The polarized political environment in America is not unusual. What makes the current situation so incredible is the comparison to what came before.
After World War II the United States experienced a prolonged period of relative political calm. While disagreement was rife, there was a sense of compatibility between the opposing political parties. A few Republicans were more liberal than some Democrats and a few Democrats were more conservative than a few Republicans. It was a world where liberal Republicans and conservative Democrats existed.
That started to change in the 1970s and blew full force as the 1980s arrived. The reasons are varied, but not the topic of today’s discussion. We are interested in the history of polarized politics and how it affected wealth. The goal is to learn from the past so we can better position ourselves for success in the toxic environment we find ourselves.
Politics is always a dangerous topic to cover. And it might not have an immediate connection with money or wealth. But experience (with heavy doses of research) reveals politics indeed has plenty to do with wealth and wealth creation or destruction. Polarized politics has visited America before and in much worse circumstances.
We will address politics first, then personal finances.
History of Polarized Politics
There is no exact count as to how many Founding Fathers the U.S. had. Some say there were 7, others 10. The Constitutional Convention had 55 delegates.
Regardless the number of Founding Fathers, there are several points worth noting about their behavior. First, they were all men of the landed class. In other words, the Founding Fathers were men with at least a modest amount of wealth in real estate. This isn’t the most politically correct situation by today’s standards. But we can (or at least should) agree this group of men did a pretty good job at nation-building.
Many Founding Fathers owned slaves. Benjamin Franklin had to dance around the subject when he was the American agent in London for the colonies. The British found it ironic Americans wanted freedom while holding tight to slavery.
Storing crops was more difficult in those days so it was common to store the excess corn crop as whisky. Consumption of alcohol was high in the 18th century. Bad water also encourage more alcohol consumption. It is no exaggeration to say the men who brought America to life were inebriated much of the time. While not drunkards by the standard of the time, some might be surprised how much work these men accomplished with the blood alcohol level they regularly had.
We only have time to discuss one Founding Father at length; we will touch on several others for reference. Since Ben Franklin is a leading Founding Father he will make a prime example for our discussion.
Much of the polarization of modern politics revolves around the identity politics of the left and the conservative ideas of the alt-right. There isn’t a single Founding Father who wouldn’t be nauseous over the current national dialog. Or would there?
Conservative Franklin: To the chagrin of the left, most Founding Fathers were decidedly conservative. Before President Reagan, Benjamin Franklin had his own version of trickle-down economics. Franklin believed the more money the rich had the more it percolated down to the poor. Franklin stated the”rich do not work for one another…” The rich, according to Franklin, spent their money on the poor buying the goods and services they produced. (Benjamin Franklin: An American Life by: Walter Isaacson; Simon & Schuster; 2003; pages 267-8.)
Welfare and Social Security: Franklin also warned against the welfare state. He wrote welfare had unintended consequences and promoted laziness. Modern ears may find this palatable, but Franklin went further. “I fear the giving mankind a dependence on anything for support in age or sickness, besides industry and frugality during his youth and health, tends to flatter our natural indolence, to encourage idleness and prodigality, and thereby to promote and increase poverty, the very evil it was intended to cure.” (Italics mine.)
What Franklin was saying is you either work or deserve to starve, even in old age or during illness. Social Security is something Franklin would probably not approve of. If you lacked the necessary frugality and industriousness during the vigor of youth, you serve as a living example to those who consider such sloth.
Minimum Wage: Franklin also disagreed with the minimum wage. By artificially raising wages Franklin felt it would overprice goods destined for foreign markets.
All these positions place Franklin decidedly to the right of center. But was he really cold-hearted? Did Franklin believe people should be allowed to suffer?
While conservative readers might be licking their lips by now, the liberal folks will have something to cheer shortly.
Liberal Franklin: Benjamin Franklin had a balanced political stance. In some ways he could be called a liberal Republican by today’s measures. Franklin had no problem with taxes as long as they were coupled with representation. His lack of debate against the Stamp Act of 1765 is indicative of his political position. Only when there was a serious backlash back home did Franklin give us our first political spin campaign to right his reputation.
Policies should encourage hard work, according to Franklin. He felt hard-working people lucky enough to achieve wealth (became rich) had an obligation to serve the community. These duties should improve the lot of the community, providing for a prosperous middle class. Those in genuine need (people suffering illness before they had time to work for their keep, children and widows, et cetera) were the responsibility of the wealthy. Today we might consider many welfare programs as serving this need in a much larger population than existed in 18th century America.
There are also a few things we might find appalling in Franklin’s behavior even in the Age of President Trump.
The Un-family Man: Franklin left his wife and children to serve as colonial agent in London for the Thirteen American Colonies. Even when opportunity arose, he chose to stay in London or travel to Scotland and Paris, even as his wife’s health failed. Ask John Edwards how that helped his political career. Even the King found this behavior strange when he inquired as to why Franklin remained in England in 1774 when Franklin had no more duties there.
Womanizer: We can forgive Franklin for many of his political positions due to the age he lived in. His position on slavery softened over the years, but as Isaacson reports, Franklin used the qualifier “in time” in letters he wrote. He knew slavery wasn’t a workable prospect, buy also kicked the can down the road.
Modern eyes are ears will be most disturbed by Franklin’s behavior towards women. The list of affairs and potential affairs is long. Need I remind you Franklin was married with children during many of these flirtations.
History records Benjamin Franklin enjoyed the company of women more than men when it came to social gatherings. The flirtations weren’t always innocent and the women not always unattached. There is a crude sketch by Charles Willson Peale of a scene he walked in on of Franklin kissing Polly Stevenson, the daughter of Margaret Stevenson (Franklin’s landlady). It is possible Franklin befriended Polly’s mother for the purpose of spending time with Polly. Mary “Polly” Stevenson was 18 years old at the time Peale accidentally walked in on the kissing scene. But there is also a story of Franklin in a flirtatious conversation with Polly when she was 11 years old discussing her desire to be with an older man Franklin’s age.
Final Notes on Franklin: I spent a fair bit of time on Benjamin Franklin for a few reasons. Franklin is a Founding Father and certainly one of the most important and influential of the Founding Fathers.
He was a man with all the failings and shortcomings of men. His humor was crude at times, as we see when he recommended to the Royal Academy of Brussels that they should study the causes and cures for farts. It is unlikely Franklin was faithful to his wife and was distant to his family often. He even missed his only daughters wedding.
Franklin had strong political beliefs that would have toppled normal men. He didn’t suffer such a fate because he never held a high office. He was more a grandfather and guiding hand in the creation process of the United States. His role was certainly instrumental, but he managed to avoid the polarization politics brings once high office is held. Even Washington faced real criticism for the first time as president.
Another benefit of reviewing Benjamin Franklin is he shows us the world and human nature when the United States was just a dream and there were only American colonies as part of the British Crown.
If we fault Franklin for his short-comings that many current political leaders share, then we espouse the notion that Franklin should not have been allowed to do his work of nation-building. Such opinions at minimum presuppose the right of the United States to exist or at least ever to come into existence.
It is a truism of the ages: The worst of human nature can lead us to greatness.
Maybe we should be more open to human failings if we aspire towards a better tomorrow.
We will cover the next actors with less detail as they all share similar traits we find so disqualifying.
Thomas Jefferson is also a Founding Father of the United States. He wasn’t the biggest fan of slavery and history assumes he treated with slaves with dignity and respect. (How else could we remember a man as great as Jefferson and his contribution to our morals, values and standards.)
Jefferson also served as the third president of the U.S. That said, Jefferson did own slaves regardless his dialog on the subject. Over 100 years after the abolition of slavery in this country we still feel the scar it has left. The black community more than any other.
To make matter worse, Jefferson had a child with at least one of his slaves. In a modern era where people in authority are criminally liable for sexual activity with someone under their authority, this seems like a serious offense. Yet it happened and we seem unmoved by the act. Maybe time does heal every wound. Or not!
For all Thomas Jefferson gave this nation, he was still a man with failings. Failings we would consider criminal in the current environment. If modern rules were applied Jefferson would never have been president and his work may never have been created. How a man with such concerning behavior gave us rules to live by is hard to understand. But once again, the greatest of us tend to have the greatest failings, too.
President Andrew Jackson
President Andrew Jackson did more to define and solidify federalism than any other president. But could a man of such accomplishment be endowed with faults?
Polarized politics were at their worst in Jackson’s day. Jackson won the popular vote three times and the presidency twice. He also gave Native Americans the Trail of Tears.
Instead of focusing on Jackson’s flaws, I want to refocus on our topic: political polarization.
People today think the things said and done are the worst ever. Wrong! People had no problem Jackson killed a man in a duel, he was also hated enough to be the first president to have an assignation attempt on his life.
He married his wife before she was legally divorced from her husband. As you can imagine, adversaries made hay of this knowledge. They hounded Jackson and his family to the point of murder.
The political campaign of 1828 was brutal. The fight contained numerous ad hominem attacks. This isn’t so different from modern times. The difference was how the attacks also dragged Jackson’s wife, Rachel, into the fight.
Rachel Jackson started to suffer from what we would call today anxiety and depression. The stress became so acute it lead to a heart attack that killed her. Jackson never forgave his enemies for murdering Rachel. We have no way of knowing if the stress caused her death, but Jackson didn’t care. He blamed his enemies and hated them to then end for what they had done.
If you think politics are polarized today, you might want to read up on President Jackson. Few political leaders in the U.S. experienced such an assault in attaining office.
President Abraham Lincoln
Most Americans hold President Lincoln in high regard. They hold views of Lincoln as a moral and honest man. He freed the slaves so he must be good, right? He also preserved a nation rent in two by political division. Never before or since has our nation been so politically divided. There is nothing in the current dialog we can compare to the division our nation faced and underwent in those days of the early 1860s.
These are not the worst of times. Our nation weathered far more serious problems than a misogynist Trump. Need I remind you the great Abraham Lincoln consorted with prostitutes while married. Yeah, great leaders are riddled with flaws. Perhaps the flaws are what make them great.
Yes, I digress. It is political division that most concerns us. Except, all the discourse on said divisions seem to revolve around moralistic behavior.
Before we finish with the Supreme Court and discussing the personal finance implications, we turn to FDR, the hero of the left.
FDR also had serious flaws when it came to women. He also had an affair. (It starts to sound like a nervous tick after a while.)
The Great Depression was the issue of the age when Roosevelt took office. You would think after the economic crisis the Republicans presided over, the Democrats would have unchallenged rule. You should think again.
Before World War II became an issue, FDR had a New Deal. There was only one problem. Republicans packed the Supreme Court for years and the Court kept knocking down his programs.
Roosevelt had an idea. If the Justices wouldn’t retire so he could nominate his own choices friendly to his programs, he would expand the Supreme Court so he would have vacancies to fill.
This struck Republicans a very wrong. And what do you know, even Democrats felt it was a power grab by FDR. FDR’s own party denied him the ability to expand the number of justices on the Supreme Court for political reasons. Talk about political polarization! Yes, it happens even within parties. Even worse than we see today.
There is always the temptation to think this is the worst time EVER! Rarely are such thoughts true.
Brett Kavanaugh’s nomination to the Supreme Court by President Trump signals the worst ever injustice in the history of the U.S. But is it?
There is already talk of impeaching Justice Kavanaugh. Some have warned this would set a bad precedent and has never happened before. And that is a lie!
Here is a quick rundown of notable Supreme Court dramas.
Removed from Office: Supreme Court justice John Rutledge was removed from the court by the Senate in 1795. Yes, 1795! Rutledge’s wife died in 1792 and he didn’t take it well. His mind deteriorated to the point where there was no other choice.
The same year Justice John Blair suffered from such severe headaches he was unable to continue. Rather than have the Senate remove him, he resigned.
Assassination: Justice Stephen Johnson Field was nearly assassinated in 1889 by a California State Supreme Court justice in a confusing story of divorce, alimony and a lost case.
Antisemitism: The Supreme Court had a justice so hated not a single member of the court attended his funeral. Justice James Clark McReynolds was a very vocal anti-Semite. In 1916 the Jewish justice, Louis Brandeis, joined the Court. McReynolds left the room every time Brandeis started to speak.
Racism: Justice Hugo Black belonged to the Ku Klux Klan prior to taking the bench.
There are stories of bribes and other nefarious behavior by Supreme Court justices. Justice Kavanaugh may still resign or face impeachment by the Senate at some point in the future. Regardless, we sometimes wrongly assume the Supreme Court, the final arbiter of law, rule and justice in our nation, is free from political polarization. Unfortunately, the Supreme Court is just as liable to the shortcomings of human nature as any group.
With the groundwork on political polarization in place, we now turn to the impact polarization has on personal finances, wealth and money.
Personal Finance in the World of Political Polarization
The lesson above clearly outlines a history of political polarization in the United States from before its inception until today. The luxury of self-pity falls on deaf ears when history is called into action. Things have been marching higher for a long time, as Steven Pinker notes in his landmark works: Enlightenment Now: The Case for Reason, Science, Humanism, and Progress and The Better Angels of Our Nature: Why Violence has Declined.
The Long March of Growing Wealth: Humans have lived on the Earth for a few hundred thousand years. We lived short lives back then and progress was slow. Life was dangerous. Basic shelter might have been a cave, tree or outcropping.
Then man (it might have been a women for all we know) discovered how to create and control fire. Cooking soon followed which improved life immensely. Cooked food was easier to digest and it killed pathogens. Life was still hard, but lives were made a bit easier with the discovery of fire.
Shelter improved slowly over the eons. Fire made the home warmer in cold climates. Still, disease and subsistence meant most lives were brutal and short.
The pace of human progress was painfully slow for the first several hundred thousand years. Rape, murder, war, disease and starvation were constant threats. Men died from injury and women in childbirth. When God informed Adam and Eve of their curse as they were kicked out of the Garden of Eden, he meant it. But curses have a shelf life.
Civilization: Somewhere back there, over 10,000 years ago, humans became civilized; congregating in cities, that is. This was another improvement. War was a constant threat, but now a larger group was needed to harm the community.
Health issues were the age old problem.
Fast Forward: The pace of improvement in the human condition keeps accelerating. First rudimentary shelters, then fire, now cities. A few lucky souls avoided disease and injury, living to an old age, even by modern standards.
Cities grew and slowly man discovered ways to alleviate medical afflictions. Many remedies were more harmful than helpful. Such is the nature of progress.
Money was invented and the ancient Greeks debated what money really was and how it worked. (Sapiens: A Brief History of Humankind) Over half of Jesus’ parables dealt with money or wealth. Life was improving at the fastest pace ever in history and it was slowly picking up steam.
China flourished in isolation from the West; Europe enjoyed the Pax Romana. It would be nearly the thirteen hundred years before mankind experienced the Pax Americana.
From the scientific advancements of Greek and Roman culture, mankind dropped into a Dark Ages. The path of progress is steady and up, but there are plenty of detours along the way. The line is not straight, but it leans ever more so upward every day.
1870: Something happened around 1870. The Dark Ages had long passed, the Renaissance morphed into an Age of Reason and science and discovery flourished. And most important, enough humans finally existed to hit a critical mass, causing an explosion of economic growth the world has never seen before.
As the graph above illustrates, economic growth was painfully slow until 1800 where we see a slight tilt north. In 1850 the Gross World Product turns decidedly higher and goes parabolic in the 20th Century.
The pace of wealth creation accelerated like never before. Things got better. A lot better! Really fast.
Pockets of suffering still exists. The 20th Century experienced two world wars, Stalin’s Russia and Mao’s famine. Many people suffered and died. But many more lived better and longer, too.
Inequality: The buzzword of the day is inequality. The rich seem to get richer while the poor get poorer. But is this really true?
Inequality still exists and surely always will as long as more than one human is alive. There has been an uptick in income and wealth inequality recently. Compared to historical norms we live is really good times.
The wealthiest people alive in 1930 rarely, if ever, had indoor plumbing. Today, with rare exception, we all enjoy indoor plumbing.
Medicine is even more widespread. Polio is a rare disease; small pox eradicated. While indoor plumbing eludes many in third-world (I hate that term) countries, modern medicine is brought in on a regular basis. Fewer women are dying in childbirth. Men have fewer dangerous jobs shortening their lives. Children live beyond infancy at a very high rate. These numbers have never been so generous ever in history. Things are as good as they’ve ever been, and believe it or not, it’s still getting better and better every day.
Walter Scheidel in his book, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty -First Century outlines how inequality is on the decline and has been for a long time. Periodic catastrophes level the playing field immensely, but there seems to be a natural level of inequality. The good news is that everyone can have a significantly high standard of living even on the lower ends of the income distribution scale.
Optimism is the Best Financial Choice: If you have to make the call, always bet things will get better. For thousands of years things have been doing just that and at a rapid clip for over 100 years.
Warren Buffett has a reputation as a master stock investor. People spend a lot of time dicing his decisions looking for the secret sauce. I can save you the time. Buffett is the most optimistic guy you’ll ever meet. Even his good friend Bill Gates acknowledges surprise by how upbeat Warren always is.
Buffett came out in support of Hilary Clinton in her bid for the presidency. When Donald Trump won many called it the end of America and probably the world. A bit dramatic, I think. Buffett made it clear America has the “secret sauce” when it comes to economic growth and that America will do just fine even with Trump as president. I personally think the human race has a bottle of that patented sauce.
Yes, some people have it bad. Cancer might not feel like a time to be optimistic. But this isn’t about the individual level. We are talking humanity here. As a whole things are chugging higher all the time with only periodic setbacks.
The stock market reflects these facts. In the U.S. the stock market has powered higher decade after decade. Even the Great Depression is a minor speed bump when the charts are viewed over large time periods. It looked scary up close and personal. Then, a few decades later it looks like a minor dimple on the chart.
The 1987 stock market crash is the same story. The Dow dropped 22.6% in one day. The decline requires you squint your eyes to make it out now.
To the Future and Beyond: Life is good and getting better! Calls for the “end of the world” have been with us from the beginning of time. It’s a story that sells, but never delivers.
The future is bright. Today isn’t so bad either!
America and the world will have challenges ahead. That doesn’t mean optimism is wrong or dead! It is only an acknowledgement of reality. Every challenge will be confronted and re-challenged as we boldly go where no species has gone before.
Back to Politics: I know, I know. We never had a president like Trump. True.
We never had a Founding Father like Franklin either. How could such a womanizer, a masher, be allowed to engage in nation-building after the things he did.
And a president who fathered a child with his slave! How will the nation survive?
And don’t forget the evil of the Trail of Tears, a duel and murder and the death of a president’s wife.
A Civil War didn’t slow us down. A great president with massive flaws sewed the nation back together.
FDR tried to manipulate the Supreme Court to no avail. Talking of the Supreme Court, these are the people who gave us Dred Scott! These flawed men (most of them were men) did something wonderful as a whole. As bad as they were, their flaws made us stronger, more vibrant.
Politics is NOT more polarized than ever before. The First Lady is miffed, but not dead or even scuffed.
Never lose faith. Optimism is always the best choice. Things are good and getting better. We live longer and better lives. Economic and personal wealth is at sky high levels and rocketing higher! And any decline in the markets is a correction soon to be followed by greater heights!
It’s not a Dream; Success is Real: I’ve been around long enough to personally hear many of the doomsayers. They fall by the wayside every time. Yes, much of the Western world in more polarized than it has been for many decades. Let me remind you of the above chart. From 1850 to 1900 the U.S. exploded higher economically. During this time we experienced the Civil War and what many in the south thought was the end of the world, the freeing of the slaves.
Not only didn’t the world end when we took the moral high ground, we excelled. But we had to experience the debauchery and evil of slavery to propel us from the ignorance. We certainly don’t want to go back. It will require vigilance to retain our hard fought gains.
This is not the End: In recent times we were told the U.S. was caput because a womanizer like Clinton was president. Did anyone take the time to research Franklin and Jefferson? Caput! I think not!
Then Bush was a sign of the End Days. Nope! President George W. Bush proved to have human failings, but we did fine.
President Obama was the worst. I had clients who came into my office saying their life’s mission was to prevent Obama from getting a second term. What a waste of time! The economy grew, the stock market was up and America and the world did great after a serious economic debacle.
And now we have the hated President Trump. Many tears have been shed. The Supreme Court is forever tainted (unless you read few history books where you’ll discover it was always tainted). I’m not a fan of Trump. I disagree with many of his policies. But not all! An honest person will find issues where agreement exists. Who doesn’t like lower taxes? We can debate who gets how much and the fairness of taxes, but com’on! I also agree with more infrastructure spending. I’m against tariffs which are nothing more than a tax on consumers. Call it a quasi value added tax, if you will.
The Beginning: In the darkest hours of World War II, Winston Churchill gave encouragement to the British people as Nazi bombs decimated London. His immortal words are as vital today as they were then as we worry ourselves sick over geopolitical events. His words are a reminder things always get better and setbacks are only temporary.
Now this is not the end.
It is not even the beginning of the end.
But it is, perhaps, the end of the beginning.
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It’s hard to see when watching at the speed of life, but there is no doubt it keeps getting easier to reach financial independence. Some in the crowd might disagree with me. The statistics are clear, however. As the hand of time ticks by the human race is finding greater and greater opportunity at every turn until now when it is laughably easy to reach virtually any financial goal.
But we need to start at the beginning.
In the Beginning
Depending on whom you ask, humans (Homo sapiens) have been around for around 300,000 years. For most of this time we were limited in our conversion of energy into useful tasks. Men, women and children all contributed to their subsistence lifestyle.
Because energy input determines so much of quality of life (as will soon become clear) we need to use a consistent measure of power. Energy is best describes in joules and power by watts (W). This allows a better understanding of inputs by humans over time.
A human can sustain around 100 W of labor. From the beginning when modern humans started its own branch of the family tree until the third millennium BCE, the most power mankind could muster was limited by the backs of the very same people. It took several hundred thousand years before mankind figured out a way to utilize more than the limited 100 W of power available from an average adult male.
Sometime during the third millennium BCE people learned to harness draft animals and their sustained 300 – 400 W of sustained labor. Not satisfied with the several fold increase, humans experimented with different ways of harnessing draft animals and even breed animals for greater labor.
Over thousands of years the maximum prime movers (draft animals in this instance) slowly increased until around 1000 of the Common Era when horizontal waterwheels came into wider use, providing up to 5,000 W of power. (The waterwheel was employed earlier, but not widely or in a modern sense.)
What took over a hundred thousand years to move from 100 W of manpower to draft animals and their approximate 350 W of power only took four millennium to reach the technology of the waterwheel. As slow as it moved it was still an improvement. Progress was slow because people needed to expend all their resources to survive. Draft animals allowed more land to be tilled which meant more people could be fed and better.
By 1800 steam engines surpassed 100,000 W (100 KW) of power. The late 19th Century brought water turbines, driving the maximum power of one unit to as much as 10 megawatts (MW).
The pace of energy use expanded rapidly. Life was still harsh for many people, but the goods and services available grew as more prime movers grew more and more powerful. Subsistence living was declining. Life was still hard, yet more people than ever had a better diet. Also, more people than ever before were able to live an upper class lifestyle. As power use increased due to technological advancement, fewer people had to work to cover the basics of living for the entire community.
The rate of increase accelerated until 1960 when the largest steam turbine reached 1 GW of power.
The more technology increased the power of a single prime mover, progress advanced in efficiency. The first draft animals could replace three or four men max. By the 19th Century better harnesses and certain horse breeds could do the work seven or more men.
Waterwheels increased in size and efficiency until steam turbines were invented, catapulting the power available in one unit (prime mover) to unheard of levels.
Thermodynamics places a limit on the maximum power that can be extracted per unit of coal or other energy source. Steam turbines also have theoretical maximums. The first steam engines were extremely inefficient. Advances in efficiency were slow at first, increasing faster until the gap between best performance and the maxima narrowed.
The first steam driven machines operated at less than 1% efficiency to over 40% today! While 40% seems like there is lot of efficiency left to wring out, there is only modest possible improvements available.
Home heating has come even further. Heating a hut with grass or dung has serious disadvantages. Wood was a major improvement once tools were invented to cut trees versus the limited supply of branches available on the ground. Early gas furnaces enjoyed 40% or less efficiency; today homes have gas furnaces up to 97% efficient.
Lighting has an even greater efficiency improvement. Candles convert between 0.01% to as much as 0.04% into light. Edison’s first light bulbs were 0.02% efficient. The first fluorescent bulbs in 1939 were 7% efficient. In the year 2000 a lumen of light in Britain cost 0.01% of what it did in 1500 and 1% of what it did in 1900 (see reference at the end of this post).
The Ease of Wealth
We will now switch from the historical use of power to how the above information yields increased ease in acquiring financial independence.
It seems like wages have been stagnant forever while prices continue to climb. The data tells a different story.
Adjusted for inflation, wages have been flat for at least 50 years (see chart)! Before anyone become alarmed, know that wages are what drive inflation. When wages increase it eventually is reflected in the prices of goods and services, kind of.
Natural gas and gasoline prices have been steady to lower over long periods of time, adjusted for inflation (see charts). Natural gas has been up and down, but is basically unchanged since the mid-1990s even before considering inflation or the unadjusted growth in wages. All this while vehicles are larger than ever with more gizmos and home gas furnaces are the most efficient than they’ve ever been.
Inflation causes the most angst. In 1913, when statistics were first kept in the U.S., the CPI-U started at 9.8. The latest CPI-U (April 2018) stood at 250.546. What cost a dime is now 25 times more expensive. The average worker earned around $300 per year in 1910! (A competent accountant could earn $2,000! I would like to think I’m competent so, adjusted for inflation, I should make around $50,000. Looks like this competent accountant is doing a bit better than expected. Bet you are too.) In 1918, after the inflation of WWI, the average household earned $1,518, which is, adjusting for inflation, less than the average household income today.
Inflation is real and affecting household budgets. But while prices are increasing, wages are oscillating around the baseline, adjusted for inflation. At first glance we might be depressed to learn we’ve made no progress. However, wages and inflation only tell part of the story.
A hundred years ago many homes lacked indoor plumbing. We’ve rectified that problem since. Electric appliances have been added to the daily luxuries of life. Over the last 30 or so years we have added computers, internet and smart phones to our list of luxuries. You’re probably reading this on a smart phone.
Increased efficiencies are where most of our increase in living standard comes from. Wages mimic prices as efficiency keeps rolling along. Energy costs have gone nowhere fast over the last century. But what we do with that energy has changed radically. Heating our home takes less than half the natural gas of 50 years ago. Of course, our homes are twice as big so we’re still broke. The electricity needed to light our homes has decreased to such a level that it is an insignificant part of our budget.
Money for Nothing: FI for Free
Frugal today is nowhere near what frugal was a century ago! What we consider austerity would get us laughed back into our time machine if we had such a machine to transport us back in time. Most households spend less than 10% of household income feeding the family. There was a time not that long ago when 50% or more of the budget went to feeding hungry mouths. Back then the house didn’t glow at night the way our cities do today.
As technology allows us to utilize energy resources like never before, we have a lifestyle never before enjoyed by any species in history. And it gets easier to reach financial goals!
Once upon a time all but a few worked till the day they died. A select few, very few, enjoyed a life of luxury supported by the backs of the masses. Then draft animals were put to work, allowing for a larger population and a better diet. Later coal, oil and gas powered the turbines of industry and heated our homes. More work horses (steam turbines, et cetera) meant we could delegate the most back-breaking labor to machines. We went from nearly 100% of the population working in the fields to under 2%. The freed labor did other things. Many spent more time in educational pursuits; some did nothing at all, choosing to live longer with mom and dad.
Some lived frugally for a few years and retired early.
In the U.S. 49% of the population works a traditional job. That percent has probably crept up in the last year so we might be over 50% as of this writing. Young children and the old are understandably unemployed. Still, of working age adults, we are near the multi-decade low labor participation rate. What gives!
The answer is rather simple. Our use of energy resources continues to become more efficient while wages remain stable and prices are moving in tandem with wages over time. Productivity slowly grinds higher. After centuries of progress, the cumulative gains have made it possible for large numbers of society to pursue other interests. Food is plentiful thanks efficient use of energy. Even with half the population not engaged in traditional employment, we still have abundant food, shelter and clothing.
Financial independence keeps getting easier and the trend will remain intact! There is no excuse to not have financial wealth. None. We are so rich today with abundant resources and technology we can throw away massive amounts of money on interest to support debt. This is unheard of in history. Debt was always considered bad, if not an outright sin. Governments had debt, but regular people who knew better followed the adage: neither a lender nor borrower be.
Mass media has brainwashed us into thinking things are hard. The 2008 financial crisis was not that bad compared to reality of 100 years ago. The Great Depression was bad. The Irish potato famine was bad! When was the last time you heard of a famine in a developed country? It’s been a long time and for good reason. The only reason less developed countries starve is because they have not implemented the prime movers the way developed countries have. Once you use the energy resources efficiently you can move food from any part of the planet to wherever a drought or blight is affecting crops.
We live in an age of abundance like never before. We need to start acting like it. We need to feel grateful for our largess. It’s easier than ever to save a massive percentage of our income and invest it safely into index funds. You can retire early with plenty of financial wealth because you live in the most awesome time in history. All thanks to the never ending increase in energy utilization and increasing efficiency of its use.
Smil, Vaclav 2017. Energy and Civilization: A History: Cambridge, MA: The MIT Press (Pages 397 – 407 were used in the writing of this post.)
Wealth Building Resources
Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?
Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.
QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. Quickbooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.
A cost segregation study can save $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.
Recent volatility in the stock market has people reassessing their appetite for risk. Investing in a bull market is easy as it seems the only way equities go is up.
The recent bull market has an added way of lulling people into a false sense of security. Last year many indexes never saw even a 5% pullback even once. Some didn’t see a 3% decline at any point! This is a highly unusual situation confirming for some people the stock market doesn’t test your resolve as often as it does.
In the past week we’ve had a > 5% intraday swing in the market indexes. Many individual stocks had even greater moves!
The first shock wave most investors put on a brave face. The constant chatter on social media meant it was all an act. The market caught people’s attention.
The broad market didn’t even close down 10%, a level considered a normal and expected pullback in the broad market, before the clichés were pulled out.
I didn’t Lose Money Because I Didn’t Sell
This is the stupidest thing I hear every time the market pulls back or a correction is discussed. If you don’t sell you don’t have a taxable event, but your net worth has declined!
If you believe stupid clichés to keep you from making bad investment decisions you might want to consider money market accounts before you experience a bloodletting.
There are people who refused to sell Enron. They NEVER actually sold Enron. Does that mean they never lost money? Heck, no! The Enron Scandal destroyed many life savings. Not selling didn’t make it better!
Granted, index funds are different from an individual stock, especially Enron. But the lesson is learned. Whether you sell or not doesn’t change the fact your investments declined at least temporarily.
The worst part about these old worn out clichés is that it focuses your attention on the wrong details. Refusing to sell because you know it’s the wrong thig to do in a down market is radically different from thinking about what you SHOULD do!
I agree, panic selling is a bad idea. But BSing yourself into thinking you haven’t lost money when your portfolio dropped $87,000 is industrial strength stupid.
Another line of reasoning has people backtrack to the last time the market traded at the lower level and then saying if they hadn’t checked their account since then they wouldn’t even know the market went through a conniption fit. But you do know and your brain is in overdrive trying to preserve the previous old highs!
A Better Way
There is a better way to look at the stock market when it declines. Instead of focusing on denial (refusing to sell in a down market only to succumb when it gets super bad at the ultimate low) focus on value.
The underlying value of the businesses you own a fractional share of (that is what stock ownership really is if you didn’t know) probably didn’t change much in value since traders blew out their backside timing the market.
Once a decline begins a lot of selling is forced by margin calls! Sanity or reality has nothing to do with it. Leverage increases risk magnitudes of order. When you borrow to invest it’s not if, it’s when the boom will be lowered. Pray to every god ever known you don’t get lucky the first time using debt. Debt also magnifies gains. If you win the first round you are either addicted or lulled into digging in deeper next time. Either way the carnage will also be increased.
I hate it when people say they refuse to sell into a down market. Has anyone considered putting new money to work during a decline? Just asking.
There are tricks, games you can play, to reduce the sting your psyche experiences, especially when you are starting out. We’ll go there next before we discuss good reasons to sell.
Let’s Play a Game
My 18th birthday came less than month after I graduated high school and I couldn’t wait. I had a veeeery modest nest egg in a passbook savings account (remember those) at the bank. Shortly after I reached the age of majority I pulled most of the money out and dropped it into growth & income funds.
I timed my age perfectly. In August 1982 the market took off like a streak and never looked back. Until 1987.
Even in an advancing market there are down days. As the 80s bull market got longer in the tooth volatility increased. Record highs meant larger point losses if not actual percentage records.
Not immune to the emotions of market moves I knew I had to find a way to short circuit my brain to avoid the fear and pitfalls of down days.
I devised a game from watching my account grow. A down month was never as bad as the overall market because automatic deposits muted the losses. Up months really looked good! Using an old spreadsheet (I think actually used Excel 1.0 at one time (gawd, I’m old)) my account values took on a stair step pattern as each new investment jumped the account value and dividends kept ratcheting higher.
My game only works with small accounts, but it sure helped me when I was building my first million. What I did was this. When the market declined I would do everything in my power to increase new investments so the actual value of the account didn’t decline.
An example would be if I had an account value of $100,000 and the market pulled back 3% I would try to add at least $3,000 of new money during the month. I worked hard to always keep my account value at the old high water mark.
Big declines are hard to offset and as the account grows larger even small declines became hard to offset.
The game was still the same. I might not offset the whole market decline, but I sure put a dent in it.
Then 1987 showed up.
Market volatility increased as the bull market aged. I wasn’t a millionaire at the time, but my accounts worked deep enough into the six figures to make constant investments as the market declined from a top in August to the gut-wrenching losses of October more and more difficult.
I’d be lying to you if I said I controlled my emotions during the market turmoil of 1987. My guts were a disaster. The only good news I can report is that I was so scared $hitless I never sold. I was numb all over. At least I did my job keeping the economy afloat with regular purchases of Fruit of Loom.
What I didn’t understand as a young adult was that my game actually prepared me to think about market prices differently.
Market declines were not about willpower NOT to sell, but rather an opportunity to reassess value.
In down markets there will be companies on sale. Not all of them, but a few.
All those mutual fund/index fund investments also go just a smidge further in a down market, too, buying more shares with each dollar invested. The other game I played was to track the number of shares owned. Philip Morris might be down, but I still own my pro-rata share of the company. That part is mine. My part of the revenue; my part of the assets; my part of the profits; my part of the dividends.
Strangely, the dividend stream never dipped much so I changed my game as the account values increases to add new money to maintain the income stream only.
Isn’t money a fun game?
Smart people will tell you to never try timing the market. I think I’m a relatively smart guy! It could be delusion, but it’s my fantasy so I’m sticking with it.
In late January I mentioned on social media (Facebook) that I moved to my highest cash position in my adult life. I was promptly jumped for market timing. A few days later we had the current market pullback.
So what gives, Sir Accountant?
Well, in my defense, I wasn’t timing the market. My gains over the last decade have been nothing short of astounding. Second, when I calculated the discounted future value of earnings with higher interest rates due to the tax law changes the numbers no longer added up.
I had no idea my selling would be so well timed. But . . .
My timing wasn’t timing! And even if I was so lucky to time the market so right I still need to pick the right time to jump back in!
For the record, I didn’t sell with the intention of buying back at a lower price.
I sold because the value of future earnings were not high enough to keep eight figures and over 80% of my net worth in index funds and individual stocks.
Since the market DID decline I might return some of the money from where it came. A 5% decline isn’t enough to change my mind. Now if we see blood flowing in the streets I might bite. It’ll take at least a 20% decline to accomplish that. I’m not holding my breath.
I hope this ends all discussion of my mighty stocks timing skills which I don’t possess.
What to do and Where To
So what should you do in volatile markets?
First, DON’T PANIC!!!
The broad markets have always come back and always will. If I’m wrong there will not be earth to live on so it will not matter. You’ll have to sue me after the collapse of civilization if I’m wrong.
If you are a millennial and your account is small enough, try playing my game. Cut every possible expense and add to your regular investments until your account value has little or no change.
If your account is getting bigger play the first game with an eye toward keeping the dividend stream pointing north. This is easy so far as dividends are rising nicely as I write.
I sometimes tell people not to look at their investments when the market falls, but I am assuming there are no adults in the room. I recommend you know exactly where you stand so you can make intelligent decisions like adding extra to the pile while stocks are on sale. And it’s okay to have cash available for just such an event. Some crazy accountant from Nowhere, Wisconsin told me that.
The best way I know to visualize your holdings is with Personal Capital. The best part is there is no cost to open an account and kick the tires. Seeing your investments performance live can provide additional encouragement to play the games I outlined above.
Negative attitudes about declines are caustic! Willpower alone will not help you sleep at night and may actually get you to wait for further declines before selling! Playing a game with your mind to recognize value is a powerful tool.
The last thing I want to touch on is what I plan on doing with the cash balance I built in January.
There are alternative investments available for those in the know. One investment I’m testing is PeerStreet.
PeerStreet works a lot like Lending Club and Prosper but with what I consider less risk since you invest in real estate loans with at least 25% equity whereas Lending Club and Prosper are unsecured loans. Returns are comparable and if recent personal results are any indicator, PeerStreet does better.
This is only one alternative investment I’m considering. With the better part of eight figures in cash I’ll need a few more ideas. I’ll share them when I know more.
I’ll be publishing a PeerStreet review, but there are compliance issues. PeerStreet is only for accredited investors (PeerStreet has the details on their site if you follow the link above). Once PeerStreet’s compliance department grants permission I’ll share my review..
So there you have it. How to control your emotions when the world turns into a raving mad mob of Chicken Littles.
Anyone up for a friendly game?
Those little devils are everywhere. Drone fever has swept the country and it has me hopping mad. In the last week my office has been buzzed every workday and the Accountant farm had its privacy disrupted three times.
The animals hate it! Drones buzzing overhead send the chickens running for cover while the steers run the length of the pasture trying to get away. Privacy is the main concern at the office. If somebody wants to invade my privacy on the farm while I water the horse out back there isn’t much to see. (Ah, that didn’t come out right.)
Therefore, I hereby announce The Wealthy Accountant will start selling anti-drone guns for $500 a pop with the beautiful logo of The Wealthy Accountant emblazoned on the side. This is a limited offer! Only 10,000 will be manufactured. When they are gone they’re gone.
To recoup my costs fast I’ll be announcing the anti-drone guns all over social media, especially Twitter.
There are two kinds of people in this world, my friend. Those who love to annoy people with their drone and those who love to shoot’em down. I’m betting you are like me and fall into the latter camp.
One problem still needs to be resolved before shipping starts. It seems UPS doesn’t allow shipping of a package with ANTI-DRONE GUN printed on the side. My solution is to changes the package to read NOT AN ANTI-DRONE GUN.
Branding is one of the most important tasks a company undertakes. This blog also needs to brand or it will fall into irrelevance as cobwebs start gracing the corners of the site.
My tax office has built a brand over the previous three decades locally and finds its footprint spreading far and wide as of late.
Many readers here are in the accounting profession looking for ideas to save their clients more money and get ideas on how to grow their business. Other readers have a side gig. In either case you still need at least a bit of branding to turn a profit.
Branding is where the real money is. Most goods and services are commodities. Everybody can sell what you’re selling and everybody does. There is always some schmuck willing to cut corners and offer a discounted price to yours.
President Trump is a master at branding. Whether you like the guy or not you still have to sit back and watch how he has done so well financially. Even if his net worth numbers are inflated he still can teach us a lot. Trump has turned his name into a worldwide brand generating hundreds of millions of dollars.
Trump doesn’t really build anything. He licenses his name so the real builder can slap Trump’s name on the side of the building. Yeah, I know. He does build some stuff. But the big money, the money his fortune is built on, is his brand.
By now you probably realize the opening of this post was a gag. Anti-drone guns exist and the military and police can buy them, but you and I are probably not allowed.
The opening is a play on Elon Musk’s latest attention-getting behavior. Musk is playing a flamethrower stunt for all its worth. In the end he will probably never ship a one, returning all deposits while he keeps all the press.
Musk has flooded Twitter with the sensationalism of his flamethrower sale. To give the stunt some legitimacy he found a loophole in the law allowing flamethrowers that shoot flame less than ten feet. Of course when you make a splash like Elon with a sale of 10,000 flamethrowers, lawmakers get nervous. What could possibly go wrong?
Even with the flamethrowers sold out Musk has played the publicity stunt for all its worth. First he had the sale. Then they sold out. (Lot of pyromaniacs out there, I guess.) Then UPS said “no” so Musk tweets boxes will say NOT A FLAMETHROWER. Then he tweets about the law probably killing the whole idea. Don’t worry, Musk assured. If the law is changed and the idea flames out, all monies will be returned. I think Elon keeps any interest that accrued on the nine mil and all the free PR.
Wait for It
I stand in awe of the skills Musk has at marketing and generating free publicity. The value of the attention (branding value) he gets is immeasurable. I can’t get CNBC, Business Insider or MarketWatch to even mumble my name.
Warren Buffett has a way of catching headlines without the drama. Ryan Holiday went to extremes at times during his career to generate buzz. Musk and Trump are legends.
Then we have respectable family men like Richard Branson. Once upon a time Virgin Atlantic (the Virgin brands belong to Branson) added shiatsu messages to their on-board Upper Class service. Branson is from the UK and British Airways (BA) thought Virgin Atlantic’s shiatsu messages were a joke. When BA didn’t follow suit Virgin bought ad space in a few select locations at Heathrow Airport stating: British Airways doesn’t Give a Shiatsu.
Funny, Richard. Real funny.
Sometimes a branding opportunity falls into your lap. British Airways once again took a thinly veiled jab at Virgin with two-page ads in the New York Times and other newspapers with the message: More people choose British Airways to London than any other airline. Duh!
BA is the largest airline in the UK so they do carry more passengers than any other airline. But the Duh! at the end was an unnecessary jab.
Branson’s team went to work producing a fitting response. Within hours they were ready to go. (It shows their sense of humor is as sick as your favorite accountant’s.) The next day the New York Times had another two-page ad, this time reading: More people switch to Virgin Atlantic from British Airways than from any other airline. Hah!
According to Branson it got heated quickly. My understanding is a lawsuit was threatened. Oh, well!
Branding with Integrity
Branson has written on leadership and building a company from scratch and fighting against the big boys. Branding is absolutely necessary to survive! The cost of building a brand is prohibitive if you use traditional advertising venues. Even social media is expense for a micro-sized firm.
Social media makes it easier to find an audience than ever before. My earlier writing from the 80s and 90s found it hard to find a home. My brand was nonexistent so my work sold for peanuts or worse, tear sheets.
I adopted Amazon and social media relatively early in promoting my brand, but was never real good at it. I’m getting better. Unfortunately, I fell into the sinkhole of time social media demands when you don’t automate and do it wrong. It’s impossible for me to communicate with every reader individually even on social media. With 100,000 page views per month and growing the task would be daunting moving toward impossible.
Branson said it best in his book The Virgin Way: If It’s Not Fun It’s Not Worth Doing when he wrote:
We have always relied on smart, cutting-edge creativity and scads of often quite self-deprecating humour to get ourselves noticed — it’s called getting a bigger bang for a much smaller buck.
Every blogger looking to grow their viewership must read Branson’s book!
The first thing that jumps out of Branson’s quote in my prime problem. He said smart. My challenge just got more, ah, shall we say, challenging.
Humor and self-deprecation are powerful tools when communicating. To the best of my ability I use these tools when writing posts. Growing traffic and an award might be the result of such behavior.
Shootout at the OK Coral
How far do we have to push to be noticed? Branson was lowered from the top of a building on a rope while wearing a dress and did that hot air balloon thing.
If I thought it would work I’d wear a mini skirt and high heels, too, but I’m worried I’d lose the remaining three clients I have left. (To the ladies in the office. NO!)
Ryan Holiday took the extreme measure of vandalizing his own posters and your favorite accountant begged people to steal his stuff.
Warren Buffett uses whimsical country humor.
Musk builds fast electric cars, rockets, and solar panels, plans to go to Mars, and has a Boring Company selling $700,000 of hats and $9 million of flamethrowers.
Will it require even crazier ideas to be noticed? Artists do it. Musicians especially. Getting noticed in a crowded room takes effort and talent.
There is a point where it goes too far. How would Musk feel if he did manage to get the flamethrowers built and delivered and some psycho burned a daycare to the ground killing dozens of children? He’d get more publicity, but this time the kind he wouldn’t want.
Consistent quality work speaks volumes. Getting noticed doesn’t require a massive budget. A well placed Facebook ad for under $100 could generate quality buzz. A free tweet could do the same.
Mild self-deprecation is the best branding you can do. Shouting the loudest or craziest as our current President does isn’t always a good idea. Trump mastered that shtick, but most will fare poorly attempting the same.
I like some of Musk’s ideas and think Branson has hired a team of geniuses when it comes to branding and PR.
My original idea was to claim I was selling nukes stolen from North Korea. After some thought I came to the conclusion a couple percent of my readers might think it was unbelievable or even clickbait.
So I’m left stealing an idea from Branson. If I thought for a second I would triple my page views permanently by wearing a dress all weekend at FinCon, I would.
Ugh! Just had a visual.
Maybe we should stick with flamethrowers.
I was contacted recently by an old acquaintance. Brad is a reader of this blog and started to take exception to my style of writing. He felt any idiot could write a blog and I can assure you any idiot is writing this one.
He felt it beneath a CPA to write what I do here. I assured him I’m no CPA; never have been never will be. Brad was starting to feel disappointed in his disappointment in me.
His final argument was it took no skill or knowledge to write a blog. True. But then he said it was easy to make money telling tall tales. Yikes! (Okay now, bloggers. Keep the cussing to a mild roar in the comments when you explain how “easy” it is to make real money blogging.)
Brad had several more complaints I’ll address shortly. We have enough material for a good start, however, to learn some valuable lessons.
Brad was born in the same backwoods of Nowhere, Wisconsin I was. His wife was born so far in the backwoods maps generally list the area as Terra Incognito. What I’m saying is we didn’t come from grand beginnings.
Life hasn’t been easy for Brad. Life started hard and slid downhill from there. It was easy to develop an edge of cynicism. Several years ago the pendulum swung 180 degrees and opportunity knocked. Smart man Brad is, he answered.
Brad has a gift and can’t understand mine. He thinks writing is easy and a quick way to wealth. (Steady blogger friends.) All I have to do is tell BS stories or modified life events while sitting on the couch and watch people rush in.
Anybody can push a noun up against a verb. Heck, there are computer programs that will produce grammatically accurate sentences on demand. It’s not engaging reading, but it can be done.
There is a difference between what Stephen King does and what I do! There will be few arguments, especially from me, if people think King’s noun and verb pushing is better than mine. I think it has something to do with the order of the words. I think.
Brad’s gift is greater than mine and I understand it less. Whereas any literate person can write, few music lovers can create a sound pleasant to the ear.
You cannot believe the magic jumping from that man’s fingertips as he gently massages the strings of a bass guitar and I can prove it. He found his wife while performing before an audience sharing those soulful sounds. Okay! Brad doesn’t like it when I adlib and tell only part of the story. Truth is, his wife found him. That boy didn’t have a snowball’s chance in hell once she heard what his fingers can do. (Read that any way you want.)
Brad has more heart than any man I’ve met. It takes honor and bravery to tell such a painful personal story.
Developing a Gift
There is nothing special about Brad or me. Our difficult beginnings were somewhat different, but the pain was just as real.
Brad argued I used my daughter’s medical condition to garner sympathy. Duh! I hurt. My child hurts! Sharing the story is a natural act.
His final arguments involved me telling only part of the story. Of course! To include every detail is called an info-dump; editors hate it and modern readers don’t stick around. If you want to read the info-dump of the century read The Lord of the Rings. Of course the Rings books are awesome. But the first 128 pages (you read that right) are world building. There isn’t much story before that.
A show of hands. How many readers would grant me the luxury of a 128 page info-dump to satisfy the need for absolute accuracy before getting to the point? Nobody? Thought so. That’s why I don’t do it.
The last of the two final arguments involves my personal life. Brad asked what my readers would think if they knew I wrote erotica for profit in the past. Ah, I don’t know? I’ve mentioned it before. I also did a stand-up comedy act in Seattle a year and a half ago where twenty minutes of the gig was on my transgender flash fiction writing.
For the record, a large percentage of successful writers have written erotica. Science fiction writers after the Golden Age resorted to selling short stories to Penthouse (paying $1,500 a story) and Playboy (paying $2,000 a story) in the 1970s. I’ve never heard any complaints against these writers. And if no one has noticed, 50 Shades of Gray is a, ahem, romance novel about training a woman how to please a man while she’s tortured. I doubt anyone cares I’ve written practically every topic known to man, including erotica.
I bring up all these arguments because they play a role in today’s story, minus the info-dump. I’ve made it clear often that my stories are true unless otherwise noted with material facts changed to fit the story into the context of the discussion at hand and to protect privacy in certain instances (I never name clients).
I have no idea why Brad is so good playing bass. I’m not even sure why my writing is gaining such traction. Most of my prior material got modest pageviews with exception to the skanky blogs (I actually wrote two transgender flash fiction captioning blogs to double the profit) where after about a year I hit a groove that went wild with millions of pageviews.
And yes, I made money doing it! I love writing, but I prefer writing fantastic (read high science fiction) stories. I even published a short story here on New Year’s Day. I love writing that kind of tear-jerker. But do you know how well men sell tear-jerkers? Yeah, me neither.
Song of Songs
I lied above and I’m certain Brad will call me on it. I said I had no idea why he was so good at bass, but I do.
Brad didn’t leave the womb with a massive desire to grab a hunk of wood covered with resin and wires and start plucking it. Somewhere in his life he found music was an escape from all the demons.
You might have noticed how the best artists have dark pasts. There might be truth in the adage that artistic greatness is built on rivers of tears and mountains of pain.
I have no answer why some people buckle under the assault of life and others find beauty deep inside and refuse to let go until they share it. At some point the pain was so much Brad needed an outlet. He chose music and the rest is history.
In his hands the guitar gently weeps; in my hands it would be the sound of fingernails across a blackboard.
But it’s easy! Any idiot can fondle the strings of a guitar.
True. But knowing which strings, in which order with the right feeling and soul takes practice.
L. Ron Hubbard (yes, the Scientology guy) was a big name in science fiction in the day. He once said it took a writer 500,000 words before they found their voice. I’m not sure if his number is accurate, but personal experience says you paste plenty of words to page before the fingernails lift from the slate.
Music is harder!
Writing is subjective. Someone who enjoys a mystery might not like a horror novel; someone who enjoys horror might hate westerns; and so forth.
If I make a mistake writing (I do often) the story still goes on. Readers frequently miss the faux pas. Some stories hit well, others not so much. Certainly Stephen King has nothing to fear from your favorite accountant.
But what about Brad? I prefer contemporary rock while still enjoying classical music when it plays, even an opera. Music is more broadly enjoyed and that’s the risk!
Can you imagine Brad on stage and missing a note? Fingernails are literally back on the chalkboard. If I make a grammatical error it is nothing more than a minor distraction to most readers.
Never quit. Never give up.
Two Geniuses in a Room
Brad and I share radically different viewpoints. We challenge each other with some serious remarks. Outsiders might find the barbs personal, but the banter is similar to bar buddies saying their friend is the best son-of-a, well, you know.
I share what I have and make no compromises on my desire to turn coin from my work. We can only share what we have. It is a call for sympathy. People with a heart respond to that.
It would have been easy for Brad or me to pack our bags and quit at any moment during our personal trials. Most people do quit!
I’ve included several YouTube videos to bring this story alive. Brad’s video of faith and redemption is powerful and moving. Highly recommended!
Please watch the Never Give Up! video. It’s important. Very important. Hearing the greatest people of our time saying again and again their true genius was in never giving up is motivational. Powerful and moving
The truth is, each and every one of us, kind readers, have a similar story. Life gives every single human alive a swift kick to the groin at least once in life. Going to a knee in pain isn’t the problem; staying on your knee is.
Brad is right. I make this look easy because I write a lot. Brad makes music look easy because he lives it.
You have a story inside you too. Maybe you have the gift to share it verbally or by spanking words to a digital page.
Or maybe you have to sing a song to move souls.
You never know, your wife might be listening.
2017 was one heck of a year. Business was good, investments were good, personal life was awesome. The good news never seemed to stop.
Many people like to make New Year’s resolutions. Not me. I forgo the whole ritual.
Instead, I plan all year round. When an idea strikes I write it down. It’s a rare moment when I don’t have a pen and paper within striking distance.
Ideas are impossible to control. A chance encounter, an overheard word can trigger a thought process. In moments another blog post idea is ready for recording. The same applies to projects in the tax practice and in my personal life.
It was all good news (unless you watch anything political).
Time is an investor’s friend and 2017 added another year to the schedule of growth. The stock market performed well.
Of course, some years business isn’t all roses. The stock market can decline and the tax practice can be more challenge than profit or fun. This wasn’t one of those years.
I’ll mumble this out the side of my mouth because people react incorrectly when they know what I’m about to say. A certain farm boy from the backwoods of Wisconsin saw his net worth scratch a quarter inch above the $14 million mark at yearend. There I said it. Now forget it.
My greatest fortune is my girls. For the most part Mrs. Accountant and the kiddos were healthy. Who could ask for more? And we had more time together even with the oldest now getting serious about her education. They’re smart kids. I’ll take credit because without a doubt it has everything to do with genetics. Care to take a bow with me, Mrs. Accountant?
The Greatest Gift
After struggling with growing pains and changes in my business, I found solace this year.
Traffic to this blog has grown significantly in the last twelve months and the growth in demands followed. Procedures instituted to manage the flow have eased the feelings of overwhelm.
The overwhelm still exists, but I’m handling it better. By clearing my mind I’m making better decisions. The final pieces are falling into place which should allow me to add new clients to my tax practice without always being so far behind.
This has always bothered me. I struggle with saying “no” and I hate working to exhaustion daily and never keeping up. 2017 saw improvements; 2018 should knock it out of the park if staff additions and training work out as planned.
And I have learned to say “no” or just ignore some requests. It’s always a loaded question: Can you help me? Frequently the answer is yes, but I can’t because I’m six months out.
The good news is I’m able to help more while learning to say “no”. This leads to balance and balance leads to more life satisfaction.
As if the world isn’t bright enough in this accountant’s world, I received the ultimate form of recognition: a Plutus Award for Best New Personal Finance Blog of the Year. I don’t think anyone understands how much this has meant to me.
Traffic and revenue are another form of recognition. Traffic has climbed steadily over the year and the first few days of 2018 are tremendously higher than the first few days of 2017. The trend is clear.
With traffic comes revenue; my favorite score card. Now that I’m committed to contributing the profits of this blog to charity I can focus on quality without a vested interest in the outcome. Money is the scorecard, a game of Monopoly if you will, to remind me the work I’m doing has value and that the value is growing.
All this said I still feel anxiety over issues I can’t control. I must constantly remind myself of the things I have control over and the things I don’t. Readers might recognize this as a Stoic principle. Well, I subscribe to the Stoic philosophy! Unfortunately, I’m not perfect at it. Consider it a work in progress.
With traffic comes comments from outside the demographic and from people whose only intention is to harm or irritate. I wish I could report my skin is thick enough to deflect all criticism. It isn’t. Sometimes I’m caught off guard and the attacks hurt. In taxes there is always another opinion. And just like law (taxes are the big section of the law library), everybody has an opinion. Too bad the Tax Courts around the country couldn’t agree. It’d make my job a lot easier.
Deep breaths, accountant. Deep breaths.
Planning for a Bright Future or Resolutions Writ Large
As awesome as the last year has been, the future holds even greater opportunities.
When I was at the top of my game I suffered a minor setback (my feelings were hurt) and I let’em have it with both barrels. I’ll be editing the bullets holes out shortly.
My primary goal is not to let people bring me down with insults or criticism. From the outside it must look petty. From the inside it hurts like heck! Everybody in the room isn’t going to agree with me. Thank God for that!
Having more followers means there will be differing opinions. Even when someone unloads it probably has more to do with their personal experiences than reality.
I also have to be careful with clarity. The last post for New Year’s Day was a short story with an underlying financial moral. It was an emotional story told in the first person. One reader emailed to say sorry for my loss. He thought my wife really died! It was a story and I need to make sure readers know the difference between story to illustrate a point and fact. It’s important!
Here are some plans for the next year that will affect you, kind readers. Call them resolutions if it makes you feel better.
Tax practice: This is still my greatest challenge in life. Outsiders must wonder why I put myself through this hell when financially I don’t have to. I wish I had an answer, folks. Wish I had an answer.
2018 will be a year of growth. Three or four years ago Mr. Money Mustache gave me a shout-out and nearly killed me. It wasn’t intentional; it was meant as a “thank you”. Still, when a guy with 5 million plus pageviews a month says, “Here’s my guy” you’d better be prepared. Unfortunately, service businesses are labor intensive and finding that many good tax people fast is impossible.
It took a few years, but I think I have it. I will actually be able to add new clients and get their work done in a reasonable time (a week or less for most). This troglodyte clung tenaciously to old school methods of running a tax practice. We now have serious additions to our automation.
A few years back I dropped over $50,000 a year on a new computer network to beef up security to the highest level commercially available. Good for me. (Good for you, too.) Too bad I didn’t engage all the other neat features available to make my life easier.
That’s all history now. Our system can scan faster and better than ever. Data entry work will be reduced by magnitudes of order. This frees my team and me to focus on the value added work: review and consulting. We put the computers to work doing the mundane while my skilled staff focuses on serving the client with outstanding planning services.
I feel better about the upcoming tax season than I have in five years. Wish me luck! (Luck has nothing to do with it. Planning and hard work deserve the credit.)
Personal Life: My introduction to the FIRE (financial independence, early retirement) community required (it felt like it was required) me to attend more and more events around the country. This took me away from family and reduced my personal time.
Traveling is something I try to avoid unless absolutely necessary. People started joking about how much I was now traveling when I keep saying I don’t like it. A series of events brought me back to my senses. I CAN SAY “NO”!
And so I have. As much as I love the FIRE community and enjoy meeting with like-minded people, my mental health is more important.
I will only attend one conference per year from now on. FinCon is my pick. FinCon 17 was mind-blowing. I’ll be better prepared for FinCon 18 in Orlando this time.
Other minor meet-ups, gatherings and conferences are almost certainly off the to-do list unless there is another reason for my attendance. (Keep reading to see what I have planned for my allotted conference plans.)
Hold onto your hats, kind readers, you’re not going to believe your ears. I am planning, yes, me, planning on a family vacation this year! Mrs. Accountant and the girls will all be there.
Where are we going, you ask? All the way to West Branch, Iowa, about a four hour drive. I know, I know. It’s not all that far, but just wait until I tell you what I have planed.
The crew and I are going to see the Herbert Hoover Presidential Library and Museum. I’m as giddy as a schoolgirl. I bet you can hear my voice screech as you read the page.
It’s okay if you don’t share my enthusiasm. President Hoover always intrigued me and a recent read of his biography has given me an exalted opinion of the man and his life’s accomplishments. I’ll be writing at least once this year on some lessons Hoover has for us today.
I’m so excited!
Blog: I bet you’re wondering what I have planned for your favorite blog? Well, it’s a secret. Mostly because I don’t have a clue of many of things I’m sure to pull out of my hat over the next twelve months.
Okay, okay! Stop pushing!
I do have some plans. The first involves pushing cash into the hands of subscribers. Periodically (usually associated with some tax due date) I will pick a subscriber at random and give her a $250 Amazon gift card.
This is my way of saying “thank you” to people kind enough to subscribe, the lifeblood of any blog.
There is one more surprise, but it needs a formal heading.
Camp Accountant: When I introduced the idea of Camp Accountant I had a large influx of emails asking when and where.
Many readers here are also in the tax profession. Several requests asked if I could offer continuing professional education (CPE) credits for tax professionals attending so their employer would pay their way. I’m working on it.
The best part is where the first Camp Accountant will be held.
Ask me! Just ask me where the first Camp Accountant will be held!
Well, I had several offers from readers willing to organize the event. One offer came from Hawaii (someday soon if I know what’s good for me (Note: Mrs. Accountant has always wanted to go to Hawaii) I will accept that offer).
Southern Ohio is another possibility.
But then I got an email that forced me to palm slap my forehead.
A highly intelligent reader said, “Pete (Mr. Money Mustache) has a nice new MMM world headquarters in Longmont that would be perfect for a Camp Accountant.”
Sometimes a certain accountant in the room can be pretty dense.
Now before we get carried away, let me remind you I haven’t asked Pete yet if this will work for him. But my plan is to get the initial stuff out of the way during the next few months (with all the free time I have over tax season) and then plan the venue in May.
The goal is for the last weekend in August or September.
Now, kind readers, I know many of you know each other and a few know Pete personally. Don’t go blab to him what I have in mind. He might not like the idea of me publishing my plans without first consulting him.
And that boy can run. I do his taxes, so trust me. I’m an ‘ol farm boy and know from personal experience the mustachioed man from Colorado can run like the wind. He can whoop up on me too.
That’s All Folks!
There you have it. Your favorite accountant’s plans for the next year.
A real family vacation without a business motive. What readers around here call a walk around the block.
Sending out free money several times during the year.
A new and improved tax practice.
I couldn’t be happ. . .
Oh, $hit! Somebody already squealed to Pete. I gotta run!
I can clearly remember the first time I heard about the Pay it Forward philosophy. The year was 2002; the location Schenectady, New York; the event Albacon.
Back in those days Mrs. Accountant and I were groupies of the science fiction convention circuit. The insanity only lasted a few years, but it was a fun ride while it lasted. We met scores of bestselling writers. I can’t speak for Mrs. Accountant, but I drank in every word.
I had recently discovered Mike Resnick. His only novel to grace the bestseller list hooked me. Why Resnick never became a household name is beyond me.
Albacon is a science fiction convention held in the Albany, New York vicinity most years. It’s a small convention, at least it was back in 2002.
Once I read Santiago I started stalking Resnick. I read every book of his I could find. His style of Space Western appeals to me. His fast paced stories also caused me to miss more than a few nights of sleep.
I also read the few remaining science fiction magazines in 2002. Isaac Asimov’s Science Fiction Magazine listed a select number of upcoming conventions. I noticed Resnick was the Guest of Honor at Albacon. The road trip was on.
Not What I Expected
Albacon was either the first or one of the first SF conventions Mrs. Accountant and I attended. My hopes were high as we packed the car and drove from northeast Wisconsin to Schenectady. For the record, that is a long drive.
My expectations were high which is always a bad sign.
I figured my literary hero would welcome guests with open arms. He didn’t. He was there and mostly stuck with his friends.
High expectations usually end with disappointment when reality meets fantasy. Mike is a helluva nice guy and the problem was more with me than him. I’m rarely at a loss for words, but my dry tongue swelling in my mouth was a barren hole in the dead center of my face.
I sat listening to Mike talk with several groups and eventually managed a few minutes to express my gratitude. I sounded like an idiot actually. Mike Resnick was bigger than life in my eyes and I had no idea what to say to the man whose writing I spent so many hours enjoying.
As disappointed as I was with myself and the opportunity I squandered, I still received a gift I hadn’t recognized.
Pay It Forward
At one point in the weekend convention Mike spoke to the small group gathered in his honor and talked about paying it forward. He explained how he helped other writers find their legs as his way of paying it forward. The people he helped would have no way of paying Mike back. He did it with a promise from those he helped to keep the ball rolling and to pay it forward when they were in a position to do so.
You’d think I’d have heard about the Pay it Forward philosophy prior to Albacon 2002. I probably did, but the skull of a Neanderthal from the backwoods of Wisconsin is thick so it didn’t sink in.
Mike Resnick changed all that. Whatever he said, it sunk in and I thought it was the most brilliant idea ever devised. For a year or so I thought he was the guy who invented the idea. Backwoods, people. Real backwoods.
The years have kept counting and my consumption of fiction of any kind has been declining. I still read a novel here and there, but the bulk of my reading in nonfiction.
It is with sadness that I report I haven’t read much of Resnick’s work of late either. His stories still resonate with me, but my interests changed.
The stories I did read are still buried inside me, bringing me continued pleasure. And I can never thank Mike enough for pounding the Pay it Forward concept into my head.
As we race to the finish line of 2017 it’s my turn to Pay it Forward. Don’t get me wrong. I’ve done plenty of paying it forward. It’s just that now I want to codify the process so I can ramp up my game.
I have been blessed beyond words. I started from humble beginnings and the journey to today has not always been smooth. What I’m saying is there was no free ride for the Accountant household.
As humble as those beginnings were I have achieved more than any one man deserves. I am fortunate to have the best wife to ever live. I can prove it too! She puts up with me. Nearly 30 years now.
I have two awesome daughters who never gave mom and dad any real reason for concern. They are moral, kind and generous.
My business life has been nothing short of phenomenal! I struggled early on with finding my way and later with figuring out how to run a growing business. Through it all I survived, even when the power that be worked very hard to destroy what I was building.
Financial success is the biggest surprise. There were no warnings signs some schmuck from the frozen tundra of nowhere would amount to anything. Yet, I managed to amass a tidy fortune recently breeching $14 million. The number has grown so big over the years it no longer moves me when another milestone is surpassed. The whole experience has turned surreal. I expect this to happen some day soon.
With all my good fortune, much is expected. I could pay it back to those who helped me along the way, but I never kept a list and the number of folks who supported me is legion. Besides, the people who helped me don’t need the favor returned!
All that remains is the future.
My business continues to add to the stack of wealth. This blog is starting to make a contribution as well. And all the previous investment soldiers are hard at work reproducing. The compounding effect is mindboggling.
And this is where it ends.
This blog earns a growing profit. I need a profit as a scorecard to motivate me. Once the numbers are in and I’m amply motivated, it’s time to make the most important business decision of my life.
Writing The Wealthy Accountant is a way of paying it forward. But more is expected of one who has been blessed so mightily.
From this point on all profits of this blog will go to charity. I recently outlined one avenue of charitable work. Reach Counseling will continue to enjoy the fruits of this blog’s success so they can expand their work helping abused women and children. Previous work with Special Olympics will also be expanded.
I will update you, kind readers, from time to time on the charitable work this blog is doing. When you support this blog it strokes my ego, but all the profit goes to those in need. My way of paying it forward.
Not Good Enough
As altruistic as the above statement is, it isn’t good enough. This blog has a tidy profit, but not overwhelmingly so, at least not yet. So giving the proceeds of this endeavor is still rather small.
I’ve discussed my giving habits in the past along with ways to use the tax code to increase the value of your gift.
Above the monetary contribution of this blog’s profits I will extend a helping hand to all bloggers and podcasters in the FIRE demographic contribute in an efficient way to charities they hold close to their heart without cost.
I know it sucks, but businesses have better opportunities to maximize the value of their charitable giving. The new tax bill makes it even worse. The tax code offers opportunities for businesses to give to charity and get a deduction on the business tax return; no itemizing required.
I wish I could extend this offer to everybody. Unfortunately, I am one human being with limited time and resources.
Bloggers and podcasters who want to donate to charity in a way that promotes their blog or podcast and maximizes the value of their gift should contact me. You still write and send the check. (You don’t have to give all your blog/podcast profits!) What I’ll do is help you decide the best way to give so you can give the most without a certain uncle in Washington taking his share first. I’ll even organize the necessary paperwork so you have no problems with the IRS.
I discussed this tax strategy in the past. In short, instead of giving a traditional gift, you sponsor a program at the charity of your choice. Since your blog/podcast gets recognition, the gift is really a promotional or advertising expense.
It not exactly that simple, but you get the idea. What I will do if you contact me and give me the go-ahead is I’ll contact the charity to find an appropriate program you can sponsor. You will get the necessary paperwork for your tax record. And you write and send the check. No money goes through my account. I don’t want the extra headache.
So there is my year-end offer to end 2017 with any even bigger bang than it already has been.
Life has been beyond awesome this year! We can do this together. We can pay it forward.
So the next generation has a chance to feel the same joy we experience every day.
Earlier this week I had the opportunity to extend my Thanksgiving holiday by attending a few days of continuing education training. Northeast Wisconsin isn’t a bad place to get an education as long as you can get to Green Bay or the Fox Cities. But when you live in the middle of nowhere it takes planning and strategy to git er done.
Well, the plan was fine; the strategy could have used a bit more work. It’s been a while since I weaseled my way to Green Bay where the training classes were. The fastest way there was to take side roads the whole way.
My memory has started to slip these past years as the birthdays add up. Not having to visit Green Bay in a bit, I knew the trip was a straight forward drive with one exception; at Wrightstown I had to make a loop to get on the bridge to cross the river.
The first day I started early and relied on memory — you know, the thing starting to go with age. It was a good thing I started early.
If you don’t cross the bridge at Wrightstown you have to take a longer, slower route deeper into Green Bay before swinging hard west to head out to the casino where the class was held. Confident as only an American can be, I went off memory. It was a gamble I was willing to take.
Sitting in a classroom all day listening to tax law is grueling. As soon as class was over I wanted to get home. Now less willing to trust my normally reliable brain, I decided to use the phone’s GPS. The last thing I needed was to miss the turn at Wrightstown. Then I’d end up going all the way to the Fox Cites to get home and that would add twenty minutes or so to the ride.
The GPS worked swimmingly at Wrightstown. GPS loves highways and it loved the route turning off at Wrightstown. But it didn’t want to take the side roads the way I wanted!
I followed the GPS directions and knew I was going off course. The darn thing wanted me to take highways as much as possible so I ended up on Highway 32/57. It wasn’t a terrible distance out of the way, but added ten to fifteen minutes to the drive.
Such was Day 1.
I was ready for Day 2! I used the GPS to get to the casino for class in record time. I was even able to use side roads, too.
Day 2 is always brutal. Day 1 wears you out and Day 2 grinds you into putty. Sixteen hours of intense tax law review has that effect on normal humans.
I wanted the fastest way home and hoped the GPS would be as kind on the return trip as the morning drive. Once again things went swimmingly at the Wrightstown turnoff. Then the GPS wanted me to keep going east until I hit 32/57.
I was ready.
Suspecting the ruse from the GPS I took note of how the squirrely turn at Wrightstown fed to the side road I wanted to take. When the GPS said to go straight I made the loop I made that morning and found my true heading home.
Rather than turn the GPS off now that I knew the way home I decided to leave it on and focus on my driving. There are a lot of deer roaming and it gets dark early this time of time. I wanted to get home and was in no mood to tenderize some venison.
The GPS kept telling me to hang a left at every cross road until I was only a few miles from home. The GPS didn’t care the side roads were a faster route; it wanted to get to a highway, any highway, as quickly as possible.
The Day the Sun Went Out
This past August we had a total eclipse of the sun. A new friend from this blog, Bernie, invited the Accountant family to stay at his place only a few miles from totality in Kentucky.
It was an awesome experience and included a new friend. But that isn’t the interesting part of today’s story.
When the eclipse was over our plan was to head to the Interstate and back to Bernie’s. Except seven quadrillion other people had the same idea.
The GPS loaded where we watched the eclipse, but once we got on the interstate coverage died. And so did the traffic.
The highway was wall-to-wall cars and weren’t moving. It took an hour to move a mile! I don’t see stuff like that in the backwoods of Wisconsin. Where I live a car coming down the road is an event. Either one of the few neighbors I have is up to something, we have visitors or someone is lost. Now I saw cars as far as the eye could see!
After a few hours some people were getting in trouble as their gas got low. Good thing I was smart enough to fill up after the eclipse before we headed back. Okay, maybe luck had more to do with it.
Cars were pulling to the side and some were stranded. If emergency services were needed you were SOL.
I’d had enough. Mrs. Accountant wanted to drive back so I studied the map. Without GPS the map was incomplete. Sick of the traffic and with evening fast approaching I wanted an alternative before it got dark and our gas started getting low.
I told Mrs. Accountant to take the next turnoff a half mile ahead.
“Are you sure?”
Mrs. Accountant trusted my instinct. It took another hour to travel that half mile to the turnoff, but we eventually made it.
Some people had the same idea, but it was a serious minority.
Traffic on the side roads we light. We still had one problem. We needed to cross the interstate to get home. And like the crazy loop in Wrightstown, it wasn’t going to be easy.
Cell service was spotty but did click long enough to expand the map in the phone. As we traveled toward home we noticed every approach to the interstate was backed up for miles. Crossing the interstate could take half the night!
I searched the map for a side road crossing under the interstate without on-ramps. It was a gravel road, but there was only one other car on the road and we were moving just fine.
Once on the other side of the interstate we drove at the speed limit all the way back to Bernie’s place. It was dark by the time we got there.
Mrs. Accountant and I still think there are people out there on that interstate in Kentucky still waiting to move a few more feet.
The Best Choice Isn’t Obvious
The two stories above reveal the same lesson: the obvious choice isn’t always the best one. The GPS in Kentucky showed massive traffic issues and still demanded we stay on the interstate! I think people were staying on the interstate because they were preprogrammed to take the most obvious course home and their presupposed assumptions were affirmed by a piece of technology. If my GPS was giving bad advice; the same must be said for the rest of the crowd.
The interstate is frequently the right choice. Unfortunately it’s also the crowded choice. The side roads and lesser highways might be slower, but the traffic is generally lighter and the scenery better. The interstate doesn’t allow much opportunity to meet locals. State highways wind through small towns where you can get out and chat with folks. In my opinion it’s the only way to travel.
Other areas of life face the same dilemma. Technology wants us to always run for the nearest highway when that is the worst possible choice! People, unfortunately, react the same way the technology does.
Wealth experiences the same issues. Everyone is a genius right about now. The stock market has been straight up for nine years. Virtually every other asset class has also enjoyed heady gains. Bonds have been higher as interest rates declined. And now we get cryptocurrencies to add to the growing list of assets turning everyone into Einstein.
History is an important guide. Following the crowd doesn’t lead to riches. At best the crowd leads to mediocrity; at worst it leads to the poorhouse.
I don’t trust what technology always tells me. Right now technology (and the experts) tells us to pile into bitcoin and the stock market. Weeeeeeeee!
What could possibly go wrong?
Like the interstate in Kentucky after the eclipse, we might find it hard to move anywhere or even get off the crowded road. Before long we end up with real problems as night approaches and gas is running low with the kids in the back seat.
Heading for the highway sounds like the smart move. Sometimes it’s not! It can extend the drive a few minutes like my trip to Green Bay for a class or create serious problems like it did after the total eclipse in Kentucky.
The side roads are seldom crowded. Sometimes you get behind a tractor for a short distance or have to navigate twisting roads and frequent stop signs.
But at least you have the road to yourself and a whole lot less stress.