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Despite what the talking heads say, it’s never “a stock picker’s market.” As a group, pickers of stocks are always market laggards.

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Driving Prices

IN 2020, ELECTRIC car maker Lucid Motors brought in revenue of $4 million. Five years later, sales had risen impressively, to more than $1 billion. In 2025 alone, sales grew 68%. That sounds like a success story, and through that lens, it is. And yet, over that same period, the company’s stock dropped more than 89%. What happened? A better question is: What didn’t happen? Despite growing sales, the company has struggled to turn a profit. On sales of $1.3 billion last year, Lucid posted a loss of $3.8 billion. It’s experienced production problems and management turnover. It’s seen its competitors cut prices. As a result, it’s been forced to issue new shares, thus diluting the value of existing investors’ holdings, just to keep the lights on. In fairness to Lucid, the road to success is rarely a straight line. Arizona State University professor Hendrik Bessembinder studies the performance of public companies, and the results are sobering. In new research, he found that, over the past 100 years, the median return among stocks trading on U.S. exchanges was negative 6.9%. Only a minority of stocks, in other words, made any money at all. Why are these results so dismal? Four factors stand out. The first is emotion—specifically, investors’ emotions. After Lucid went public in late-2020, its stock began rising quickly, and in the early months of 2021, the shares gained nearly 500%. What was driving those gains? Since the company was just starting production, very little can be attributed to the company’s financial results. Instead, it was simply investor excitement around the electric vehicle market and the optimistic view that Lucid would become the next Tesla. But no sooner did the stock rise that it fell again. And in the years since, it’s been an overwhelmingly downward slide for investors. In the last interview he gave before he died in 1976, Benjamin Graham compared the stock market to a seesaw. “The present optimism is going to be overdone and the next pessimism will be overdone.” And that causes stocks to go to extremes. Fifty years later, Graham’s observation seems no less accurate. Indeed, investment manager Cliff Asness has argued that, because of the internet, the impact of emotions on the market is even worse today. Due to what he calls “the less-efficient market hypothesis,” inaccurate information can spread much more quickly today than it did in the past. You may recall the phenomenon in which a group of day traders, led by a YouTube personality who called himself Roaring Kitty, was able to drive up the stock of a nearly-bankrupt company for no rational reason. That couldn’t have happened in the years before social media. Another factor that can drive stock prices is government action, and this also explains part of Lucid’s slide. When the government ended tax credits on electric vehicles last year, that made electric cars much more expensive for consumers. And contrary to intuition, this year’s higher gas prices haven’t done much to entice buyers back to EVs. On the other hand, government action can sometimes be positive. In 2017, for example, Congress voted to cut the corporate tax rate from 35% to 21%, significantly boosting public company profits. Perhaps the most obvious factor that can drive stock prices is competition. This can take a few different forms. Coke and Pepsi, for example, have been battling for more than 100 years, but their relative positions don’t change very much. At this point, neither company is going to go out of business as a result of the other. In his book The Innovator’s Dilemma, the late Clayton Christensen described a much more disruptive form of competition—the sort that upends industries entirely, such as when 19-year-old Bill Gates outsmarted IBM. At the time, IBM was the most dominant company in the computer industry, but over time its position faded. It underestimated how important personal computers would become and didn’t take the market seriously. Years later, it ended up selling off its PC business entirely, and today makes very little hardware. The same sort of thing happened to BlackBerry, to Kodak and to Polaroid, among others. Like IBM, all of these companies had enormous resources. But, according to Christensen, it was their success that became their greatest weakness, because it caused them to underestimate threats and to downplay the likelihood that anything fundamental might ever change. Ken Olson, the founder of Digital Equipment Corporation, a leader in minicomputers in the 1960s and 1970s, famously asserted, “There is no reason anyone would want a computer in their home.” The tricky aspect of the innovator’s dilemma, though, is that it isn’t universal. Consider the early years of the auto industry. Before automobiles gained popularity in the early 1900s, it’s estimated that there were 4,000 companies in the horse-and-carriage business. The right move for any of these companies would have been to try to transition into automobile manufacturing. Carriage makers, especially, had relevant skills and were best positioned to make this leap. But they adopted a collective mindset that the automobile wasn’t going to succeed, dismissing cars as “devil wagons.” But one of these carriage makers, Studebaker, did correctly assess where things were going and successfully transitioned to making automobiles. The rest failed, faded away or switched into other businesses. Companies, in other words, can be very good at one thing but lose their footing in the face of change. That’s a key factor behind Bessembinder’s findings. A final factor that can cause companies to stumble: random events. Consider, for example, what occurred in Thailand in 2011. Heavy rainfall resulted in flooding that caused large industrial areas to become submerged. This included the factories of hard drive manufacturers Western Digital and Seagate, causing their stocks to drop 35% and 45%, respectively. Both recovered, but this is an example of how even good companies can run into bad luck. Years of research has shown how difficult it is to predict stock prices. Bessembinder’s new work, however, makes an additional important point, which is that, for all of the reasons discussed here, and likely others, stocks face many more roads to potential demise than to success. Thus, to succeed at stock-picking doesn’t just require research and hard work. It requires an almost prophetic ability to identify the tiny handful of stocks that will turn into homeruns. But since the odds are so steeply against success, that’s a key reason I see it as so important to stick with the simpler and less risky alternative of index funds.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

Live a little

"Echoing Sethi perhaps, another HD contributor recently said that they aim to save on things they need and spend on things they want. We’re not that specific about it but I like the concept."
- Michael1
Read more »

Around the Obstacles

I WAS 48 years old when the judgement was final and the papers were signed. My former wife and I split our net worth 50/50. There were no arguments over household items like furniture; I didn’t care about that stuff. Pam gladly accepted my proposal that she keep the house, and all its equity, in exchange for me keeping an offsetting amount of the IRAs and my 401(k), a very good move for my future self. By giving up the house, I also escaped the mortgage, which was the only loan obligation I had. Had there been consumer debt (there was none), I would have eliminated that as quickly as possible, beginning with the highest interest loans. I was ordered to pay spousal support to age 65, or my retirement if I worked beyond 65. I would be lying if I told you that I liked paying alimony. Still, it wasn’t unfair considering our age at divorce, Pam’s depression, and the fact that she mostly stayed at home to raise our kids.  Long before the divorce was ever final, I knew I’d have to make up for lost time if I ever wanted to retire in the manner to which I wanted to had become accustomed. The divorce wasn’t going to be the only obstacle I would have to overcome. Thirty years of delivering beverages resulted in osteoarthritis and plantar fasciitis; my days on the beer truck were rapidly coming to an end.  I needed a plan. Where Was I?  I had to understand exactly where I was, and what my options were. 
  1. My continued employment as a delivery driver would likely have left me on Social Security Disability (SSDI) by age 55.
  2. I was very interested in personal finance, and knew many people in that field who would help me get my foot in the door.
  3. I had acquired bookkeeping, payroll, and tax prep skills through my involvement with my local union, though I never pictured myself as the type to sit behind a desk, in a dimly lit office, crunching numbers beneath the glow of one of those green shade banker’s lamps.
  4. As a last resort, I could fall back on my truck driving skills, using my commercial drivers license to get a job hauling ‘no-touch’ freight of some sort.
  5. Last but not least, I needed a place to live. “Hello, mom and dad, I need my room back”. Sleeping on the twin mattress I gave up 25 years earlier, was not part of my plan.
  6. I was determined not to let my occupation as a beer truck driver dictate my future job prospects.
Where did I want to be? 
  1. Where to live? Living with the folks was never meant to be a long term thing. After three months of that, I signed my first ever apartment lease as a lessee, as opposed to a lessor. That lasted two years, until a very large increase in the rent caused me to buy a duplex, and become a lessor again.
  2. Where to work? I continued my work as a delivery driver for three more years. My position as the local union president, and my five paid weeks of vacation actually kept me off of the truck much of the time. That enabled me to tolerate the maladies that would eventually force me out of that job. Having absolutely no desire to spend the balance of my life languishing on SSDI and a minimal IRA balance, I set off on the path to becoming a financial services guy. That did not work out, and if you want more information on that, here’s a link.
  3. To make ends meet, I turned to my last resort; driving a truck. Piloting an 18-wheeler was not how I envisioned my remaining working days. And although the freight was ‘no touch’, driving 600 miles every day in a Kenworth tractor is still pretty hard on your vertebrae. But sometimes you have to do what you have to do to survive and to keep your eye on your finish line. My heart goes out to full time drivers, that job is no walk in the park.
  4. And what about love? My preference was to be in a relationship, but not any relationship. I wanted a good partner, I wanted to be a good partner as well. What qualities would I look for in a new partner? Independent, established, confident, and nice. Was I asking too much?
Making it All Work  Finally, preparation collided with opportunity. In other words, I got lucky. Remember when I told you I didn’t picture myself as ever being a bean-counter? Two established financial services guys set me up with free office space and began funneling tax prep clients to me. What began with me preparing taxes for about three dozen of my union brothers, instantly turned into over 100 clients. There I was, a bean counter of sorts.  I kept that truck driving job for several more years. And remember that duplex I bought after the rent spiked at my apartment? Well, there was this girl living next door. Enter Chrissy. We became best friends. She is no longer my neighbor. She is now my spouse. Of course, at the time we met, aside from being a nice guy, I wasn’t much of a catch. Man, she took a chance on me.  As my client count went up, my days driving the big-rig went down. When the client count got to about 400, I retired forever from driving. No more trips to Chicago, Des Moines, Snow Shoe PA, or Jersey City. Chrissy and I began pounding 40% of our gross pay into savings. It would take until I was 70, but working together, we got to a place each of us only dreamed we would be. By living within our means, and keeping lifestyle creep to a minimum, we surpassed our goals.  Chris retired at 64 and helped me during my final three years as a tax preparer. Lucky for me, Federal Wage and Hour never found out that I violated the minimum wage laws by never paying her in the first place. I sold the practice at age 70. I prepared 650 tax returns in my final year.  It’s important to note that during our journey, we did not starve ourselves of food nor fun. We counted 27 trips during our first ten years together. Chris was great at finding great deals to various destinations in the Caribbean, and we turned several of her business trips into mini vacations as well. It’s important to prepare for the future, but have some fun along the way as well.  I hope this piece inspires someone who is still on the road, dealing with similar obstacles, and wondering if there was a way around them. For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan's earlier articles.
Read more »

How it all pencils out–or at least, we hope so! (Our Big “Little” Move, Part 3)

"Relationship havoc gets expensive. I agree with David that this is the wild card in your otherwise well thought out plan. The space CANNOT be used both by a tenant and your daughter at the same time and Murphy's Law says you will need the rent income at the worst possible time. If you haven't already, find the number of $ you need out of the cottage. If you offer it to your daughter, then she will know what you are actually offering. You can decide if she matches it, or gets a discount. Know your local laws about short and long term rental notices so if someone's in the space when she needs it, you don't end up with legal costs on top of the social stress of having an adult child in crisis. When she and her pets leave, price in some down time before the next rental. Your next guests may be pet scent sensitive and there will be costs before reletting ( or your could promote your cottage as a premium pet friendly rental)."
- Barb Westerbaan
Read more »

Financial Planning

"Like others here, I have landed with a flat fee advisor. I worked with a couple of AUM advisors, and was uncomfortable with the value proposition. I heard Morningstar's Christine Benz interview a representative from Abundo, and engaged one of their advisors. Not perfect, but good to work with. I have many questions, and they answer them all, and generally find the advice to be sound, often better than my own thoughts. They don't make any trades, I have to execute them myself, so every option has it's limitations. With my kid's help, my wife would be more than capable of managing our finances in my absence, but it is comforting to know there is a trusted advisor who knows us, ready to help through uncertainty. This is not an endorsement or suggestion that my flat fee advisor is better than any other, just a recommendation to consider flat fee as an alternation solution."
- John Verlautz
Read more »

Enough complaining already. Live your life and stop worrying about “they” “ them” or things

"I have observed that things that used to be considered luxuries are standard or baseline. My Dad was a music buff, he thought Karen Carpenter was the bomb. He returned from Vietnam and bought a new 1974 Dodge Dart and was just delighted to have an under-dash cassette tape player to listen to his favorite music. It was a luxury to him, one of few he allowed himself. Now people feel that wired connectivity to the music apps on their phones just isn't good enough compared to wireless, but it's so much better than just a few years ago. The proliferation of luxury features in our consumer mindset is a huge contributor to inflation. On many products, you can no longer find a simple manual system, everything is "smart." I don't object to the development of labor saving features, I object to the dependence on it. I'm probably guilty of this like anyone else, but I miss the days where you had to WORK for the fancy stuff. Or just do without."
- John Verlautz
Read more »

Rethinking the “Right” Time for Social Security

"I guess the decision also should consider what portion of retirement income is made up of social security."
- R Quinn
Read more »

The IRA Decision That Affects Your Kids

"Wow, great example that the U.S. tax code is exhausting!"
- Andy Morrison
Read more »

Fixing Social Security once and for all

"I agree with RQ. Wealthy or not, folks with no wages shouldn’t be required to contribute to SS system. There are other tax mechanism to shift wealth to support society."
- Andy Morrison
Read more »

Lonely Island (Correct Edit)

"I have to say that I'm impressed, because if I were writing an article mainly read in Ireland, I wouldn't begin to know how to infuse it with Irish flavor, I mean flavour."
- DAN SMITH
Read more »

Driving Prices

IN 2020, ELECTRIC car maker Lucid Motors brought in revenue of $4 million. Five years later, sales had risen impressively, to more than $1 billion. In 2025 alone, sales grew 68%. That sounds like a success story, and through that lens, it is. And yet, over that same period, the company’s stock dropped more than 89%. What happened? A better question is: What didn’t happen? Despite growing sales, the company has struggled to turn a profit. On sales of $1.3 billion last year, Lucid posted a loss of $3.8 billion. It’s experienced production problems and management turnover. It’s seen its competitors cut prices. As a result, it’s been forced to issue new shares, thus diluting the value of existing investors’ holdings, just to keep the lights on. In fairness to Lucid, the road to success is rarely a straight line. Arizona State University professor Hendrik Bessembinder studies the performance of public companies, and the results are sobering. In new research, he found that, over the past 100 years, the median return among stocks trading on U.S. exchanges was negative 6.9%. Only a minority of stocks, in other words, made any money at all. Why are these results so dismal? Four factors stand out. The first is emotion—specifically, investors’ emotions. After Lucid went public in late-2020, its stock began rising quickly, and in the early months of 2021, the shares gained nearly 500%. What was driving those gains? Since the company was just starting production, very little can be attributed to the company’s financial results. Instead, it was simply investor excitement around the electric vehicle market and the optimistic view that Lucid would become the next Tesla. But no sooner did the stock rise that it fell again. And in the years since, it’s been an overwhelmingly downward slide for investors. In the last interview he gave before he died in 1976, Benjamin Graham compared the stock market to a seesaw. “The present optimism is going to be overdone and the next pessimism will be overdone.” And that causes stocks to go to extremes. Fifty years later, Graham’s observation seems no less accurate. Indeed, investment manager Cliff Asness has argued that, because of the internet, the impact of emotions on the market is even worse today. Due to what he calls “the less-efficient market hypothesis,” inaccurate information can spread much more quickly today than it did in the past. You may recall the phenomenon in which a group of day traders, led by a YouTube personality who called himself Roaring Kitty, was able to drive up the stock of a nearly-bankrupt company for no rational reason. That couldn’t have happened in the years before social media. Another factor that can drive stock prices is government action, and this also explains part of Lucid’s slide. When the government ended tax credits on electric vehicles last year, that made electric cars much more expensive for consumers. And contrary to intuition, this year’s higher gas prices haven’t done much to entice buyers back to EVs. On the other hand, government action can sometimes be positive. In 2017, for example, Congress voted to cut the corporate tax rate from 35% to 21%, significantly boosting public company profits. Perhaps the most obvious factor that can drive stock prices is competition. This can take a few different forms. Coke and Pepsi, for example, have been battling for more than 100 years, but their relative positions don’t change very much. At this point, neither company is going to go out of business as a result of the other. In his book The Innovator’s Dilemma, the late Clayton Christensen described a much more disruptive form of competition—the sort that upends industries entirely, such as when 19-year-old Bill Gates outsmarted IBM. At the time, IBM was the most dominant company in the computer industry, but over time its position faded. It underestimated how important personal computers would become and didn’t take the market seriously. Years later, it ended up selling off its PC business entirely, and today makes very little hardware. The same sort of thing happened to BlackBerry, to Kodak and to Polaroid, among others. Like IBM, all of these companies had enormous resources. But, according to Christensen, it was their success that became their greatest weakness, because it caused them to underestimate threats and to downplay the likelihood that anything fundamental might ever change. Ken Olson, the founder of Digital Equipment Corporation, a leader in minicomputers in the 1960s and 1970s, famously asserted, “There is no reason anyone would want a computer in their home.” The tricky aspect of the innovator’s dilemma, though, is that it isn’t universal. Consider the early years of the auto industry. Before automobiles gained popularity in the early 1900s, it’s estimated that there were 4,000 companies in the horse-and-carriage business. The right move for any of these companies would have been to try to transition into automobile manufacturing. Carriage makers, especially, had relevant skills and were best positioned to make this leap. But they adopted a collective mindset that the automobile wasn’t going to succeed, dismissing cars as “devil wagons.” But one of these carriage makers, Studebaker, did correctly assess where things were going and successfully transitioned to making automobiles. The rest failed, faded away or switched into other businesses. Companies, in other words, can be very good at one thing but lose their footing in the face of change. That’s a key factor behind Bessembinder’s findings. A final factor that can cause companies to stumble: random events. Consider, for example, what occurred in Thailand in 2011. Heavy rainfall resulted in flooding that caused large industrial areas to become submerged. This included the factories of hard drive manufacturers Western Digital and Seagate, causing their stocks to drop 35% and 45%, respectively. Both recovered, but this is an example of how even good companies can run into bad luck. Years of research has shown how difficult it is to predict stock prices. Bessembinder’s new work, however, makes an additional important point, which is that, for all of the reasons discussed here, and likely others, stocks face many more roads to potential demise than to success. Thus, to succeed at stock-picking doesn’t just require research and hard work. It requires an almost prophetic ability to identify the tiny handful of stocks that will turn into homeruns. But since the odds are so steeply against success, that’s a key reason I see it as so important to stick with the simpler and less risky alternative of index funds.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

Live a little

"Echoing Sethi perhaps, another HD contributor recently said that they aim to save on things they need and spend on things they want. We’re not that specific about it but I like the concept."
- Michael1
Read more »

Around the Obstacles

I WAS 48 years old when the judgement was final and the papers were signed. My former wife and I split our net worth 50/50. There were no arguments over household items like furniture; I didn’t care about that stuff. Pam gladly accepted my proposal that she keep the house, and all its equity, in exchange for me keeping an offsetting amount of the IRAs and my 401(k), a very good move for my future self. By giving up the house, I also escaped the mortgage, which was the only loan obligation I had. Had there been consumer debt (there was none), I would have eliminated that as quickly as possible, beginning with the highest interest loans. I was ordered to pay spousal support to age 65, or my retirement if I worked beyond 65. I would be lying if I told you that I liked paying alimony. Still, it wasn’t unfair considering our age at divorce, Pam’s depression, and the fact that she mostly stayed at home to raise our kids.  Long before the divorce was ever final, I knew I’d have to make up for lost time if I ever wanted to retire in the manner to which I wanted to had become accustomed. The divorce wasn’t going to be the only obstacle I would have to overcome. Thirty years of delivering beverages resulted in osteoarthritis and plantar fasciitis; my days on the beer truck were rapidly coming to an end.  I needed a plan. Where Was I?  I had to understand exactly where I was, and what my options were. 
  1. My continued employment as a delivery driver would likely have left me on Social Security Disability (SSDI) by age 55.
  2. I was very interested in personal finance, and knew many people in that field who would help me get my foot in the door.
  3. I had acquired bookkeeping, payroll, and tax prep skills through my involvement with my local union, though I never pictured myself as the type to sit behind a desk, in a dimly lit office, crunching numbers beneath the glow of one of those green shade banker’s lamps.
  4. As a last resort, I could fall back on my truck driving skills, using my commercial drivers license to get a job hauling ‘no-touch’ freight of some sort.
  5. Last but not least, I needed a place to live. “Hello, mom and dad, I need my room back”. Sleeping on the twin mattress I gave up 25 years earlier, was not part of my plan.
  6. I was determined not to let my occupation as a beer truck driver dictate my future job prospects.
Where did I want to be? 
  1. Where to live? Living with the folks was never meant to be a long term thing. After three months of that, I signed my first ever apartment lease as a lessee, as opposed to a lessor. That lasted two years, until a very large increase in the rent caused me to buy a duplex, and become a lessor again.
  2. Where to work? I continued my work as a delivery driver for three more years. My position as the local union president, and my five paid weeks of vacation actually kept me off of the truck much of the time. That enabled me to tolerate the maladies that would eventually force me out of that job. Having absolutely no desire to spend the balance of my life languishing on SSDI and a minimal IRA balance, I set off on the path to becoming a financial services guy. That did not work out, and if you want more information on that, here’s a link.
  3. To make ends meet, I turned to my last resort; driving a truck. Piloting an 18-wheeler was not how I envisioned my remaining working days. And although the freight was ‘no touch’, driving 600 miles every day in a Kenworth tractor is still pretty hard on your vertebrae. But sometimes you have to do what you have to do to survive and to keep your eye on your finish line. My heart goes out to full time drivers, that job is no walk in the park.
  4. And what about love? My preference was to be in a relationship, but not any relationship. I wanted a good partner, I wanted to be a good partner as well. What qualities would I look for in a new partner? Independent, established, confident, and nice. Was I asking too much?
Making it All Work  Finally, preparation collided with opportunity. In other words, I got lucky. Remember when I told you I didn’t picture myself as ever being a bean-counter? Two established financial services guys set me up with free office space and began funneling tax prep clients to me. What began with me preparing taxes for about three dozen of my union brothers, instantly turned into over 100 clients. There I was, a bean counter of sorts.  I kept that truck driving job for several more years. And remember that duplex I bought after the rent spiked at my apartment? Well, there was this girl living next door. Enter Chrissy. We became best friends. She is no longer my neighbor. She is now my spouse. Of course, at the time we met, aside from being a nice guy, I wasn’t much of a catch. Man, she took a chance on me.  As my client count went up, my days driving the big-rig went down. When the client count got to about 400, I retired forever from driving. No more trips to Chicago, Des Moines, Snow Shoe PA, or Jersey City. Chrissy and I began pounding 40% of our gross pay into savings. It would take until I was 70, but working together, we got to a place each of us only dreamed we would be. By living within our means, and keeping lifestyle creep to a minimum, we surpassed our goals.  Chris retired at 64 and helped me during my final three years as a tax preparer. Lucky for me, Federal Wage and Hour never found out that I violated the minimum wage laws by never paying her in the first place. I sold the practice at age 70. I prepared 650 tax returns in my final year.  It’s important to note that during our journey, we did not starve ourselves of food nor fun. We counted 27 trips during our first ten years together. Chris was great at finding great deals to various destinations in the Caribbean, and we turned several of her business trips into mini vacations as well. It’s important to prepare for the future, but have some fun along the way as well.  I hope this piece inspires someone who is still on the road, dealing with similar obstacles, and wondering if there was a way around them. For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan's earlier articles.
Read more »

How it all pencils out–or at least, we hope so! (Our Big “Little” Move, Part 3)

"Relationship havoc gets expensive. I agree with David that this is the wild card in your otherwise well thought out plan. The space CANNOT be used both by a tenant and your daughter at the same time and Murphy's Law says you will need the rent income at the worst possible time. If you haven't already, find the number of $ you need out of the cottage. If you offer it to your daughter, then she will know what you are actually offering. You can decide if she matches it, or gets a discount. Know your local laws about short and long term rental notices so if someone's in the space when she needs it, you don't end up with legal costs on top of the social stress of having an adult child in crisis. When she and her pets leave, price in some down time before the next rental. Your next guests may be pet scent sensitive and there will be costs before reletting ( or your could promote your cottage as a premium pet friendly rental)."
- Barb Westerbaan
Read more »

Financial Planning

"Like others here, I have landed with a flat fee advisor. I worked with a couple of AUM advisors, and was uncomfortable with the value proposition. I heard Morningstar's Christine Benz interview a representative from Abundo, and engaged one of their advisors. Not perfect, but good to work with. I have many questions, and they answer them all, and generally find the advice to be sound, often better than my own thoughts. They don't make any trades, I have to execute them myself, so every option has it's limitations. With my kid's help, my wife would be more than capable of managing our finances in my absence, but it is comforting to know there is a trusted advisor who knows us, ready to help through uncertainty. This is not an endorsement or suggestion that my flat fee advisor is better than any other, just a recommendation to consider flat fee as an alternation solution."
- John Verlautz
Read more »

Enough complaining already. Live your life and stop worrying about “they” “ them” or things

"I have observed that things that used to be considered luxuries are standard or baseline. My Dad was a music buff, he thought Karen Carpenter was the bomb. He returned from Vietnam and bought a new 1974 Dodge Dart and was just delighted to have an under-dash cassette tape player to listen to his favorite music. It was a luxury to him, one of few he allowed himself. Now people feel that wired connectivity to the music apps on their phones just isn't good enough compared to wireless, but it's so much better than just a few years ago. The proliferation of luxury features in our consumer mindset is a huge contributor to inflation. On many products, you can no longer find a simple manual system, everything is "smart." I don't object to the development of labor saving features, I object to the dependence on it. I'm probably guilty of this like anyone else, but I miss the days where you had to WORK for the fancy stuff. Or just do without."
- John Verlautz
Read more »

Rethinking the “Right” Time for Social Security

"I guess the decision also should consider what portion of retirement income is made up of social security."
- R Quinn
Read more »

The IRA Decision That Affects Your Kids

"Wow, great example that the U.S. tax code is exhausting!"
- Andy Morrison
Read more »

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Manifesto

NO. 77: TO BUY ourselves happiness, often the best strategy is to not buy anything at all. That can leave us with a plump bank account and the sense of financial security it offers.

think

TIME DIVERSIFICATION. Investors with long time horizons are encouraged to buy stocks. Yet such “time diversification” is controversial: While most of us assume the stock market is mean reverting—meaning good times follow bad—academics have argued that, if stock returns are random, healthy returns aren’t a sure thing, no matter how long we hang on.

act

GET A FREE CREDIT score. You can learn your score at websites such as Credit Karma, Credit Sesame, NerdWallet and WalletHub. Credit scores are also available from financial firms like Capital One and Chase, even if you aren’t currently one of their customers. Not all these sites will tell you your FICO score—the most widely used scoring system.

humans

NO. 51: WE FAVOR the familiar, such as stocks of local companies and makers of goods we buy. This “home bias” can be risky. Folks often bet big on their employer’s shares, so both their paycheck and portfolio hinge on the company’s prosperity. Many U.S. investors also shun foreign stocks, even though there’s no guarantee U.S. shares will outperform long-term.

Homes

Manifesto

NO. 77: TO BUY ourselves happiness, often the best strategy is to not buy anything at all. That can leave us with a plump bank account and the sense of financial security it offers.

Spotlight: Life Events

Did we do this all wrong?

Looking up at the ceiling recovering from major surgery has this 70+ boomer rethinking life. Everyone on here has an intense interest in personal finance. Most of us are boomers.  Our parents were the Greatest Generation who lived the Depression and fought the war then shared their stories of sacrifice. We’ve read the Wall Street Journal, especially when Jonathan was there, financial papers, magazines and websites galore. My guess is that our playbook is pretty much the same:  get an education,

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Friday the 13th, the Luckiest Day of My Life

Happy Friday the 13th, everyone.
They say that one of the best financial decisions you can make, if you’re married, is to stay married. So I figure that gives me just enough of a hook to justify sharing on Humble Dollar why I celebrate today.
I met my wife Rosalinda for the first time…twice. In 1977, I was a 2nd year law student at the University of Texas in Austin. That spring I found myself spending another boring and tedious weekend studying at the UT law library.

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Boglehead Conference

There is a Boglehead Conference in October.  Has anybody attended previous conferences? I’m considering attending and I’d appreciate your hearing about your experience. Did you find it valuable?
Thanks,
Jackie

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What will you do with $5,000?

DOGE is considering sending all Americans $5,000 as a dividend on all the savings that have been achieved by firing, slashing and burning various government agencies.  My question is what will you do with your $5,000?
If it sounds too good to be true, see:https://finance.yahoo.com/news/elon-musk-mulls-giving-americans-165329483.html

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Hitting Repeat

Earlier this week, I asked readers, “If you could go anywhere in the world on your next trip, where would it be? If you could savor any experience, what would it be?”
I didn’t offer my own response—because I didn’t have one. At this point, I don’t have a strong urge to go to some exotic locale or try some new experience. On the other hand, there are places and experiences from my past that call to me.

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On Being 80

WHEN I REACHED AGE 70, I felt a sense of accomplishment, a bit of weird pride. At 75, I had a similar feeling. But when I turned 80 last year, things felt different. It was like I was an overachiever. Suddenly, the future wasn’t as long.

For many years, I’d searched for a high school friend who’d been my navigator at sports car rallies, but with no luck. Then, recently, I stumbled across his obituary.

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Spotlight: Friedman

A Gift Worth Reading

When I was in third grade, my mom worked at a small diner near our house. Every morning before school, I'd walk there for breakfast and read the sports section of the Canton Repository. That habit stuck with me, and soon I was arriving early to school just to read the newspaper in the library. I wasn’t the best student, but if they had quizzed me on what was going on in the world, I’d like to think I'd have aced the test. Newspapers became such a big part of my routine that, even when I was pinching pennies, I always made room in the budget for subscriptions. While I was living in Long Beach, California, in a small studio apartment above a garage on an alley, I subscribed to multiple newspapers. One of them was a printed edition of an out-of-town newspaper: the Cleveland Plain Dealer. For me, reading the newspaper wasn’t just about staying informed—it became a cornerstone of how I approach life. It helped me make better decisions and, ultimately, live a more fulfilling life. That’s why, when a friend's daughter was graduating from college, Rachel and I were brainstorming gift ideas. We decided on cash, but I also suggested a digital subscription to a major newspaper. I was hoping it would provide her with valuable insights to help guide her in life’s big decisions. If I had to recommend three articles to help Laura make smarter, more informed choices in her next phase of life, here’s what I’d choose: Learn the Secret Ingredients to Doubling Your Money–Time: In his New York Times article, Jeff Sommer interviews Charlie D. Ellis about his new book, Rethinking Investing: A Very Short Guide to Very Long-Term Investing. The key takeaway? Ignore the fear-driven headlines and focus on the long-term. If…
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Took Courage

I ALWAYS THOUGHT my father was a brave man. It wasn’t just because he served in World War II. It had to do with a few incidents that I witnessed. I’ll never forget when my dad and I went to McDonald's for a late evening meal. I was probably in the eighth grade. I believe my mother was working late that night. It must have been a Friday because a lot of teenagers were hanging out in the parking lot. It was the 1960s, when folks would often eat their food in their car. While we were consuming our burgers and fries, a fight broke out in the parking lot. I said to myself, “We should get out of here before things really get out of control.” But my father thought otherwise. We were going to finish our meal. There were three teenagers in the car next to us. They started to get out of their vehicle to join the fight. My dad wasn’t a big man, and these three guys looked like they were big enough to be on the high school football team. Still, my dad stuck his head out of the window and yelled, “Get back in your car.” Those guys looked at my dad, and slowly sat back down and shut the car doors. I don’t know what my dad would have done if they’d ignored him. We stayed until order was restored. I always thought my dad was courageous that night. Today, some might say he was foolish. But what might have been even more courageous was when my father accepted a job in California. In summer 1961, when we lived in Canton, Ohio, my dad answered a help wanted ad in the local newspaper. It was for a job as a machinist in Los…
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Shouting Out

AS WE GET OLDER, some of us have less patience and complain more. Maybe it’s because we’re frustrated. Many everyday activities become more difficult to perform as we age. As a 73-year-old, I probably have a shorter fuse when dealing with life’s daily hassles. My friend Bill might also fall into the cranky category. He was complaining about how terrible customer service has become since the pandemic. “Prices keep rising, but we keep getting less in return,” he ranted. “We get less service before, during and after we purchase something.” Bill pointed out that he tried to get help with his YouTube TV, but he couldn’t phone someone. He had to use the service's online chat, which made it more difficult for him to solve his problem. Maybe he’s right that shoddy service has become the norm. I thought about how it took more than an hour to talk to a customer service representative at an airline. But then a few things happened that made me realize there are plenty of good, well-trained employees trying to make our lives easier and more enjoyable. Like many other retirees, I have a daily routine. I wake up early every morning and go for a long walk. After breakfast, I like to read the newspaper on my iPhone. One morning, I was trying to read The Washington Post, but I was unable to access the articles. Instead, I got a message saying I had to subscribe to the newspaper. I became frustrated because I’ve been a subscriber for years. I tried to log into the site, but I found I was already logged in. I gave the paper a call, with the intention of giving some employee a piece of my mind. A woman answered. I told her what happened and threatened to…
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Buying Everything

IN A FEW YEARS, my wife and I will have additional income, thanks to both Social Security benefits and required minimum distributions from our IRAs. Our thought: Any money we don’t spend from these two income streams we’ll invest for the long term. We wanted to keep this money separate from our other investments, so we opened a new joint brokerage account at Vanguard Group. We decided to invest our extra cash in the Vanguard Total World Stock ETF (symbol: VT). It’s a highly diversified portfolio and costs just 0.08% a year, equal to eight cents for every $100 invested. The Vanguard fund tracks the FTSE Global All-Cap Index and owns more than 9,000 stocks. It reflects the composition of the global market, with 58% of its assets in U.S. shares and the rest invested abroad. We thought this would be a hassle-free way for an aging couple to invest their money in their later years. We don’t have to rebalance because the fund simply buys all of the world’s significant companies according to their stock market value. Since it’s an exchange-traded index fund and it has no bonds, it should be highly tax-efficient, with relatively little taxable income generated each year. We plan to invest in the fund slowly over time, which means we’ll benefit from stock market dips.
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Proud of Nothing

I'M NOT SOMEONE who pats himself on the back when he does something right. I’m also not someone who takes compliments well. But this time, I want to toot my own horn. After four years, I can finally say I’ve accomplished a goal that I’ve worked toward for many years, but was unable to achieve. It wasn’t easy. It took a lot of discipline and composure. To accomplish this feat, I tuned out cable business news. I avoided financial articles on topics like why you should sell bonds or overweight foreign stocks. More important, I ignored the financial markets’ daily performance. What have I done the past four years that I’m so proud of? Absolutely nothing. It’s quite an accomplishment, don’t you agree? It’s not easy to sit on your hands, sticking with your long-term investment plan through good times and bad. Okay, I did do something. I rebalanced my investment portfolio twice. But that’s all. I give some credit to my financial advisor, who helped me stay the course. You might say, what’s the big deal? Here’s what: I can, at long last, say I’m behaving like a passive investor. Yes, I owned index funds before. But that doesn’t make you a passive investor if you’re still chasing performance. This year, for instance, how many index-fund investors have upended their long-term asset allocation plan by reducing their bond holdings? To be a passive investor, you have to hold your investments over the long term. I know four years isn’t a long time. But for me, it’s quite an accomplishment. What is passive investing? Passive investing doesn’t try to outsmart the market, but rather endeavors to match the performance of the major market indices. It’s a type of investing that seeks to minimize costs, including costs for trading and investment…
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Go Long

WHEN I WAS GROWING up, I don’t remember my parents talking about the stock market. In fact, I’m not sure when they started buying stocks. It could have been sometime after I graduated from high school in 1969. When I was a junior in high school, however, I do remember a conversation about stocks between two of my classmates. Brandon was telling Brian that he could buy a motorcycle if he sold some of his shares. I wasn’t surprised that Brandon owned stocks at the young age of 17. Both Brandon and Brian lived in Ladera Heights, California. It was a wealthy community back then and it still is today, with residents that include celebrities and highly paid sports figures. Some of my classmates from the area drove new Chevrolet Camaros, Plymouth Roadrunners and Ford Mustangs to school. I never envied the Ladera Heights kids until many years later, when I wondered what happened to Brandon’s stocks. Did he still own them? Did he sell? Were they blue chip companies that are still trading on the stock exchange? If he held on, just think how much those stocks might be worth today. All that compounding over many decades. At age 17, Brandon was sitting on a potential goldmine. But I suspect he sold long ago, displaying the sort of short-term focus that often hurts stock market investors. Want to be more tenacious? Here are seven recommendations: Invest in a target-date fund. You’ll have fewer decisions to make, and that’ll encourage a more hands-off approach to investing that can lead to better performance. According to BlackRock, target funds “may also soften the downside of tough markets—especially as retirement appears on the horizon.” The funds offer a diversified investment portfolio in a single mutual fund, with a stock-bond mix that grows more conservative as you…
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