meaningful life…Those same studies and surveys actually tell all of us how to live better lives right now. Because the benefits of those activities encompass all age groups.”

Have you outgrown your financial heroes? [Rich & Regular] — “You’ll know you’ve outgrown your hero when you can finish their sentences or when their answers to your questions are ‘it’s up to you’. At that point, you wont need another book, coaching session, private session or personalized assessment. You won’t need to spend hours combing through their blog, liking their posts on social media or listening to their latest podcast interview.”

Why read? Advice from Harold Bloom. [Farnam Street] — “The ultimate answer to the question ‘Why read?’ is that only deep, constant reading fully establishes and augments an autonomous self. Until you become yourself, what benefit can you be to others?”

Finally, here are Tai and Talaat from His and Her Money with a YouTube livestream that explains how the pursuit of financial independence gives you options.

That’s all I have for you! We’ll be back on Monday with more of the best in the world of money.

How your childhood affects your money habits.

I’m not sure if I’ve mentioned it here at Apex, but I’m experimenting with sobriety. I never really thought I had a drinking problem, but I did think alcohol was keeping me from being the person I wanted to be. As of Independence Day, I gave up drinking. And this month, I’m trying to do a completely sober October. (Translation: no pot either.)

Well, we’re nearing the end of the month, and I think it’s safe to say: giving up the pot has had a more profound positive impact to my mental health than giving up alcohol did. But giving up the alcohol has helped my physical health.

I’ll have some interesting choices in the future. I’m pretty sure I’ll give up the pot for good (but hey, I could change my mind), but I miss beer and wine. Still, do I really want them back in my life? I’m not sure.

Anyhow, you don’t actually care about my experiments with my health. You’re here for money links! 🙂 Let’s get to them.

How your childhood affects your money habits. [Femme Frugality] — “Our past can unconsciously help us make decisions. Paying attention to our thoughts and behavior patterns with money can help us create reflective money habits. Sometimes we have to dig a little deeper to find what’s going on.”

“Three video games that made me wealthy.” [Tic Toc Life] — “This article focuses on the long term educational value of video games. By teaching you business, economics, and finance, video games can help you build your personal wealth…This article is an ode to the video games that helped me grasp business and personal finance from a young age in a way that my peers did not.

How to invest on a low income. [Moriah Chace] — “I didn’t start out with all of this. I built it over a period of two years. And you can too. The goal is to invest in a way that makes you feel confident, because when you feel good about your money, you’ll want to build on the good habits you’ve created to feel even better.”

Finally, here’s a quick video to close out the day. Maybe you’ve seen this already. It’s worth watching again. It’s a joint political ad from the two candidates for the governor of Utah. And it’s amazing.

This is what it should look like when two adults with different ideas come together to ask voters for their support. Just because somebody disagrees with you, that doesn’t mean their stupid or evil. It just means they disagree with you. Kudos to these guys.

“Why I’m grateful for my emergency fund.”

What a wonderful day to read and think about personal finance, wouldn’t you agree? That’s why I’ve taken the time to collect some of the best money stories from across the web. Take a gander!

“Three times I was damn grateful for my emergency fund.” [Bitches Get Riches] — “I am here to testify to the importance of emergency funds and side gigs! Bow your heads and listen as I tell you my tales of being grateful af that I had an emergency fund and an extra stream of income at hand.”

How continual professional development benefits you and your money. [Women Who Money] — “If you’re not sure where to look for professional development opportunities, check your local community college for seminars or workshops. Also, if you’re a member of a professional organization, you might be able to attend conferences throughout the year.”

How to repurpose your old gadgets. [Wired] — “You might be surprised at how many ways you can repurpose an old piece of hardware, even if it’s several years old and has become too slow to fulfill its original function properly anymore. These are some of our favorite ideas, but there are more out there.” [As somebody who has an iPhone 12 Pro in transit, I found this article useful.]

When you have enough, it’s time to help others. [The New York Times] — “While I continue to invest for a retirement that grows ever closer, I am no longer focused on trying to increase my net worth. There is nothing more I want.”

Not much extra commentary from me today. I’m too engrossed in reading the Hannibal Lecter books (for real!). So disturbing, but so good.

New homeowner money mistakes.

Today is Tuesday, money nerds, and you’re back at Apex Money, your daily source for interesting money stories from around the web.

First up today, I’m going to link to a piece from my co-author. Jim and I try not to promote our own stuff too often, but this is an important piece. There are some folks out there who like to push the notion that extraordinary incomes only provide “middle class” lifestyles. Recently, Jim debunked this idea.

How to survive on $400,000 per year. [Wallet Hacks] — “This week, CNBC published a story about how a family making $400,000 isn’t wealthy and could barely make it by in a high cost of living state. I’m not going to nitpick the budget itself (with one exception) other than to say that it contains a few mistakes. What I will do is explain why it’s wrong by explaining how someone could not only survive but thrive, when you earn more than six times the median household income.”

Airline miles programs sure are profitable. Are you the loser? [The New York Times, so possible paywall] — “Because of our desire for freebies, Delta [believes] it can ‘manage costs by modifying inventory levels and value.’ In other words, the airline can raise the prices of trips and upgrades, in miles, at any time. And it believes it can do so with relative impunity from a passenger revolt or from intense protest by American Express cardholders.” If you use an airmiles card, you should read this.

Related reading: The contrarian’s guide to frequent-travel plans.

The economics of vending machines. [The Hustle] — “Radical shifts in consumer behavior, physical interaction, and health guidelines have shifted the vending landscape. Vendors who rely on schools have been hit especially hard; other locations, like nursing homes, have continued to perform well. Despite the shakeup…the market is ripe for entry.”

To wrap things up today, here’s another video — and this time it’s actually about personal finance! Here’s Sarah (the Budget Girl) talking about some of the mistakes she’s made as a new homeowner. As a fellow who has made tons of homeownership mistakes, I feel for her.

And that’s it for Tuesday. I’ll be back tomorrow with more great stuff. Join me, won’t you?

Working from home is making a lot of people miserable.

Happy Monday, money nerds! J.D. here with another week of recent money news. To start, let’s look at the psychological side of things. Today’s articles are all about our mindset. (I leave it up to you to see how these apply to your financial life. 😉 )

Babies’ random choices become their preferences. [Johns Hopkins University] — “Though researchers have long known that adults build unconscious biases over a lifetime of making choices between things that are essentially the same, findings from Johns Hopkins University indicate that even babies engage in this phenomenon, suggesting that this way of justifying choice is intuitive and somehow fundamental to the human experience.” Confirmation bias starts young, my friends.

Being a n00b. [Paul Graham] — “It’s not pleasant to feel like a noob. And the word ‘noob’ is certainly not a compliment. And yet today I realized something encouraging about being a noob: the more of a noob you are locally, the less of a noob you are globally.”

We learn faster when we aren’t told what choices to make. [Scientific American] — “The role for choice found here suggests that our sense of control in a situation influences how we learn—or do not learn—from our experiences. This insight could also help explain delusional thinking, in which false beliefs remain impenetrable to contrary evidence. An outsize feeling of control may contribute to an unflagging adherence to an erroneous belief.”

Working from home is making a lot of people miserable. [Slate] — “We traditionally tend to think of working from home as a perk. You can do your laundry while you work. You can stay in pajamas and control your own thermostat. You can take the dog for a walk. But after being abruptly forced to work from home full time this year, a lot of people have discovered they don’t like it nearly as much as they thought they would.”

Our final article today has nothing to do with money…but I liked it. Dolly Parton is a national treasure. This explains why.

The United States of Dolly Parton. [The New Yorker] — “A voice for working-class women and an icon for all kinds of women, Parton has maintained her star power throughout life phases and political cycles…The country-music establishment can be about as partisan as they come, a rope line of old-school apple-pie values and unquestioning patriotism. But Parton is a true diplomat.”

And, of course, I can’t leave you without sharing a fun video. This one’s strange. It’s all about how one guy decided to see if could play the classic computer game Doom…using only potatoes for power.

Okay, folks. I’ll be back tomorrow with more money news. See you then!

Goals vs. Systems

For many years, people would ask me about my goals and I would tell them I didn’t have any.

It’s not that I didn’t have them – I did but they weren’t “SMART” – Specific, Measurable, Achievable, Relevant, and Time-bound. Of course, I wanted an outcome but it wasn’t something you could measure. I usually wanted to get better at something (very nebulous) that I wasn’t good at (also nebulous) and needed some stakes. For example, I co-started a meal plan business ($5 Meal Plan) because I wanted to see if I could sell something and build a recurring revenue stream from a membership site.

The business is still going strong so it was successful but did I reach my goal? Maybe? I don’t know or care.

Goals are great, I just don’t really set them in the way others do. There are downsides to this but it’s worked for me so I haven’t looked to fix it.

Which brings us to the first article – it is one I’ve long enjoyed because it validates what I already believe! 🙂

Goals vs. Systems [Scott Adams] – “In my new book, How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life, I talk about using systems instead of goals. For example, losing ten pounds is a goal (that most people can’t maintain), whereas learning to eat right is a system that substitutes knowledge for willpower.”

His book is a great read too – I recommend checking it out.

Build Personal Moats [Erik Torenberg’s Thoughts] – “A personal moat is a set of unique and accumulating competitive advantages in the context of your career. Like company moats, your personal moat should be a competitive advantage specific to you that’s not only durable, but compounds over time.”

I want to send you into the weekend with this short piece from Derek Sivers:

Where to find the hours to make it happen [Derek Sivers] – “It takes many hours to make what you want to make. The hours don’t suddenly appear. You have to steal them from comfort. Whatever you were doing before was comfortable. This is not. This will be really uncomfortable.”

Have a great weekend!

The wrong way to think about debt

A few compelling arguments against debt that are directly towards high earners but applicable to everyone regardless of your income level:

The Wrong Way to Think About Debt [The White Coat Investor] – “I often suggest people pay off their debt or that they are over-leveraged in a blog post, on a forum, on social media, and even in real life. While most agree with me, there is usually someone who pipes up to give some pushback. The argument usually goes something like this: “It’s stupid to pay off a 2-4% debt because you expect your investments to do better than 2-4%.” I used to believe this argument too. It’s easy to do so because mathematically it is correct. The older and wealthier I get, the more I see serious flaws in this argument, and I’d like to discuss them today because the argument is so darn common, even among people who are debt-free!”

The Best Magazine Articles Ever [Cool Tools] – Kevin Kelly co-founded Wired Magazine and he shares a curated list of the 25 best magazine articles ever. The list is pretty big and has some familiar names on it, but I haven’t read the vast majority of them. The top one is an article from Esquire in 1966 titled Frank Sinatra Has a Cold – time to dig in!

33 Things I Stole From People Smarter Than Me [Ryan Holiday on Forge] – “Throughout my career, I’ve had the fortune of meeting bestselling authors, successful entrepreneurs, investors, executives, and creative people. They’ve offered me some of their best advice, which I’ve eagerly taken. So here, to mark my 33rd birthday, I’ve made a list of 33 of my favorite pieces of wisdom — things I try to live by, things I tried to revisit and think about this year. If you like them, steal them for your own life, too.”

Tourist returns stolen artifacts to Pompeii after suffering ‘curse’ for 15 years [CNN] – “‘I took a piece of history captured in a time with so much negative energy attached to it,’ she wrote. ‘People died in such a horrible way and I took tiles related to that kind of destruction.'”

I don’t know what’s weirder – taking things from a place known for death and suffering… or waiting 15 years to return it.

Don’t steal!

See you tomorrow!

Leftovers

TIL that there are people who don’t eat leftovers.

If You Don’t Eat Leftovers I Don’t Even Want to Know You [Bitches Get Richest] – “Here it is! Our most controversial article of all time! It has inspired more offended, angry comments than any other. […] Did you guys know there are people out there who just… don’t eat leftovers? Yes! These wasteful, absentminded heathens exist! And they’re coming for your delicious yet frugal lifestyle decisions.”

SEC charges S&P employee with index insider trading [Alphaville on Financial Times] – “While we’ve heard about investors trying to arbitrage index inclusion and, conversely, accusations of companies gaming their accounts to meet the index’s arbitrary rules for years, this is the first time we’ve heard of insiders allegedly trading on index inclusion.”

This next story is from The Economist and it’s a bit on the dry side but does highlight how “tutoring” works for the uber-rich, it’s as incredible as it is laughably predictable:

Education First-class flights, chauffeurs and bribery: the secret life of a private tutor [The Economist] – “Wanting your child to succeed is almost the definition of parenthood (though interpretations of success vary). If a good school begets a good university, a great job, a suitable spouse, house and all the rest, then it’s never too early to start training. Ever more parents, particularly those with money to spare, consider their children to be engaged in an academic arms race. Tutoring is a secret weapon.”

Did you get the part about the very good doctors’ suggestion of drawing out Frank’s DNA and injecting it into their son to “make him more talented?” INSANE.

Recycling meets reality [Knowable Magazine] – “Modern industry has made great strides in turning trash into tomorrow’s new products, but the process is still a long way from perfect. New technologies can help. Plus, updates on chemical recycling, design for recycling and dirty recycling.”

Time to reheat some leftovers!