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Applying for college financial aid is a blind date that almost always disappoints.

Money Vigilant

I BELIEVE THAT OUR earliest financial experiences set lifelong patterns. It’s certainly been true for me, though I didn’t recognize it until recently.
My father was an Episcopal priest. When I was born in 1956, our family lived in a big stone parish house located in a large graveyard in Harlem. It was the overflow burial ground for Wall Street’s historic Trinity Church, whose churchyard was all filled up. Dad never voiced concerns about money and,

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Buy High Sell Never

IN BEN CARLSON’S wonderful book, A Wealth of Common Sense, there’s a vignette about Bob, the world’s worst market timer.
Bob is a diligent saver. But unfortunately, he’s cursed with horrible market-timing skills, plowing money into the stock market just before every major decline. For you market history buffs, Bob buys into an S&P 500 index fund on the following dates: December 1972, August 1987, December 1999 and October 2007. The subsequent plunges from these highs were 48%,

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Short Stuff

Material Difference

A RECENT ARTICLE on HumbleDollar, which detailed the economic and moral shortcomings of commodity producers, reminded me of a conversation I had in 2004. I was in my study reading Security Analysis or watching The Sopranos—it was a little while ago—when I heard a knock at the front door. I opened it to find an earnest but scruffy sandal-wearing young man trying to raise funds for the Sierra Club.

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Enjoying the Show

TWO TICKETS TO the Kia Forum: $250. Event parking: $60. One beer and one water: $28. A night with my wife at a Pearl Jam concert: priceless.
A few weeks ago, we attended a concert for the first time in more than two years. It was my 13th Pearl Jam show since becoming a fan 30 years ago. My status as a Pearl Jam follower has not wavered from the first time I heard them in the early 1990s.

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Spend With a Smile

AS I WAS PREPARING to retire last year, I spoke with a number of friends who were also about to leave the workforce. One of the main topics of discussion: How could we best arrange a stream of income for the next three decades or so?
Among my friends, a common refrain was that they planned to spend more in their first decade of retirement. They thought their spending would fall during the second decade,

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Stay Positive

AMONG THE AREAS of law that have made me miserable over 16 years of practice, it’s the adversarial roles that have made me most miserable. My experience in labor and employment law has been particularly difficult because the interaction with opposing counsel is usually contentious, each side compelled to zealously advocate for their position.
Almost any type of litigation is a zero-sum game. One side wins, the other loses. Because the outcome is never guaranteed,

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Close but No Cigar

BEAR MARKET territory. On Friday, that phrase was all over the “financial pornography” channel, as commentator Carl Richards labels it. During trading, the S&P 500 finally dropped 20% from its early January all-time closing high. In truth, that number alone doesn’t mean much. Consider that stocks in both 2011 and late 2018 briefly encroached on 20% before bouncing back in a big way.
The media was ready last week to go with all the flashing banners and alerts.

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That Losing Feeling

LOSS AVERSION IS ONE of the most powerful behavioral-finance phenomena. It’s often defined as “losses loom larger than gains.” It’s been said that the psychological pain from a loss is about twice as powerful as the pleasure from an equivalent gain.
Boy, am I feeling that right now. This year’s market losses have many of us concerned. But this year is different for my wife and me. This is our first year with no consistent earned income.

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Longer Reads

Staying Put

I’VE MOVED SIX TIMES in the last 10 years. Four of those moves involved relocating less than a mile. The most recent move–from Portland, Oregon, to Phoenix, Arizona–required significantly more travel.
As a child, my family changed homes frequently. I attended five different elementary schools between first and fourth grade. I’ve never minded moving. I’m not the type of person who gets attached to a home or a particular location. I’m a firm believer that change is a good thing.

Read more »

Super Old

FINANCIAL ADVISORS used to suggest a 20-year planning horizon for retirement. Now, most advisors say to plan for a 30-year retirement. From my own experience, I believe 40 years should be the norm, and 50 years isn’t unreasonable.
If we plan for the longest possible life expectancy, we’ll almost always die with money left over. That’s far better than the alternative—living longer than planned and running out of money.
People who live to 100 are called centenarians.

Read more »

Big League Lessons

IT WAS JUNE 3, 2006, and I was in the starting lineup for the New York Yankees. We were in Baltimore, playing against the Orioles at Camden Yards. I went 1-for-4 in my major league debut.

A week later, I had the experience of a lifetime. June 10 was my first start at Yankee Stadium. It was a nationally broadcast Fox Saturday day game against the Oakland A’s. I hit my first major league home run.

Read more »

Seven Figures

A FEW WEEKS AGO, my net worth hit the $1 million mark. It was a milestone I’d been looking forward to for years.
Almost a decade ago, I performed my first net worth calculation. Back then, I was recently divorced and living on my own for the first time in my life. My only assets were three retirement accounts and a seven-year-old car, plus half the proceeds from the sale of a house my ex and I had owned.

Read more »

Under the Radar

RESEARCH SHOWS HOW subtle sales pitches, called nudges, can influence our buying. Think of tricks like putting the more expensive potato chips on eye-level grocery-store shelves. Over time, such nudges create spending habits. Those habits become ingrained, nonthinking ways of dealing with money.
A collection of such poor habits begun in childhood can result in a hard-to-alter lifestyle of poor saving and foolish spending. Even worse, nudging sends a stealth message, especially to children,

Read more »

The Taylor Rule

IF YOU’VE TRIED TO buy a car or a home recently—or have even just been to the grocery store—I’m sure you’re aware how much prices have jumped over the past year. John Taylor certainly has an opinion on the topic.

Taylor is an economics professor at Stanford University. While not a household name, he’s a leader in economic circles. Before Jerome Powell was appointed Federal Reserve chair in 2018, Taylor was a candidate for that spot.

Read more »

Voices

Do we talk too little about our personal finances—or too much?

"Those who don't need to talk about it do so way too much, and those who do need to talk about it (and listen) do so way too little"
- Jack McHugh
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Should U.S. investors own foreign bonds?

"Here's my "filter": We own stocks for "return ON our money" and bonds for "return OF our money". If a foreign bond fund doesn't make you feel comfortable, or your planned allocation to it won't "move the needle", then maybe Uncle Sam should be your holding."
- Rob Thompson
Read more »

If money were no object, what life changes would you make?

"Not much. My wife and I have learned to live happily on a modest income, and now, in our middle-late 70s, we're financially content. We no longer need a budget because our spending patterns are stable. We don't worry about money because our lifestyle is within our Social Security and pensions, so we use investment income for extras—travel, new gadgets, and gifts. If someone gave us one or more millions, we'd continue living like we do."
- Warren Flick
Read more »

Money Guide

Borrowing Returns

STOCK PRICES SHOULD climb with the growth in corporate earnings per share. What if we do better than that, thanks to rising price-earnings multiples? We may discover that we're borrowing from the future. As our portfolios grow fatter, that might not seem so bad. But remember, richer valuations mean future returns will likely be lower, plus any new dollars invested will buy shares at those higher valuations. In fact, as discussed elsewhere, those still saving for retirement should probably pray for lousy returns. This same phenomenon occurs with other investments. Remember the housing boom during the initial years of this century? Annual price increases raced far ahead of inflation. But those gains effectively borrowed from the future, resulting in wretched returns from mid-2006 to early 2012. Similarly, bond investors notched handsome returns as the 10-year Treasury yield plunged to record lows in 2020. But from there, returns may be relatively weak, and any new dollars invested will buy bonds at extremely modest yields. Next: Market Timing Previous: Whither Stocks? Article: Repeat After Me
Read more »

Manifesto

NO. 66: WE SHOULD build a low-cost, globally diversified stock and bond portfolio, so we’re highly likely to achieve our goals—no matter which parts of the financial markets shine.

Truths

NO. 54: RISK GETS rewarded—usually. To earn high investment returns, we need to take high risk. But not all risk gets rewarded: Stocks should climb over time, but there’s no guarantee any one stock will triumph. Even entire national stock markets can suffer long periods of lousy returns, which is a reason to diversify globally and own some bonds.

Act

AIM TO BE debt-free by retirement. If you aren’t, you’ll have an added living cost to cover. That could necessitate larger IRA withdrawals or selling winning stocks in your taxable account. This extra income could trigger taxes on your Social Security benefit and larger Medicare premiums. Want to avoid that? Pay off all debt before you quit the workforce.

Think

FIXED COSTS. Our fixed monthly expenses include items like mortgage or rent, car payments, insurance premiums, utilities and groceries. The higher these costs, the less we’ll have for savings and for discretionary spending. The latter includes things like vacations, concerts, eating out and hobbies—typically the spending that brings the greatest happiness.

Second Look

Retirement

Free for All

IN AUGUST 2004, venture capitalist Peter Thiel sat down to listen to a pitch from a 20-year-old entrepreneur named Mark Zuckerberg. It didn’t take long for Thiel to make up his mind. According to most accounts, they met in the morning and, after a short break for lunch, Thiel committed to buying 10% of Zuckerberg’s new company, Facebook.
In hindsight, this was clearly a smart move, making Thiel a billionaire. But while it was certainly a great investment,

Read more »

Family Finance

Goodbye Assets

MY TWINS ARE SENIORS in high school. That means, pandemic or no pandemic, we spent the fall applying to colleges.
Here in California, the pandemic closed public schools in March and most did not reopen for in-person teaching with the start of the current academic year. That forced parents to stand in for college counselors. The preparations high school juniors usually engage in, such as visiting colleges and taking standardized tests, didn’t occur this past spring or summer.

Read more »

Investing

Too Trusting

AFTER SHARING MY best investment in my previous post, it’s only fair that I follow up with my biggest blunder. I was 22 and working my first real job, as a high school English teacher in south Texas. Thanks to the job, I quickly kick-started my “adult” life: learning about health insurance, taxes and retirement savings.
A colleague introduced me to his brother, who worked as an investment advisor. We scheduled a meeting to talk about my retirement plan.

Read more »

Lists

Better to Be Rich?

I’M LOOKING AT MY credit card statement and I have a month-end balance of $3,475. My other credit card has almost $1,200 owed on it. My property taxes, automobile insurance and home insurance are due. I have an appointment in a few days to see my lawyer about my trust. He charges $450 an hour. Rachel and I are going on two weekend getaways in the next two weeks.
But I’m not rattled about all these expenses.

Read more »
Home Call to Action

Mindset

Material Girl

TWENTY-FIVE YEARS ago, I found myself quite unexpectedly spending a night in Reno, Nevada. Gambling was the obvious form of evening entertainment, but money was tight back then. A friend convinced me to splurge and spend $20 playing a slot machine. My measly 25- and 50-cent wagers kept me entertained for nearly an hour, but when I was down to my last few quarters, I bet them all on one final play.
The machine immediately lit up with a colorful array of flashing lights and I waited patiently for my winnings to start spilling out.

Read more »

Longer Reads

Staying Put

I’VE MOVED SIX TIMES in the last 10 years. Four of those moves involved relocating less than a mile. The most recent move–from Portland, Oregon, to Phoenix, Arizona–required significantly more travel.
As a child, my family changed homes frequently. I attended five different elementary schools between first and fourth grade. I’ve never minded moving. I’m not the type of person who gets attached to a home or a particular location. I’m a firm believer that change is a good thing.

Read more »

Super Old

FINANCIAL ADVISORS used to suggest a 20-year planning horizon for retirement. Now, most advisors say to plan for a 30-year retirement. From my own experience, I believe 40 years should be the norm, and 50 years isn’t unreasonable.
If we plan for the longest possible life expectancy, we’ll almost always die with money left over. That’s far better than the alternative—living longer than planned and running out of money.
People who live to 100 are called centenarians.

Read more »

Big League Lessons

IT WAS JUNE 3, 2006, and I was in the starting lineup for the New York Yankees. We were in Baltimore, playing against the Orioles at Camden Yards. I went 1-for-4 in my major league debut.

A week later, I had the experience of a lifetime. June 10 was my first start at Yankee Stadium. It was a nationally broadcast Fox Saturday day game against the Oakland A’s. I hit my first major league home run.

Read more »

Seven Figures

A FEW WEEKS AGO, my net worth hit the $1 million mark. It was a milestone I’d been looking forward to for years.
Almost a decade ago, I performed my first net worth calculation. Back then, I was recently divorced and living on my own for the first time in my life. My only assets were three retirement accounts and a seven-year-old car, plus half the proceeds from the sale of a house my ex and I had owned.

Read more »

Under the Radar

RESEARCH SHOWS HOW subtle sales pitches, called nudges, can influence our buying. Think of tricks like putting the more expensive potato chips on eye-level grocery-store shelves. Over time, such nudges create spending habits. Those habits become ingrained, nonthinking ways of dealing with money.
A collection of such poor habits begun in childhood can result in a hard-to-alter lifestyle of poor saving and foolish spending. Even worse, nudging sends a stealth message, especially to children,

Read more »

The Taylor Rule

IF YOU’VE TRIED TO buy a car or a home recently—or have even just been to the grocery store—I’m sure you’re aware how much prices have jumped over the past year. John Taylor certainly has an opinion on the topic.

Taylor is an economics professor at Stanford University. While not a household name, he’s a leader in economic circles. Before Jerome Powell was appointed Federal Reserve chair in 2018, Taylor was a candidate for that spot.

Read more »

Free Newsletter

Voices

How long before retirement should you dial down risk?

"If pension and SS adequately cover expenses and then some, wouldn't having a higher allocation of equities, say 80%, be OK? Provided, of course there are adequate reserves for unforeseen circumstances."
- Mohan
Read more »

What financial lessons did you learn from your parents?

"My folks taught me the importance of keeping balances up-to-date. I still do a monthly reconciliation on our accounts. I verify that my Quicken account agrees with my Schwab account on a regular basis (don't laugh, it is easy for them to get out-of-sync). I know how much I have and where it is going."
- Jeff Bond
Read more »

What stock would you happily hold for the next 10 years?

"I have so many to choose from, but without doubt or hesitation to select just one: Waste Management. Everyone has trash. It's Amazon proof. It has multiple moats. Pays a dividend. Essentially recession proof."
- Ed Hanson
Read more »
Home Call to Action

Manifesto

NO. 66: WE SHOULD build a low-cost, globally diversified stock and bond portfolio, so we’re highly likely to achieve our goals—no matter which parts of the financial markets shine.

Act

AIM TO BE debt-free by retirement. If you aren’t, you’ll have an added living cost to cover. That could necessitate larger IRA withdrawals or selling winning stocks in your taxable account. This extra income could trigger taxes on your Social Security benefit and larger Medicare premiums. Want to avoid that? Pay off all debt before you quit the workforce.

Truths

NO. 54: RISK GETS rewarded—usually. To earn high investment returns, we need to take high risk. But not all risk gets rewarded: Stocks should climb over time, but there’s no guarantee any one stock will triumph. Even entire national stock markets can suffer long periods of lousy returns, which is a reason to diversify globally and own some bonds.

Think

FIXED COSTS. Our fixed monthly expenses include items like mortgage or rent, car payments, insurance premiums, utilities and groceries. The higher these costs, the less we’ll have for savings and for discretionary spending. The latter includes things like vacations, concerts, eating out and hobbies—typically the spending that brings the greatest happiness.

Money Guide

Start Here

Borrowing Returns

STOCK PRICES SHOULD climb with the growth in corporate earnings per share. What if we do better than that, thanks to rising price-earnings multiples? We may discover that we're borrowing from the future. As our portfolios grow fatter, that might not seem so bad. But remember, richer valuations mean future returns will likely be lower, plus any new dollars invested will buy shares at those higher valuations. In fact, as discussed elsewhere, those still saving for retirement should probably pray for lousy returns. This same phenomenon occurs with other investments. Remember the housing boom during the initial years of this century? Annual price increases raced far ahead of inflation. But those gains effectively borrowed from the future, resulting in wretched returns from mid-2006 to early 2012. Similarly, bond investors notched handsome returns as the 10-year Treasury yield plunged to record lows in 2020. But from there, returns may be relatively weak, and any new dollars invested will buy bonds at extremely modest yields. Next: Market Timing Previous: Whither Stocks? Article: Repeat After Me
Read more »

Second Look

Retirement

Free for All

IN AUGUST 2004, venture capitalist Peter Thiel sat down to listen to a pitch from a 20-year-old entrepreneur named Mark Zuckerberg. It didn’t take long for Thiel to make up his mind. According to most accounts, they met in the morning and, after a short break for lunch, Thiel committed to buying 10% of Zuckerberg’s new company, Facebook.
In hindsight, this was clearly a smart move, making Thiel a billionaire. But while it was certainly a great investment,

Read more »

Family Finance

Goodbye Assets

MY TWINS ARE SENIORS in high school. That means, pandemic or no pandemic, we spent the fall applying to colleges.
Here in California, the pandemic closed public schools in March and most did not reopen for in-person teaching with the start of the current academic year. That forced parents to stand in for college counselors. The preparations high school juniors usually engage in, such as visiting colleges and taking standardized tests, didn’t occur this past spring or summer.

Read more »

Investing

Too Trusting

AFTER SHARING MY best investment in my previous post, it’s only fair that I follow up with my biggest blunder. I was 22 and working my first real job, as a high school English teacher in south Texas. Thanks to the job, I quickly kick-started my “adult” life: learning about health insurance, taxes and retirement savings.
A colleague introduced me to his brother, who worked as an investment advisor. We scheduled a meeting to talk about my retirement plan.

Read more »

Lists

Better to Be Rich?

I’M LOOKING AT MY credit card statement and I have a month-end balance of $3,475. My other credit card has almost $1,200 owed on it. My property taxes, automobile insurance and home insurance are due. I have an appointment in a few days to see my lawyer about my trust. He charges $450 an hour. Rachel and I are going on two weekend getaways in the next two weeks.
But I’m not rattled about all these expenses.

Read more »

Mindset

Material Girl

TWENTY-FIVE YEARS ago, I found myself quite unexpectedly spending a night in Reno, Nevada. Gambling was the obvious form of evening entertainment, but money was tight back then. A friend convinced me to splurge and spend $20 playing a slot machine. My measly 25- and 50-cent wagers kept me entertained for nearly an hour, but when I was down to my last few quarters, I bet them all on one final play.
The machine immediately lit up with a colorful array of flashing lights and I waited patiently for my winnings to start spilling out.

Read more »