Apex Money Posts

Hello, my friends, and welcome to another week.

After three months dedicated to selling our house, it’s now time to turn my attention to the next step of the process: buying a new place! To that end, I’m spending countless hours browsing Zillow. And I’m nearly ready to start visiting potential “next homes”. Yay! I can only hope this crazy market subsides a little.

Meanwhile, here are some of my favorite money stories from around the web lately.

The top 9 bad arguments against Bitcoin. [J.L. Collins] — “Today I want to look at the most common arguments against Bitcoin that you are likely hearing every day…I want to help you dispense with these shallow headline hot-takes and level up your understanding so next time we can debate some of the genuine issues facing crypto adoption.”

Five financial issues on which people can reasonably disagree. [Humble Dollar] — “When it comes to financial questions, there are two common reasons people disagree. Sometimes, they disagree about the facts—whether, say, interest rates are headed higher. But sometimes, people disagree for another reason: They see the world through different lenses.”

What inflation means for stocks. [Nerdwallet] — “If you can build a portfolio that’s low-cost, tax-advantaged and highly diversified, that’s how you protect your returns from inflation, and how you keep the majority of your money over time — no matter what’s happening in the markets or broader economy.”

The tyranny of time. [Noema] — “During an era in which social constructs like race, gender and sexuality are being challenged and dismantled, the true nature of clock time has somehow escaped the attention of wider society. Much like has happened with money, the clock has come to be seen as the thing it was only supposed to represent: The clock has become time itself.” This is a l-o-n-g but fascinating piece. Highly recommended.

Kim sat me down last week and made me watch the new P!nk documentary on Amazon Prime Video. To be fair, I made her watch an anime film first. Also to be fair, I was blown away by P!nk…everything about her. She’s incredible. Here she is in a very un-P!nk-like performance in her “secret’ folk duo.

Not bad, he?

Okay, folks. That’s it for Monday. I’ll be back tomorrow with more great stuff. See you then!

A few years ago, I was at dinner with Chris Peach of Money Peach when he told me he never orders his own meal at dinner. He asks the server to pick for him (“pick something you’d order for your friend”) and I thought he was crazy. He told me he’s never been steered wrong and I believe him.

I have my own mildly quirky meal ordering rules too – the key of which is to never order your favorite dish at another restaurant (especially one you’ll never go back to). So if I have a favorite burger place, I don’t order a burger anywhere else. You can only lose.

If the burger is better, then the old burger won’t live up to it. If the burger is worse, well, you’ve just ordered a worse meal. Good job buddy. 🙂

It’s a little like our first article about speculation and why you can’t win.

Speculation: A Game You Can’t Win [More to That] – “Here’s the thing about speculation: Realized gains feel like penalties when they’re interpreted as missed opportunities. Walking away with a great 10x return will make you feel terrible if that came at the expense of a future 100x return. If the top turned out to be much further out than you thought, then you can’t help but to be unhappy with the gains you actually did realize (no matter how good they were).”

What You Need To Know Before You Invest In Anything [Thomas Kopelman] – “I also want to note that chasing investment returns as a millennial is not where your energy is best spent. Your energy is best spent continually investing, increasing your income, increasing your investment percentage, investing in the right accounts based on taxes, etc.” A bunch of good questions to ask yourself before you invest in anything.

Declassified Cold War code-breaking manual has lessons for solving ‘impossible’ puzzles [Phys.org] – “The United States National Security Agency—the country’s premier signals intelligence organization—recently declassified a Cold War-era document about code-breaking. The 1977 book, written by cryptologist Lambros Callimahos, is the last in a trilogy called Military Cryptanalytics. It’s significant in the history of cryptography, as it explains how to break all types of codes, including military codes, or puzzles—which are created solely for the purpose of a challenge.”

The internet has a way of hyper-evolving every idea into near absurdity and the idea of side hustles hasn’t escaped this pattern.

The Modern Trap of Turning Hobbies Into Hustles [Repeller] – “We live in the era of the hustle. Of following our dreams until the end, and then pushing ourselves more. And every time we feel beholden to capitalize on the rare places where our skills and our joy intersect, we underline the idea that financial gain is the ultimate pursuit. If we’re good at it, we should sell it. If we’re good at it and we love it, we should definitely sell it.”

Get busy living or get busy dying…

How our jobs are killing us [The Darwinian Doctor] – “Collectively, our jobs contribute to our country’s weight problems, high stress levels, and sleep deprivation. These factors contribute to higher rates of everything from heart attacks to cancer and death.” Lots of data, lots of stats, and this is from a surgeon who, despite explaining he does spend a lot of time sitting at a computer, probably moves a lot more than most white collar workers.

One of my good friends is an estate lawyer and he’s shared a few horror stories of how it’s a headache, and a long drawn out process, when someone passes without a legal will and things have to go through probate. This article is from Canada but it doesn’t sound that different from the United States.

My Uncle Died Without a Will – And It Was a Nightmare [Young & Thrifty] – “What happens when a family member dies and doesn’t leave a will? It’s not pleasant, as one woman recounts. It’s a frustrating exercise that underscores why everyone should have a legal will.”

The headline of the only article today is really tempting… but it’s not nearly as sexy as I initially thought. It conflates income with wealth (we are taxed annually on income, wealth is only taxed when we die in estate taxes) and creates a “True Tax Rate” that feels misleading, to be honest.

I’m highlighting it not for the content within (it’s thin) but to point out why I think articles like this are not helpful. They reel you in with a great headline but there’s really no meat.

The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax [ProPublica] – “ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.”

I wanted to learn some juicy tax loophole but I didn’t see any. “.. it turns out billionaires don’t have to evade taxes exotically and illicitly — they can avoid them routinely and legally.” Bezos didn’t pay taxes because he didn’t realize any gains and his income was offset by investment losses.

They play with a “True Tax Rate” which is based on estimated wealth growth, not income. If we are taxed on capital gains we have yet to realize, I think a lot of non-billionaires would get upset (and rightfully so). Your shares of the S&P 500 index have gone up, you now owe taxes on it now, where are you going to get that money if you don’t sell? Good luck.

“One of the billionaires mentioned in this article objected, arguing that publishing personal tax information is a violation of privacy. We have concluded that the public interest in knowing this information at this pivotal moment outweighs that legitimate concern.” – I’m not so sure I agree with the public interest argument. Show us the strategies you found and if they’re outrageous, the names won’t matter.

It sounds more like putting Elon Musk and Jeff Bezos is a lot more exciting than “so and so billionaire had investment losses.”

In the end, there were no strategies in this article. No tactics. Just outrage that billionaires don’t pay more.

Maybe there will be future articles with more specifics on what people did, rather than just comparisons to lower income Americans, but we’ll have to see.

The first article is a bit of a thicker read as it’s meant for risk management professionals but it’s applicable to everyone since, when you think about it, risk management in your life is everyone’s job. We’ll look back on the pandemic as one of these novel risks (hopefully not to be repeated anytime soon!) and how we could all have better managed it and future novel risks.

The Risks You Can’t Foresee [Harvard Business Review] – “Well-run companies prepare for the risks they face. Those risks can be significant, and while they’re not always addressed successfully—think Deepwater Horizon, rogue securities traders, and explosions at chemical plants—the risk management function of a company generally helps it develop protocols and processes to anticipate, assess, and mitigate them. Yet even a world-class risk management system can’t prepare a company for everything. Some risks are so remote that no individual manager or group of managers could ever imagine them. And even when firms envision a far-off risk, it may seem so improbable that they’re unwilling to invest in the capabilities and resources to cope with it. Such distant threats, which we call novel risks, can’t be managed by using a standard playbook. […] The clearest signal that a novel risk is emerging is anomalies—things that just don’t make sense. This sounds obvious, but most anomalies are difficult for people to recognize.” It’s very easy to dismiss anomalies as just anomalies but they’re probably signals of something bigger. Anomalies aren’t “weird things you can easily dismiss” but may be a warning bell. Also, you’re the senior executive that needs to worry about what could go wrong. 🙂

10 Steps to Make Sure You Have Enough Money to Retire [Retirement Manifesto] – “One of the biggest worries folks have as they approach retirement is whether or not that they have enough money to retire. Since the goal of this blog is to “Help People Achieve A Great Retirement”, it seems appropriate to address that worry with this step-by-step plan. Follow these 10 steps and worry no more. They’re the steps my wife and I followed when we were making the decision on when to retire, and I’m confident they’ll serve you well as you make your decision.”

The Lesson to Unlearn [Paul Graham] – “The most damaging thing you learned in school wasn’t something you learned in any specific class. It was learning to get good grades.” Hmmm…. 🙂

“Many people feel disconnected from the individuals they’ll be in the future and, as a result, discount rewards that would later benefit them. But brief exposure to aged images of the self can change that behavior.” (from Harvard Business Review) – I remember reading this study but I never did anything differently, I felt like I was a decent long term planner so I didn’t need to see older me to help. 🙂

But Nikki Cox did and it’s brilliant (I’m stealing this for our kids too):

Let’s Think of Future Us [No Side Bar] – “Let’s hang up all our wet clothing so it’s dry when we want to go out and play again and not stinky and wet. Let’s put our boots away in their cubby so we know right where to find them later and we don’t get frustrated. To my complete and total surprise, the kids were like, yes. Let’s do that. That makes sense.” I can’t wait to try this.

It’s always good to get a reminder that the stock market is volatile yet resilient:

Every Single Time [Belle Curve] – “Stocks typically selloff roughly 7-10% at least once a year. A few months later, we’ve forgotten the reason for the selloff because markets recover and move on to new highs. The graph below shows the largest intra-year decline for the S&P 500 Index versus the calendar year return. In most years, stocks finish higher. Also in most years, there are decent sized selloffs.”

Is it really Friday already? I guess the week goes fast when it contains a holiday…and then you forget to do your job one day haha. No matter! Here we are with more great money stories for all of you. Let’s get to them.

“How I made $100,000 selling used items.” [Making Sense of Cents] — “I took $0.50 from my wallet, went to a yard sale and purchased a center cap for a Dodge Ram Truck. I took it home, cleaned it and put it on eBay. Within 24 hours, I sold it for $75. I took that money and re-invested it and to date, have never put any of my personal finances back into my business. Everything I have in my business today was from the original $0.50!”

Gwen’s blender theory of socioeconomic unfairness. [Fiery Millennials] — “I’ve paid $85 for two blenders. Someone who pays $300 for a Vitamix will have a working blender for years to come, while I’ll be surrounded by a graveyard of broken small appliances. Is it actually less wasteful and cheaper to buy a high-quality blender upfront? Where is the line in blender buying?”

What do you care what other people think? [The Wall Street Journal] — “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. It’s true for investing as it’s true for life: Be yourself, because no one else can do that for you.”

A financial checklist for the newly married. [Women Who Money] — “Congratulations! You just got married!…Now what? As a newly-christened household, there are financial steps you and your partner need to take to make sure you’re legally and financially starting off on the right foot.”

And, as always, we close out our week with something fun. Here’s Polygon’s take on the greatest achievements in dumb internet video. It’s just what it sounds like: a list of 25 bizarre, stupid videos from the past twenty years. You know, stuff like keyboard cat from 2007.

There’s a whole lot of goofiness there. It makes me happy.

Weekends make me happy too, and it’s time to start mine! We’ll be back on Monday with more of the best from the world in personal finance. See you then.

Good morning, money nerds! Welcome back. As always, Jim and I have culled our newsfeeds to find the most interesting and useful financial news to share with you. Have some suggestions of sites we should include in our searches? Drop us a line by email or reply in the comments to today’s post!

Here’s what we have for you today…

Five myths about women and investing. [Enterprising Investor] — “Women have longer life expectancies, and at this point, because of the gender pay gap, they have smaller nest eggs, so their financial needs are different. You can’t just pink it and shrink it. You can’t leave women out of a couple’s conversation and expect that they’re going to be happy!”

What’s the point of a trust? [Oblivious Investor] — The always-awesome Mike Piper answers a reader question: “Can you explain succinctly what the point of a trust is? I had thought that they were a tool for avoiding estate taxes (I don’t understand how that works, but it’s not a concern for me) but my accountant suggested I create one and I don’t really understand why.”

200 years of asset class returns. [A Wealth of Common Sense] — “You have to take any financial market data, call it pre-1950s or so, with a bucket of salt but I still think these numbers can be instructive when thinking about the very long-term for financial markets.” [I love this stuff!]

The world economy is suddenly running low in everything. [Bloomberg Businessweek] — “Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation…The difference between the big crunch of 2021 and past supply disruptions is the sheer magnitude of it, and the fact that there is — as far as anyone can tell — no clear end in sight. Big or small, few businesses are spared.”

On a related note, here’s Wendover Production’s 20-minute video explaining why there are so many shortages right now.

I’ll be honest: The economy is scaring me. I’m not joking. Things are weird. Nothing is doing what it’s supposed to do. I know that much of this is pandemic-related, but that doesn’t make me feel any better. In fact, it makes me feel worse. I’m hopeful that things will return to something close to normal within a year…but what if they don’t?

Okay, that’s a bummer of a way to end the day. Sorry! I’ll be back tomorrow, though, with some happy news to take you into the weekend. (Maybe.)

Hello, my friends, and welcome to Wednesday! I apologize for missing the first two installments of Apex this week. Monday was a holiday, and I meant to take that off. But yesterday? Well…I plum forgot, and that’s the truth.

But I’m back today with some favorite recent money stories from around the web. Let’s dive right in.

If houses are so overpriced, why are people still dying to buy? [/r/leanfire on Reddit] — “I mean there are always people who dont know what they’re doing but the consensus seems to be that houses are overpriced and have been so for a while. What are arguments for buying a house that people might not be seeing. What’s the other side of the story?” Interesting to read these comments in light of the fact that I just sold my house because the market is so high. [See also: This thread on Twitter about how bizarre the U.S. housing market is currently.]

Speculation and investment (and the difference between the two). [GMO Quarterly Letter] — “Investment as an activity allows for both parties to a transaction to be satisfied with the outcome, whereas speculation generally implies a winner and a loser. While that is a slight oversimplification, it’s a useful one in thinking about why speculation can be such an intoxicating activity, and why a market driven by speculative activity probably isn’t sustainable.” This is long, complicated, and poorly formatted, but it’s important.

Die with Zero, a book summary. [Debt-Free Doctor] — “Most books about investing discuss how to grow wealth and accumulate more, this one was the total opposite. It detailed an interested concept of how we could plan out our finances to ensure that we enjoyed life and died with, you guessed it, ZERO… [It’s] one of the few books I’ve read that have made me pause and rethink my view about money and life.”

Last of all, here’s a video completely unrelated to money. It’s a five minutes of concert footage featuring Mumford and Sons performing “There Will Be Time” with Baaba Maal before an enthusiastic crowd in Johannesburg, South Africa. I think the song is beautiful. Maybe you will too.

And that’s all I have for you today. Come back tomorrow for more of the best from the world of personal finance. I’ll see you then.

Personal Renewal [A talk by John Gardner given at McKinsey & Company, published on PBS.orgt] – “Not long ago, I read a splendid article on barnacles. I don’t want to give the wrong impression of the focus of my reading interests. Sometimes days go by without my reading about barnacles, much less remembering what I read. But this article had an unforgettable opening paragraph. “The barnacle” the author explained “is confronted with an existential decision about where it’s going to live. Once it decides… it spends the rest of its life with its head cemented to a rock..” End of quote. For a good many of us, it comes to that.” This talk will make you think. If it doesn’t, read it again.

I am fortunate in that I was never poor. Growing up, we wore sweaters in the winter and used fans in the summer so we wouldn’t have to spend as much on heating and cooling the house but we never worried that we wouldn’t have heat or A/C. It was there, we simply chose not to use it to save money. I never went to bed hungry because we didn’t have food.

So it comes as no surprise to me that rich people attribute outcomes more to choice than circumstances. You only know what you’ve experienced and it’s common to think everyone else shares those same experiences. To this day, I pause before I turn on the A/C and wonder if “we really need it” and I’m 40 and can easily afford it.

Rich people actually do have trouble understanding what it’s like to be poor [Salon] – “But a recent study in the journal Social Psychological and Personality Science shows he might have been on to something. The study identifies one area in which those with power, such as the wealthy, are different — they’re more likely to employ a “choice mindset,” which causes them to be equally critical of decisions made by those with fewer resources and choices.” There’s also a cognitive bias associated with this known as the fundamental attribution error. “It’s when you attribute someone’s actions or outcomes on the “type of person” they are versus the situations and circumstances that person was put in.” So there’s the aspect of choice but also this bias coming into play.

NFT, SPAC, and the Future of Money [New York Intelligencer] – “There’s Nothing to Do Except Gamble Welcome to the non-fungible, memeified, cryptodenominated, degenerate future of finance.”

I like that my weird dreams are a feature and not a bug. 🙂

The Weirdness of Our Dreams Could Explain Their Function [Technology Networks] – “Falling from a great height, naked public speaking and simultaneously losing all your teeth. The content of our dreams is often quite weird. While extensive research has teased out some of the likely reasons why we sleep, why this ubiquitous activity should be peppered with strange and nonsensical imagery has remained mysterious. Now, a new theory that takes inspiration from artificial intelligence has suggested that the weirdness of dreams is essential to their purpose.” I have varying degrees of weird dreams. Some weird dreams are semi-mundane – everyday life except people from different worlds are colliding (Seinfeld, anyone?). Sometimes they’re super weird – like a green slime chasing me. Turns out my brain is operating normally (in theory).

Have a great weekend!