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Monday, October 28, 2019

Getting older

I just finished reading an essay "Why we can't tell the truth about aging" by Arthur Krystal.  Krystal gives brief reviews of a number of books on aging, and then gives some of his own thoughts.  I don't want to discuss a discussion, but I want to add my own thoughts that his essay brought to mind.

Retirement is great if you have your health, enough money, things to do, and enough friends and family. I'm lucky enough to have all four now.

But the one thing that in the long run will not stay is good health, and we don't know how many years of good health we have.  If we did, we would have a sort of reverse "how old you are" based on how many good years we have left: I might have ten, you might have 5, my wife might have 25.

Statistics are of little help, because actuarial statistics are based on groups of people, and the predictions for individuals have such big error bounds that they are basically useless (until, of course, you have a very terminal disease and they recommend hospice -- I don't need that type of certainty).

Of course, we live with uncertainty of various types all of our lives.  This uncertainty around how many good years we have left is different though: it's a very final uncertainty (death being much more final than whether we will get a promotion at work). It's combined with the additional uncertainty of whether we will go quickly, or whether we will linger on for a long time in disability or dementia.


Sunday, September 29, 2019

More Democrat Scandals to Investigate

The news today that the "State Dept intensifies email probe of Hillary Clinton" (Washington Post, 9/29/2019) indicates that the Trump administration is looking into old Democrat scandals as a way to distract us from the impeachment inquiry.

There are more to come:

Democrat James Madison's wife, Dolly, developed a line of tasty cakes responsible for the obesity epidemic. 

Hawaii's annexation by the United States in 1898 was somewhat irregular. If it were ruled illegal, this would mean that even if Democrat Barack Obama was born in Hawaii, he still wouldn't be eligible to be president.

Democrat James Polk annexed the Republic of Texas in 1845, but didn't expel the Mexicans or provide appropriate border security. Open borders! Plus, in the 1848 Mexican War, he annexed New Mexico, a treasonous name if ever there was one.

In 1860, Democrats ran TWO presidential candidates (Douglas in the north and Breckenridge in the south), a blatant attempt to deceive.

Democrat Woodrow Wilson promised to "keep us out of war", but didn't. What a liar! Congress should be investigating that!



Saturday, July 20, 2019

Cubs really do play in the "friendly confines"

The Cubs play in Wrigley Field, often known by the nickname "The Friendly Confines".

Looking at today's statistics on win-loss (as of Friday July 19, 2019), that's certainly true.

The Cubs have won 67% of their home games, but only 40% of their road games, a difference of 27 points -- a larger difference than any other team.  The Dodgers are next with a difference of 22 points.

Put another way, if only road games counted the Cubs would be tied for last in their division, instead of 2.5 games in first place.

Saturday, July 06, 2019

Bitcoin hits the supermarkets

"When the taxi driver is talking about the stock market, you know it’s time to sell." (Wall Street maxim)
Well, what if they start selling Bitcoin in the supermarket? Seems like a similar signal.


I've never understood the appeal of an unregulated currency mostly used to disguise illegal transactions or as a tool for speculators to fleece the sheep.  And it's not just an idle game -- the BBC reports that Bitcoin "mining" uses up about as much electricity as the country of Switzerland, without producing either high quality cheese or chocolate. 

The only real use I can see for being able to buy Bitcoin from the Coinstar machine in my local Jewel supermarket is making it easier to ransom back my computer in case I'm hacked. 

Monday, May 13, 2019

Financial Rules of Thumb, revisited

Eight years ago, I posted some financial rules of thumb here:
http://www.truncatedthoughts.com/2011/01/financial-rules-of-thumb.html
 and ones for car buying here:
http://www.truncatedthoughts.com/2013/04/financial-rule-of-thumb-cars.html
and ones for retirement withdrawals here:
http://www.truncatedthoughts.com/2013/09/withdrawal-rate-confusion.html

I found some more -- really ones that overlap with the ones above --- in Patricia Mertz Esswein's  article in the June 2019 Kiplinger's Personal Finance, "When to Swim Against the Tide". https://www.kiplinger.com/pdf/kip/index.php?file=KIP2019_06.pdf#Top (gated)

The 50/30/20 rule

This comes from Elizabeth Warren's 2005 book, All Your Worth: The Ultimate Lifetime Money Plan.

The idea is to spend <= 50% of your take-home pay on musts, 30% on discretionary, and 20% to savings. 

Musts are loan payments, utilities, housing, insurance, transportation, child care, and other things you can't control.

The 20% savings is best handled by doing this automatically, e.g. by having it taken out of your paycheck (like a 401k or 403b) or automatically deducted from your checking account shortly after you get paid -- you can set this up with Vanguard or any similar financial firm.

This leaves you 30% for clothes, travel, entertainment, and other things you don't strictly have to have. 

It's a good rule, but may be hard to do if you are just starting out or have been downsized and are in a job that doesn't pay as much as you were earning.  Plus, you have to balance savings against paying off loans -- If your loans a higher interest rate than what you are likely to make on your investments, then it's probably best to pay off the loans more quickly.


You can afford a home that's 2-4 times your annual gross income

This is basically garbage. It's looking at the wrong thing: you need to look at what your monthly payment will be, which will vary by the interest rate, property taxes, insurance (homeowners and mortgage insurance if your lender requires it).  Can you afford that monthly payment?

Esswein notes the front-end ratio should be at or below 28% (principal, interest, taxes, insurance, any homeowners association costs) of gross income, and the back-end ratio (mortgage and other debt) should be less that 36%-50% of your gross income.

Note that the general recommendation for home maintenance costs is 1-2% of the market value of the housing.

Life insurance at 8 to 10 times annual gross income

That's a lot of insurance. Others recommend 6 to 10 times.  Everyone recommends term rather than whole life.  This amount may make sense when you have small children, and if you died you'd want the surviving spouse to be able to raise the kids without strain.  Personally, I never carried more than 4x -- but that's partly because my savings rate was high, so the savings would cover the slack. When the kids got older and college expenses were taken care of, I dropped life insurance and put that money into retirement savings.

Save one-third of the college sticker price

The idea is that you'd pay for a third out of savings, a third out of current income, and borrow a third. That's fine if you can afford it, but this should be after you've done an adequate amount of retirement savings.

You'll need 70-80% of your pre-retirement income to retire

That's very rough. As you get within 10 years of retirement, tote up your actual expenses, put them into rough categories, and see what expenses go away. Also, see what expenses will increase. If you plan on travelling more, allow for that.

100% - your age should be in stocks.

As Kiplinger notes, this rule should be retired.  People live longer now, and if your investments are too conservative you can run out of money.

If we look at the approach taken by the large financial firms in their target retirement date funds, we can see that they aren't following this.  I'm 69, so that would suggest I should have only 31% in stocks.  But if we look at the target retirement date funds for 2015 (i.e. assuming you retire at 65 in 2015) we see far more in stocks:  Vanguard is 41% in stocks. T Rowe Price is 44% (they also have a second 2015 Target fund with 38% in stocks). Fidelity has 48% in stocks.  

Saturday, May 04, 2019

Coyotes

Nextdoor.com is a localized blog that allows you to interact with your neighbors. Most of the posts are asking for advice, e.g. who knows a good plumber.

But there are a large number of posts about coyotes, as if anyone who sees a coyote feels the urge to inform everyone about it.

Coyotes are wild animals, and nobody should try to give them a nice back rub, or fail to be cautious. 

That said, coyotes are all over the place -- an estimated 2,000 in DOWNTOWN Chicago alone https://www.chicagotribune.com/news/ct-downtown-coyotes-met-0117-20150116-story.html and an estimated 4,000 in Cook County. https://news.wttw.com/2017/12/27/why-are-coyotes-thriving-chicago-area 

There are only two recorded deaths from coyotes in the US and Canada, one in the 1980s and the other in 2009 https://www.humanesociety.org/resources/coyotes-people-encounters

By contrast, 30-50 people die from dog bites each year https://en.wikipedia.org/wiki/Fatal_dog_attacks_in_the_United_States 

Sure, leaving your toy dog out in the back yard at night isn't the best thing, since it might become a coyote snack. But let's have a sense of perspective. 

Saturday, March 23, 2019

Predicting the Mueller Report

As I write this, Mueller has turned over his report to the Attorney General, but we don't know what's in it.

With the full expectation that not all these predictions will be correct, I nevertheless offer my predictions:

1. There won't be an actual demonstration of "collusion" between the Trump campaign and Russia.

The logic of this prediction is as follows:

a. Bob Woodward, in interviews after his book was published, said he was looking for evidence of direct collusion, but didn't find anything definitive.

b. The Trump Tower meeting was suggestive, but this may be more attempted collusion.  If there was direct collusion, you would think Don Jr would be indicted, and Mueller has not recommended further indictments.

c. As Cohen's testimony before Congress showed, Trump often didn't give direct orders to Cohen often to break the law, he was more likely to give vague "take care of it" orders that shield him from accusations he directly ordered something to be done.

2. We know there were Russian attempts to influence the election (hence the indictments of several Russians), so we are likely to find out more.

3. We may get some hints as to illegality in Trump's business relationships, but remember these were outside Mueller's charge, and more likely to be investigated by the Southern District of New York. But since they are off the point of Mueller's charge, the report probably won't have many juicy details.

4. We already know Trump surrounded himself with scumbags, but we are likely to get a few more juicy details from those already indicted.

5. We will likely get hints that the president teetered close to obstruction of justice, but that gets tricky with a sitting president (Mueller doesn't think that can be done) and also because these people also report to the president, who is supposed to be overseeing them and they serve at the pleasure of the president. 

In my opinion, indicting a sitting president for a judgment call crime (obstruction of justice) seems like a terrible precedent, even if it is Trump. There is a constitutional remedy (impeachment), there is an electoral remedy (not being re-elected) and an eventual criminal remedy (prosecution after he leaves office). 

Friday, March 22, 2019

College Admissions, Level Playing Fields, Cheating, and Being Rich

Let me start by stating my premise here:

Every parent wants to help their child succeed.

In the wake of college admission bribery scandals, the Harvard admissions case in which Asians feel they are being discriminated against, and the rising levels of student loan debt, the temptation is to regard the system as corrupt and rigged, rather than look for the ways in which it needs to be fixed.

1. Many people say that this shows there is not a level playing field.  No, there's not. 

As your parents probably told you, life isn't fair. My premise above means that in their desire to help their children succeed, some parents will clean motel rooms 10 hours a day so their child can get enough to eat, and graduate high school and attend community college.  Other parents will be able to hire tutors and pay full freight for an Ivy League education.  Let's face it. Rich people have more money. Rich people have more money they can use to help their children.

2. Getting into a top college isn't any guarantee of success. 

In 2014, the economists Stacy Dale and Alan Krueger published an analysis of the benefits of attending a highly selective college. They found that, after statistically controlling for students’ SAT scores, economic background and college ambitions, the long-term financial returns are “generally indistinguishable from zero.” Students who are poised to succeed tend to do so even if they don’t get into the Ivy League.  
But there was a crucial exception. There were strong benefits for the subset of black and Hispanic students, and for those whose parents had few educational credentials. 
https://www.nytimes.com/2019/03/15/upshot/elite-colleges-actual-value.html 
3. As the burden of college costs has shifted onto students paying for college with loans that extend for years afterwards, we have put a much bigger barrier to opportunity and social mobility than we have by letting rich people help their children.

It used to be that many state universities were essentially free.  This was true of the University of California system until the late 1960s, and in 1975 tuition and fees were $600/year. https://www.abc10.com/article/news/local/what-happened-to-californias-free-tuition-a-history-of-fees-and-budget-issues/103-465128027 

In my case, I went to the University of Missouri at St. Louis, where my total tuition and fees were $1250 -- in total for my 3.5 years there.  Was UMSL a fine institution? No, but it worked for me, living at home and working part time.

I went to graduate school at the University of Michigan -- which was and is a premier institution. But I had financial aid from the National Science Foundation and also worked some as a teaching assistant and a research assistant.  So, I got all the way through for my PhD with no debt.

You can't do that now; states have cut tuition support. The University of California is now about $12,000 a year. Even lowly UMSL is $350 a credit hour ($10,500/year, in-state)

This is a much bigger problem for a level playing field. Starting off with a degree and a huge load of debt, or not being able to attend at all, is definitely not a level playing field.  This is a much bigger problem than the rich having better access.

4. Of course, some measures to help your child are legal (hiring tutors, for example) and others are not (bribery). I'm not trying to obscure that, only to say that given my premise that parents want to help their children succeed, rich kids will always have a leg up. 

Tuesday, November 13, 2018

Is Trump the Most Honest President?

Marc A. Thiessen started off an interesting discussion by contending that Trump could be the most honest president in history.

Don’t get me wrong, Trump lies all the time. He said that he “enacted the biggest tax cuts and reforms in American history” (actually they are the eighth largest) and that “our economy is the strongest it’s ever been in the history of our country” (which may one day be true, but not yet). In part, it’s a New York thing — everything is the biggest and the best.

But when it comes to the real barometer of presidential truthfulness — keeping his promises — Trump is a paragon of honesty. For better or worse, since taking office Trump has done exactly what he promised he would.
Not surprisingly, Paul Waldman, another Washington Post columnist took issue with this:

what I really want to address is Thiessen’s claim that Trump is perhaps “the most honest president in modern American history” because of his unparalleled record of promise-keeping. Trump has now endorsed this assessment, and it is a claim he will probably continue to make for, well, the rest of his life.

It’s a sweeping historical claim, and it would therefore require some grounding in history. Are the promises made in presidential campaigns usually kept or not? How did other presidents do at keeping their promises? Did they keep more or fewer than Trump has so far?
Remarkably, Thiessen doesn’t seem to have asked any of these questions. The only reference he makes to any previous president is to slap at Barack Obama for the way he sold the Affordable Care Act. Instead, he offers a list of things that Trump has done that he said he would do
But who keeps track of these things? In this internet age, there are people who seem to keep track of anything.  From Waldman again:

PolitiFact tracked 533 promises Obama made, and judged that 48.4 percent were completely kept, another 27.4 percent were partially kept through a compromise, and 24.2 percent were broken, though “broken” is defined rather expansively. There are different kinds of broken promises: Some a president never intends to keep (such as Trump’s promise to make Mexico pay for a border wall), others he tries to keep but fails, usually because he runs into opposition in Congress (such as Obama’s promise to close Guantanamo), and others he makes a clear decision to break (such as George H.W. Bush’s promise not to raise taxes).

So according to PolitiFact, Obama kept about three-quarters of his promises in part or in full.
And Trump? It has been tracking his promises too, and there the numbers are not quite as spectacular as Thiessen would have it. Trump has kept 13.7 percent of his promises and partially kept another 6.9 percent through compromise. Another 39.2 percent of the promises are “in the works,” meaning they might happen or might not, while 7.8 percent of the promises have been broken and 32.4 percent are “stalled,” meaning that if nothing changes, by the time he is done, those too will be “broken.”
You can disagree with PolitiFact’s judgment on what to include or what has happened, but its record for being nonpartisan is pretty solid, and at the very least, it provides a point of comparison, because it uses the same methods for assessing each presidency.

 And how were those promises kept?

Thiessen notes: "Trump vowed to pass historic tax reforms and signed the first major overhaul of the tax code in three decades."
 
 Yes, that promise was kept.  But the reforms are partly of historic interest because so much of the tax reductions went to those who were already rich, and because of the large amounts of deficit spending that will result from them -- deficit spending increases at a time when the economy is doing well, so we would expect to run lower deficits.

Thiessen notes: "On trade, he kept his promise to withdraw from the Trans-Pacific Partnership and impose tariffs on steel and aluminum. He also committed to renegotiating NAFTA and the U.S.-Korea Free Trade Agreement — and recently signed new deals with Mexico, Canada and South Korea. He committed to imposing tariffs on China to force it to open its markets and stop its theft of intellectual property — and is following through on that pledge. Whatever one thinks of Trump’s trade policies, he is doing exactly what he said."

But Trump promised "Trade wars are good, and easy to win" -- i.e. he promised the process would be relatively painless to Americans. It seems likely that the current trade war with China will hurt both countries, with the winners likely to be the noncombattants.

So, if this is keeping promises, we might have been better off without them being kept.

Missing a few


Waldman offers up a long list of promises not kept that Thiessen didn't mention.

  • Repeal the Affordable Care Act and replace it with “something terrific.”
  • Provide Americans with “insurance for everybody.”
  • Allow Medicare to negotiate drug prices.
  • Build a wall on the southern border and make Mexico pay for it.
  • Eliminate the “carried interest loophole” that benefits hedge fund managers.
  • Pass a massive infrastructure plan.
  • Officially declare China a currency manipulator.
  • Bring back the use of torture.
  • Sue the women who accused him of sexual misconduct.
  • Release his tax returns.
  • Appoint a special prosecutor to target Hillary Clinton.
  • Provide six weeks of paid leave to women who have children.
  • Eliminate the deficit and pay off the national debt.
Those are just a few of the promises Trump hasn’t kept — there are literally hundreds more, depending on what you want to include. And that only covers specific policy promises, not things such as Trump saying “I’m going to surround myself only with the best and most serious people,”
Some of these are also best not kept, e.g. bringing back the use of torture.

Wednesday, June 20, 2018

And more good news for Trump

First of all, just so we understand where I'm coming from, I'm not a Trump supporter.

But I think it's important to understand Trumpism, which like many -isms has a core of appeal. (Mussolini made the trains run on time.)  And when I'm talking about Trumpism, I'm not talking about the reflexive lying and the corruption, but issues more clearly related to policy.

The home page of today's New York Times (June 20, 2018) contains three helpful headlines.




First, in most states more whites are dying than being born.

The birth part is planned, and this population decline covers most Western countries.  But it's not without angst.  I'm a member of a small Protestant denomination that's clearly losing members -- the school has shrunk from over 100 students to less than 10 who are church members, and the services look increasingly geriatric.  Earlier in life, I was in a seminary for a Catholic religious order.  If I had stayed in, I'd still be one of the youngest members of the order, even though I'm past retirement age.  Japan, which remains a closed ethnic society, is suffering the pains of a declining population.

Not surprisingly, whites are a little distressed at their decline, although it seems to be phrased as a relative thing -- i.e. hostility at immigrants.

Structurally, we're not set up at a country to be more family friendly.  This would demand an even longer post, but beyond the obvious things (e.g. longer maternity leave), we have more student loan debt, higher housing prices, more expensive health care.  All that debt load often means two working parents, with the logistic problems that creates and the high cost of day care. That makes having a large family very difficult.  If we go back to the baby boomer childhood era (1956, say), the cost/debt burden is much, much lower and one income is more likely to be enough.

Second, the harsh policy of separating children from their parents may be working at lowering the rates of immigration. 

That's the point of Trump's anti-immigrant policies.  So, to the Trump base, these measures seem to considered "necessary and not that cruel".

Third, applications for disability are down. 

The disability system has been a scandal for a long time, and its relation to the economic cycle clearly shows that something other than permanent disability is going on here. But the system really isn't set up at all to handle nuance.

While there haven't been any structural changes to the system, the decline in applications is a good thing.

We're paying for decades of gridlock.

America is paying the price for a generation of gridlock, going back to at least the 1990s: when health care reform failed.  We let the housing boom go, because it made us feel rich even though it locked the young out of the market (or saddled them with big debts).  We've failed to decide what we want our immigration policy to be, and set up appropriate enforcement. (Most people come for jobs; but the far right likes those cheap hotel maids and fights very tight employment verification.)  Other countries have cheaper health care and at least as good of health outcomes. We haven't reformed the disability system (or, for that matter, the larger social security system). 

We have ideas, but because they inevitably come from one side or the other, they get shot down, rather than worked on and improved.

Sunday, June 10, 2018

Two Terms for Trump?

It seems unimaginable that America would re-elect Trump in 2020. Have we learned nothing?

But consider this:

1. He can probably get the nomination. He's driven many of his Republican antagonists out of Congress (Corker, Flake, Ryan). He's a sitting president, with all the advantages of incumbency. Kasich seems to be running, but the moderate Kasich made no impact in 2016.

2. Trump is extremely good at taking up all the media air in the room.  He always has been, in fact. He's appeared on talk shows as a personality since the 1980s.  Gary Trudeau (Doonesbury) has a whole book of Trump cartoons that appeared in Doonesbury before he was nominated.  Trump's ability to suck up all the media air in the room makes it difficult for competing Democrats to get known.

3. Those Democrats that are known are basically too old. Hillary, Sanders, Biden, Warren -- all are as old as Trump.  Hillary's a multiple loser with lots of weaknesses. Sanders is very old, not really a Democrat, and it's clear he's got the math right.  Biden's tried for president before, exciting about as much attention as Kasich.  Warren will get branded as "Pocahontas", unfairly but humorously. Are there new ideas in this bunch?

4. Yes, there are younger Democrats, but the weakness of the Democrats at the state level, which got worse during the Obama years, means there are fewer. Not that many are well known outside their state.

5. Finally, there's the media, where Trump has been very, very good for business. The New York Times returned to profitability in 2017. Digital subscriptions are up. The Washington Post is also doing well nationally. Cable news ratings are way up. Trump's good for business.

Much of the working media (e.g. reporters) don't like Trump.  But there's no such thing as bad publicity in the Trump world (see point #2).  And once you've got reporters on the scene, covering Trump is cheap -- a lot cheaper than, say, investigative reporting, and with better ratings than covering our ballooning national debt.

The media is much more concentrated now.  A small number of groups like Sinclair, Disney, Viacom, etc. own media outlets.  These companies are mostly public (with that pressure for quarterly earnings).

From the financial point of view, these companies would be best off with 8 years of Trump as a punching bag. A Kasich presidency, where there's a return to compromise, not insulting our allies, and little tweeting doesn't seem so good for the media  bottom line. 

So what happens if the media companies figure out how much a second Trump term is worth to them?  They can still cover the excesses of Trump, but give less airtime to the less well known Democrat.  This is easy to do, since incumbent presidents are newsworthy by definition.

Tuesday, November 07, 2017

So, what disaster led to this mandatory training?

A few months ago, there was mandatory business ethics training at a company I consult for. Now, today, there's this further training from the same company:
"Recently, [CEO] announced the adoption of our revised Code of Conduct that outlines the standards of integrity and ethical behavior that should guide all our decisions and interactions at [Company].
In order to help you [!!!!!!] ... we are announcing a new mandatory training program for all employees. ...
This mandatory training is required ... and must be completed no later than [9 business days from now]."
What the heck. I'm paid by the hour.

😉But what I want to know is: WHO SCREWED UP, AND JUST HOW BADLY DID THEY SCREW UP that they need two mandatory training programs plus a new official Code of Conduct? 😉

It's hard not to be curious.

A second possibility

A second possibility is that this is all CYA: the company knows this stuff might be / is going on, and wants to be able to say "Don't blame the executives; we explicitly told everyone not to do that.", even though there may be subtle encouragement to engage in such practices.

This is what might be termed the Wells Fargo approach -- employees had official directives not to do things, and were fired when they did them, but corporate reaped big bonuses for subtly encouraging such practices AND not monitoring the employees for compliance with the account opening policies.

As to the third possibility -- that this is all sincerely meant -- I will point out that I spent my working career working in large corporations. That possibility seems so unlikely I'm not even going to consider it.


Consultant takes no responsibility whatsoever


While this Code of Conduct and mandatory training certainly provide the opportunity for the employee to be fried for noncompliance, those designing the training course clearly want to take no responsiblity whatsoever (emphasis added).

This course was developed with subject matter support provided by [some firm LLP]. Please note, however, that the course materials and content are for informational purposes only and do not constitute legal advice and may or may not reflect the most current legal developmentsNothing herein, or in the course materials, shall be construed as professional advice as to any particular situation or constitute a legal opinion with respect to compliance with legal statutes or statutory instruments. [Some firm LLP] accepts no responsibility for their contents and the reliance on the contents is prohibited and at the user's risk. Transmission of the information is not intended to create, and receipt does not constitute, a solicitor-client or attorney-client relationship. Readers should not act upon this information without seeking independent legal advice.

It's not just me. This training is just CYA for employers 

Addendum: Some days later (Nov 17, 2018) the Washington Post had a nice article summarizing the real purpose of such training (specifically sexual harassment training):

there is little evidence that training reduces sexual harassment. Rather, training programs, along with anti-harassment policies and reporting procedures, do more to shield employers from liability than to protect employees from harassment.