I FLUNKED MY FIRST two interviews for an academic job. Fifty years ago, I didn’t make the grade at the University of California, Los Angeles, or the University of California, Berkeley, either of which would have made a fitting classroom for an unseasoned but game New Yorker. Instead, I prevailed at the University of California, Davis, the agricultural mecca of the statewide system. I was sold when I looked at one of those old gas station maps and saw that I’d be close to San Francisco. At a welcome party for new faculty held three weeks after my arrival, I met the woman who became my wife and has been at my side for 39 years. You undoubtedly have your own stories of synchronicity. How much of a role does randomness play in our life? And why are we so quick to dismiss it out of hand? I made my first and best real estate investment when mortgage interest rates were the highest in modern history—17%. For four decades, this exploit became the bedrock of my self-esteem as an investor and carried me through times of despondency and failure. But just last week, a passage in market philosopher Nassim Nicholas Taleb’s book Fooled by Randomness upended my self-assurance. “Lucky fools do not bear the slightest suspicion they may be lucky fools,” he wrote. I had denied this dagger all these years despite the string of improbable events that preceded that first real estate purchase. Could I be one of Taleb’s prideful fools? Might you? In 1980, Federal Reserve Chair Paul Volcker resolved to quash the prolonged high inflation of the 1970s with a stifling monetary policy that induced a recession. Sound familiar? Back then, few American families could afford a conventional loan, forcing builders to stockpile inventories of unsold homes. Staggering under the weight of short-term construction loans reaching 24% and facing bankruptcy, companies were offering creative financing to lure homebuyers. As happens with many defining business ventures, I stumbled into real estate ownership quite by accident. Over lunch with a broker friend, my wife Alberta was enticed by the virtues of real estate limited partnerships. At the time, people were rushing to pool their money to buy shares of a real estate enterprise, much as they would with a mutual fund. Small investors were attracted by the generous tax benefits and the promise of no management responsibilities and no liability, which were assumed by the general partners who ran the business. Alberta’s parents had missed out on the late 1970s boom in Los Angeles real estate. She wasn’t about to let another opportunity fly by. I shuddered at the prospect of losing control over my investment and trusting a remote management team to align my interests with its own. From my vantage point, the limited partnership was the beneficiary of an unsustainable and risky real estate bonanza. Besides, at age 36 and building a career as a research psychologist, I was damned if I was going to bow at the altar of my father’s real estate mantra and invest in rental properties. Alberta carried no such baggage. We agreed on a compromise. I would look for a property to invest in, but it would have to be our own. Some weeks later, I came across a classified ad in the real estate section of the Sacramento Bee announcing a financing plan consisting of 30% down with the balance to be paid in 60 equal monthly installments at no interest. No interest? A phone call filled in the blanks. A local builder had slowly sold out his suburban condominium development except for the three model apartments. He needed more cash for an assisted living project and was having trouble unloading his properties in the current astronomical interest rate environment. He wanted to sell the units to an investor and rent them back as his firm’s offices for two years. Dare I believe my good fortune? I would have to put down 30% for an investment loan anyway, even if I could qualify. No interest and no points. No anxiety-ridden pressure to prep the condos and find a renter. And we would own the properties free and clear in five years. [xyz-ihs snippet="Mobile-Subscribe"] I told Alberta about the scenario and she immediately understood we had to act quickly. She’d received a modest inheritance a few months before, so we had the cash to buy all three. We arranged to view the condos and, not wanting to alienate the seller and future renter, made a reasonable offer. It was accepted and the transaction closed in three weeks. I was in shock. I had walked almost blindly into a small goldmine. I had vowed in my youth never to follow in my father’s footsteps. Instead, I became a professor, half in spite. My brother was the trouper and I was the renegade. Yet here I was making a sweet real estate deal.  A few days later, I called my father and related the story. “So, Stevie, how many did you buy?” “All three.” “Good, you did the right thing. You’ll never see something like that again.” It wasn’t all wine and roses. Real estate values dropped 25% between 1983 and 1988, so we were underwater for several years. The stock market was going viral and I wondered for a long while whether I’d made the right decision. Those limited partnerships? Beset by so much blind faith and gunslinging, they crashed like other investment comets of yesteryear. The concept has survived but no longer enjoys the same panache. It was the crypto of that era. An innocent lunch, a wife whose parents didn’t cash in, a son reluctantly agreeing to reclaim his family’s real estate legacy, a builder who wanted to move on. How much is our destiny in investing and in life tossed about by chance? Was it all serendipity? Our lack of control makes us anxious and too easily deceived by the Protestant ethic that depicts a productive life as a straight line, from school to job to family. The journey is more jagged than that. Taleb wrote, “The simple inability to remember the true sequence of events but a reconstructed one will make history in hindsight appear more explainable than it really was. In most circumstances fraught with a high degree of randomness one cannot really tell if a person has skill.” I have tried to find the same 0% financing plan in every recession since the 1981-82 downturn. My father was right, I have never found another. Does my inability to repeat the escapade confirm that I was merely lucky? I’ll never know if what I accomplished was due largely to skill or a whim of chance. In many of your own triumphs and failures, neither will you. Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles. [xyz-ihs snippet="Donate"]

For the last five or so years, I’ve held a disproportionately large position in the Vanguard World Stock Index ETF (VT). This fund has given me “coverage” of the global markets, including a 40% stake in international stocks. Originally, I congratulated myself on my cleverness. After all, VT is monstrously diversified and dirt cheap and, besides, foreign markets were deemed sorely undervalued by the market cognoscenti. But were they really? As of now, my shrewd little maneuver has left my portfolio performing embarrassingly below the return of the “simpleminded” and home-biased—but inordinately domestic tech/heavy—S&P index funds. I still hear the siren call: foreign stocks—and especially European markets are so-o-o-o precious. The thing about value investing is that you can be too early. Is that all this is, an opportunity as yet unrecognized by the masses? Or is our more capitalist and achievement-oriented society destined to support a premium valuation into the future? Right now, that’s my major investment dilemma.

I'M DUMB MONEY, as are all so-called recreational gamblers. That’s why, during the recent basketball playoffs, we sports spectators were bombarded with wildly seductive commercials glamorizing sports betting. Fortunately, I learned my limits early on. My last notable gamble ended badly more than four decades ago, when some IBM options I bought expired worthless. But I’ve also come to appreciate that not all individual gamblers are dumb money. I’ve lately been serving as the sounding board for my 36-year-old son Ryan, who has become a successful sports bettor over the past two years. Here’s what I’ve learned. Playing the game. It’s hotly debated whether sports betting is a skill-based activity or merely the latest come-on propagated by the casino industry. But whatever the case, it’s not going away anytime soon. The bourgeoning betting business makes dough for the media, sports teams and sports books, while putting tax dollars into state coffers. In the short run and without a mathematically sound game plan, sports betting is unadulterated gambling, not unlike the frenetic trading of individual stocks and options. But taking a longer view—say, at least 100 wagers—a bettor with formidable sports knowledge and an intricate grasp of probability theory can eke out an edge that snowballs over time. A former high school math teacher and basketball coach, Ryan has attended numerous seminars on sports analytics taught by faculty at some of our most elite universities. His betting season encompasses college and pro football, as well as college and pro basketball. As some readers might recall, his modus operandi is much like that of a mutual fund manager, making many simultaneous small bets over a large and diverse number of games. Analyzing the bet. It’s instructive to look at how Ryan might attack one of the most frequently bet questions posed by casinos: “Which player will score the game’s first rushing touchdown?” At first glance, this would seem to be more appropriate for your eight-year-old grandkid than for a savvy sports enthusiast. Obviously, you say, you’d pick the runner who has scored the most touchdowns so far this season. Probably, but not necessarily.  The answer is more elusive than that. Let’s start with the injury factor. Is your guy playing with last week’s hamstring pull? Have you done your due diligence and checked his latest health status report? Maybe you should shoot an email to a local sportswriter. And when your touchdown maestro returns, will he be rested and recovered or rusty and unproductive? If a ball carrier has been out for several games, his total rushing attempts and touchdowns may not reflect how often he’ll be called on today. Don’t overlook whether the team has someone built like a fire hydrant who trots in on short-yardage situations near the goal line. Ditto for the coach partial to using the quarterback sneak from one or two yards out, rather than risking a hand-off. See what I mean? Not so simple. The situation gets even more complicated when you take the player’s supporting cast into account. You’ll want to know whether your likely choice is on a team that tends to grind it out rather than pass. Then there’s the red zone, football lingo for the last 20 yards before the goal line. How frequently has the team scored a rushing touchdown after entering the red zone? How conservative is the coach? Some are more likely to settle for a high-probability field goal than go for a less certain touchdown. Fumbling the ball. Any of these developments could affect the likelihood that your pick will be the first runner on either team to reach the end zone. If, despite all these considerations, you can’t resist the temptation to bet, here are some additional caveats. Don’t get fooled by randomness. Short-term results are often juiced by luck. Say Uncle Sammy boasts he has a system that beats the sports books because he won both of his bets on the NBA finals. But remember, by chance, getting two heads in two coin flips occurs 25% of the time—hardly insurmountable odds. Avoid overestimating your resilience. So far, we’ve only touched on data readily available online. But serious sports bettors insert this information into predictive models to tease out statistical inefficiencies and oversights in the casino odds. The work is intense, exhausting and at times daunting. All else being equal, an outstanding sports bettor wins only 55% of the time. Can you withstand all the losing? If the idea of allocating some retirement money to a sector fund makes you queasy, dipping a toe into these waters probably isn’t advisable. Resist surrendering to gut feels and hunches. If you can’t keep your emotions under control, the casinos will welcome you with open arms. The house knows far more than just which team should be favored and by how much, and that gets reflected in the odds offered. For instance, the sports bookies routinely bake in a halo effect around Alabama’s college football juggernaut. Similarly, earlier this year, Taylor Swift’s good vibes distorted Super Bowl betting on the Kansas City Chiefs. Keeping score. You probably already know about meat-and-potatoes stuff like home court advantage and weather. But rely on them alone, and the house will gobble you up. Instead, get up to snuff on the esoterica, like travel time and distance, schedule and fatigue and—I kid you not—Rocky Mountain altitude. Professional sports bettors are willing and, in rare instances, able to match wits with the casinos. I don’t have the requisite skill or endurance and, I suspect, neither do most HumbleDollar readers. The big boys are stalking folks like us—the dumb money hoping for a little fun, a few quick bucks and some ego-inflation. So, after suffering the guffaws of many friends and extended family, how did our rogue son make out? After the basketball playoffs, Ryan flew in from Los Angeles, so we could run the numbers as a family. His mother Alberta and I hunched over the computer as he slowly moved his hand from left to right across the bottom of the page to reveal the reward he’d earned in return for a year of passion and determination. I had to brace myself against a nearby table as I stared dumbfounded at Ryan’s six-figure profit. Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles. [xyz-ihs snippet="Donate"]

You don’t need Eli Lilly’s Ozempic to slim down. If you want to lose some of that tech bloating in your S&P 500 or total market index fund, I’ve got just the medicine to reduce the overweight. Several sponsors offer ETFs that cut your exposure to possibly overvalued large technology stocks by weighting each company in the sector equally rather than by size. This strategy greatly reduces the impact of the largest companies in the fund, including the Magnificent 7 and other stocks propelled by the artificial intelligence mania. Correspondingly, the minimization of those mammoth growth stocks increases the influence of possibly overlooked value and smaller stocks, vastly improving your diversification. We’ll review the two most popular equally weighted ETFs here, with an eye toward informing readers open to this kind of repositioning. Invesco S&P 500 Equal Weight ETF (symbol: RSP)  If this name sounds vaguely familiar, that’s because it is. The fund simply takes 500 of our largest and strongest companies and weights them equally. Although classified by Morningstar as a large blend fund, RSP actually has a value and smaller stock tilt. In fact, it contains twice as many value and four times as many smaller stocks than the standard Vanguard S&P 500 ETF (symbol: VOO). The equally weighted S&P yields slightly more than the conventional index (1.6% vs. 1.3%) and costs more (.20 vs. .03). The higher turnover (21% vs. 2%) needed to periodically return the holdings to equal weight status increases expenses. Like its larger counterpart, the Invesco ETF’s high volume virtually eliminates any spread. Clearly, in many respects RSP is a less efficient fund than VOO. But it has several meaningful advantages. The reduction in size and sector in the equal weight portfolio is dramatic, with the more balanced alternative having a market capitalization only one-fifth that of the S&P. Assets in the top ten holdings crater from 34% to 2% and the technology stake drops from 32% to 15%. Similarly, eight of those ten in the Vanguard S&P 500 are tech companies, whereas none appear in the equal weight option. The question of volatility is not so easily resolved. In the twenty years ending in mid-2023, shares of RSP were about 12% jumpier than they were for VOO. But this relationship has recently reversed, presumably because of the overrepresentation of the fast-paced technology names in the S&P. The heavier technology position in VOO likewise affects the relative performance of the two funds. In the technology debacle of 2022, the S&P lost 18% as against only 12% for the equal weight ETF. But in last year’s tech rally, the standard S&P outgained its less concentrated counterpart by 12 percentage points. Through August of this year, Vanguard’s S&P 500 has bested Invesco’s equal weight fund by a notable margin (19% vs. 12%), again implicating the differences in sector and style allocation. Direxion Nasdaq 100 Equal Weight ETF (symbol: QQQE)  This boutique fund is suggested only for the most venturesome of readers. It is categorized as large growth because its technology position (40%) is almost as high (49%) as it is for Vanguard’s Growth ETF (symbol: VUG). Consequently, the ride is only slightly less bumpy than it is for VUG. The equally weighted Nasdaq ETF must be considered nondiversified even though the technology stocks comprising it are much smaller and less focused than those in the Vanguard Growth fund. The top ten stocks in the portfolio only account for 12% of assets and none of the massive artificial intelligence beneficiaries. Volume is moderate but the spread is acceptable. However, its yield is low (0.9%), it’s costly (.35) and its turnover is high (30%). Just as with the equally weighted S&P ETF, comparative performance for the Nasdaq fund depends on the success of the tech behemoths. Thus, when large technology stocks were pummeled in 2022, the equally weighted version of the Nasdaq 100 declined less (-24%) than Vanguard’s growth offering (-33%) Not surprisingly given the steep gains in the very large technology stocks last year, the equally weighted Direxion ETF trailed Vanguard Growth by 13%. Continuation of those stocks’ outperformance through the first eight months of this year resulted in another marked advantage for the tech-infused growth ETF, which gained 21% as against 6% for the less concentrated Direxion ETF. Takeaways The two equally weighted ETFs could play very different roles in a retirement portfolio. The Invesco S&P 500 Equal Weight ETF could be helpful at the critical sequence of returns juncture just before or early in the withdrawal phase. Say your core holding is Vanguard’s S&P 500 ETF or its Total Market ETF, meaning that about one-third of your retirement nest egg is in the technology basket. Is that really where you want your life savings to be? Is it worth staying with the standard S&P should the technology behemoths enter a sharp correction that could wreak havoc on your withdrawal formula and limit your ability to participate fully in a recovery? It might well be more sensible to enhance your diversification by spreading your risk over possibly less overvalued smaller technology companies as well as democratizing the entire S&P.   By contrast, the tech-heavy and fast-paced Nasdaq ETF from Direxion is verboten for most of us during retirement. However, I believe it can be deployed effectively to serve a particular purpose for a young and aggressive investor still early in the accumulation phase. He might want to maximize appreciation by overweighting the technology sector, but in a more diversified way than simply concentrating on a few skyscrapers that may be vulnerable to a sharp correction.        

YOGI BERRA IS MY favorite guru. His quip, “It ain’t over till it’s over,” pretty much sums up my losing battle with technology stocks. The saga all began with an upbringing that bred a need for achievement that could never be satisfied, coupled with a prohibitive anxiety over risk-taking and failure. This family tape has played over and over again in my head as I’ve struggled to steer a course as a mutual and exchange-traded fund investor. During the lurching but inexorable bull market of my young adulthood, I would hide out in bond, balanced and option-income funds, on the outside looking in. I’ve been feuding with technology stocks for decades. In the late 1970s, I dabbled in T. Rowe Price New Horizons (symbol: PRNHX), which invests in emerging companies on a high-growth-at-a-reasonable-price basis. But it’s not a dedicated technology fund. Then came 1980, when investors anticipated the election of business-friendly Ronald Reagan and drove the S&P up a raucous 32%. I was flush with my New Horizons success and brimming with overconfidence as Fidelity Investments launched its suite of sector funds in 1981. I was the perfect patsy, redeeming my New Horizons shares and plowing the proceeds into shiny new Fidelity Select Technology (FSPTX) to ride out the raging bull without a saddle. Soon enough, I bailed out of my tech fund at the behest of those old demons—need for achievement and anxiety—cleverly sidestepping 20%-plus gains in each of the next two years. I had to concede that my fear of failure doomed me to being a lousy trader, while the writings of Eugene Fama and later Jeremy Siegel brought home the logic and power of long-term investing in the broad stock market. What to do? Where to go? My solution has been to invest primarily in index funds, but with tech stocks underweighted. According to Morningstar’s X-Ray tool, my family’s combined portfolio has 21% tech exposure, versus the S&P 500’s 31% weighting. Given the strength of technology stocks since my “conversion,” I’ve moderately underperformed the market. On the one hand, my conservative stance has allowed me to stay invested and still get a large slice of the market’s gain. On the other hand, I’ve always thought my success with funds has fallen well short of my knowledge about them. Enter the artificial intelligence mania and my newest nemesis, Nvidia (NVDA). I hate that stock. For goodness sake, it was up 240% last year, and has continued to soar in 2024. According to Morningstar, my combined position in Nvidia is 1.9%. Are you kidding me? That’s all, less than 2% in a company with a blockbuster future and a stock on steroids? Now, don’t all you fellow broad index-fund investors guffaw over my piddling allocation to Nvidia. You’ll find that even Vanguard Group's S&P 500-index fund (VFIAX) holds just a 5.1% position in the stock. That’s more than twice my participation and quite sensible in a highly diversified portfolio. But it’s certainly a very tepid stake in a company touted as the technology revolution’s next bellwether stock. You probably see where I’m going. That family legacy—unreasonable achievement demands along with heightened anxiety—make me a sucker for FOMO, or fear of missing out. Disguising that fear as innocent curiosity, I did a little research on VanEck Semiconductor ETF (SMH), a zippy little sector fund that has a 20% exposure to Nvidia. To my credit, I’ve so far abstained. But pray for my deliverance. Then, just recently, my good friend Jerry told me a story that sounded alarm bells. His wife Judy bought a Tesla during the 2022 Christmas holiday, just about the same time she discovered CNBC. Titillated by both her politically correct car and a bullish commentator, she stashed $200,000 in Tesla (TSLA). Carried in part by last year’s raging bull market, the stock doubled and Judy sold for $400,000. CNBC became her divine source, the pundits were oracles and she was a star trader. In the words of market observer Nassim Nicholas Taleb, Judy was fooled by randomness. Now devoted to CNBC, she’s informed Jerry she wants to put the whole $400,000 into Nvidia. Almost half a million in one stock? What if the artificial intelligence story proves to be overblown? Suppose the company’s earnings disappoint and the stock no longer warrants its giddy price tag? Might it be struck by one of Taleb’s black swans, like corporate malfeasance or product liability. What if the company is overtaken by Advanced Micro Devices (AMD), its primary competitor? I warned Jerry about the riskiness of his wife’s plan—a warning that, I hope, was driven more by my concern for their finances than any fear that Judy scores another windfall while I dawdle in diversification. I beseeched Jerry to stand firm against his wife’s plan and, if that fails, perhaps get her to compromise with VanEck Semiconductor, while lightening up on their other technology exposure. Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles. [xyz-ihs snippet="Donate"]

WHEN WE'RE YOUNG, we simplistically view our family’s money journey as one long road with clear signs that tell us to “speed up,” “change lanes” or “get off.” It’s only later, as we gain wisdom, that we can discern how messy the journey is—and how each of us ended up turning onto a different street to pursue financial freedom in our own unique way. By exploring the money stories of three family members, I have come to better understand my own financial journey. Business lessons. “Stevie, let’s go already. Stop with the sports page. I need to get downtown.” “Okay, Dad. The Dodgers are back in first.” “Stevie, there’s a time for baseball and there’s a time for business. I want to talk to you on the ride in. You’re 14 now and you need to get serious about life. Remember, Stevie, I started with nothing. We never owned a house, so I didn’t even know what a mortgage was.” I hated these lectures. It was like being in school on the weekend. I wish he would have taken Richie with him, like he usually did. “I’m worried about you, Stevie. You’re like your mother and grandma. You’re too soft. The world is a rough place and I don’t want you to be taken advantage of. Mommy doesn’t drive so she takes taxis everywhere. Then they take her the long way around and charge her double.” “Dad, I’m not going to be taken advantage of.” “Richie is tougher than you. He won’t paint the apartment for a tenant who’s always late or if he’s one of those types who keeps asking for more.” Always it’s Richie, Richie, Richie. I win the freshman prize for my essay on what happens to real estate values as neighborhoods change and my father doesn’t even come to hear me talk. “Sometimes, I think you’d be better off working for someone and letting Richie do the real estate. He’ll always cut you a piece of the action.” He’s afraid that, left to my own devices, I’ll fritter away my inheritance. “Let’s start with rents. Don’t be a big man. Raising rents to the ceiling is insensitive, and you don’t want to lose good tenants. And pay attention to how rental prospects come across. Sometimes, the kind of people they are is more important than how much they make.” “Dad, there’s a Howard Johnson’s 28 flavors. Can we stop for a chocolate mint?” “Later, Stevie, please, there’s more to learn. Keep your eye on the ball, and that’s expenses.” Here comes lesson No. 100. “Stevie, holding down expenses is almost more important than raising rents. Rents usually go up gradually and so do most expenses, like utilities, insurance and taxes. And your mortgage stays the same. But repairs and maintenance can go haywire. They’ll determine how much cash you have left at the end of the month.” I thought about Mommy and how she surprised me with that new Elvis Presley LP. “You have to be smart. Say a sink needs a new knob. Maybe $100 to replace it. But to get the knobs to match could be $500 if you buy the whole fixture. At that funky place in Brooklyn, they don’t have to match. The people have more important things to worry about, like having enough for food and buying clothes for their kids. They couldn’t care less about which knobs they get. But on 35th Street, that lawyer couple, they have to match. Otherwise, you’ll get a phone call the next day.” Grandma always set aside some food on her plate. She said it was for God and all his people everywhere. It didn’t matter whether they were rich or not. “Stevie, don’t drift off on me. We’ll be there soon and we’ve got more ground to cover. Let’s talk about the people who work for you. They should be loyal, no stealing, no excuses to stay home, no ‘it’s snowing’.” “Dad, I’m getting hungry. Are we near the bridge yet?” “Yes, Stevie, it’s coming up. You want versatile people, people who can do more than one thing. Take Seymour. When I was just starting out, he looked after the TV parts business, then he ran the record stores. Now, he does the real estate.” “I think the first game of the doubleheader is about to start. Can we turn it on?” “When we get to the office, Stevie. Another important thing: Salaries are a big part of expenses. You can’t go overboard, but you have to be fair. Everyone needs to put bread on the table and they’re depending on you. Always pay on time. If you want loyalty, you have to show loyalty. And be generous with gifts. Like Lucy Griffin, the manager at 35th Street. Her husband died two years ago. She works and she has a kid a little younger than you. Every Christmas, I give her a bonus and bring over clothes you grew out of.” “Hey, Dad, we’re here. I’m going to the office and turn on the game.” “Okay, Stevie, I’ll park and meet you there.” Running to the office, I promised myself I’ll never ever own any real estate. I’m going to be a sportswriter. Sibling rivalry. My brother and I spent many summers at Raquette Lake Boys Camp in the glorious Adirondacks of Upstate New York. The annual baseball game against hated rival Brant Lake marked the final week of summer vacation. The lead changed hands several times when, in the bottom of the ninth and the score tied four-four, Richie came up with two outs and a man on third. He smacked the first pitch inside the third baseline and into left field, knocking in the winning run. Richie ran up to me crying, and together we jumped up and down until my front tooth chipped when it bumped against his forehead. My brother surpassed me on another playing field as well. He grew into the favorite son—considerate, social and enamored of my father’s business exploits. I would become the renegade, aloof, moody and contemptuous of my father’s fixation on real estate. I never relinquished my role as academic star, but a kooky one isolated in his room playing baseball board games and Elvis Presley songs that vibrated throughout the house. Besides, in a family that viewed teachers as underpaid public servants, scholastic recognition was small consolation. Smooth sailing in our family served my brother well as an investor. Feeling accepted for the person he was, he had nothing to prove. He could be a steady Eddie. He started before the advent of index mutual funds and, unwilling to pay high active management fees, fashioned his own diversified stock portfolio. He mostly held firm for 40 years, capturing the entire bull market beginning in 1982, persevering through the tech debacle of the early 2000s and the financial crisis of 2008. Exiting childhood with more to prove than Richie, I fiddled around with exotic trading strategies for far too many years. Despite my more complex understanding of how markets work, I surely underperformed my brother. I squandered my knowledge and my results on old family agendas and personality issues. Richie had won the game, and it was now time to take some chips off the table. But his phenomenal success with an index-fund-like stock portfolio bred overconfidence just as he approached retirement and its nemesis, sequence-of-return risk. Unfathomably, rather than allocate a substantial part of his nest egg to short-term Treasury instruments to protect his withdrawal plan, Richie took a deep plunge into a single stock. As the country’s only dual defense contractor and major manufacturer of commercial aircraft, Boeing became 17% of what had for decades been a scrupulously diversified portfolio. [xyz-ihs snippet="Mobile-Subscribe"] My brother had come full circle from a stay-the-course investor to a high-wire act. He didn’t imagine, however remote, encountering one of Nassim Taleb’s black swans. In 2018, Boeing’s 737 MAX 8 airliner tragically crashed in Indonesia and then again five months later in Ethiopia. A constitutionally long-term investor, Richie was loath to sell, but he eventually liquidated the remaining half of his original position. Even so, my brother was luckier than most. He had ample cash flow from a thriving law practice until he retired and reliable passive income from his commercial real estate. Over the years, Richie and I collaborated on many real estate deals, some in California but most in Florida. His generosity has been unwavering. He found most of the deals, his office did the paperwork and mailed me the closing papers, and he managed the properties. I just signed, barely skimming the documents. For all this, my brother never asked for a dime. Stevie was a pro bono client. Chastened by my bouts with the fiendish market and supported by family and therapy, today I’m docked in the comparatively calm waters of mutual and exchange-traded index funds. I still do some splashing around, but in a very small pool. No longer needing a proving ground, I frolic in hobbies and find meaning with family and friends—what I should have been doing all along. Royal treatment. Last month, my wife Alberta received a royalty check for a series of Spanish textbooks her father wrote 80 years ago. Dean of Admissions and Guidance at Los Angeles Valley College, Bob died of a massive heart attack at age 49, when Alberta was eight. He never got to hear the acclaim or see the widespread adoption of his books at high schools across the country. He never knew his royalties would support his family through Alberta’s childhood, pay for her undergraduate and graduate education, and provide the down payment for her first home. Alberta’s mother Rose had been abandoned by her own father in the Depression. Losing the two most important men in her life consigned Rose to a constant state of nervous apprehension. Despite lucrative royalties, a pension and Social Security income, she lived as if in constant financial peril. Mother and daughter lived in a one-bedroom apartment for some years, a condition of relative deprivation that was a source of unhappiness. A woman twice broadsided by randomness finally saw the dice fall her way. As often happens, need is a catalyst for opportunity. With a desire for high cash flow but with a low tolerance for risk, Alberta’s mom became attracted to municipal bonds’ twin allure of tax-free income and safety. Rose began purchasing munis a few years before interest rates peaked in the early 1980s, and continued for many years as rates fell and bonds embarked on a multi-decade bull market. Alberta’s mom reaped an entirely unanticipated capital gains windfall, in addition to relatively low-risk, tax-free income. The bonds proved a boon for us after she died, with the interest supplementing our income. Looking to build up a reserve for a house down payment and wanting diversification for our stock investments, we held on to the bonds, letting them mature one by one to avoid commissions and the bid-ask spread. In many ways, Alberta grew up as the poor little rich girl, always on the outside looking in. She strove to honor her dad’s memory through academic achievement. She published her psychology honors thesis, was awarded a prize from the American Society of Criminology, and graduated Phi Beta Kappa from Berkeley, before earning a PhD in clinical psychology. But Alberta’s greatest accomplishment was not in academia, but in our family. Soon after we married, I collapsed with a serious depression that cost me my job as director of research in the University of California, Davis, psychiatry department. Negativity and irrational fears plagued me for many years. All that time, Alberta juggled a private practice with raising our son Ryan, in effect a single working mother. Her husband, the other kid, could be quite primitive. My helplessness panicked me, but Alberta remained calm. One time, I interrupted a patient hour, pleading that she not ever force me to work again. In a soft reassuring voice, she said she wouldn’t let anyone put that pressure on me. Not believing her, I threatened to let my psychologist license expire. She implored me not to shut the door. She still held out hope. From time to time, I ask Alberta why she stayed with me. “Steve, love doesn’t end when earnings do.” Only half-jokingly, she says my sense of self-worth could use some more therapy. My money journey was fueled by my alienation. A teenager’s dream of becoming a sportswriter and a subsequent career as a clinical psychologist were passions in their own right. But they were also acts of defiance. As I achieved independence from an overbearing parent, my need to rebel diminished. Alberta understood my depression was precipitated by alienation—alienation that blocked me from creating a new professional and financial identity. But that identity has belatedly emerged, one that includes rendering psychological services, investing in the stock market and managing a once-demonized real estate business. No, I never became a sportswriter. But I have written many professional articles and contribute regularly to HumbleDollar. It is, I think, an identity that fits me well. Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles. [xyz-ihs snippet="Donate"]