Ten Ways to Simplify

Adam M. Grossman

Adam is the founder of Mayport, a fixed-fee wealth management firm. He advocates an evidence-based approach to personal finance. Adam has written 300 articles for HumbleDollar.

Ten Ways to Simplify

Adam M. Grossman  |  Jun 3, 2023

TODAY MARKS MY 300th weekly contribution to HumbleDollar. Over time, one key theme has emerged: While personal finance can be complicated, it doesn’t have to be. How can you simplify your financial life? Below are 10 ideas.
1. Tracking donations. In the old days, it wasn’t too difficult to track charitable gifts. You would simply refer back to your checkbook. But today, most people use debit and credit cards,

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Losing Value

Adam M. Grossman  |  May 28, 2023

PERHAPS YOU’VE SEEN charts like the one below, which comes from Dimensional Fund Advisors. The message: Investors who try to time the market in search of better returns often end up damaging their results. To many investors, this seems intuitive, because trading isn’t easy.
But to others, market timing appears to make a lot of sense. For instance, for years, Yale University professor Robert Shiller has been maintaining a measure of market valuation known as the cyclically adjusted price-earnings (CAPE) ratio.

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Long Time Coming

Adam M. Grossman  |  May 21, 2023

IN THE NETHERLANDS in 1602, the Dutch East India Company conducted the world’s first initial public offering. Then, in 1610, the Netherlands saw the issuance of the first ever stock dividend. And in 1611, when the Amsterdam Exchange opened, the Netherlands became home to the world’s first stock market. Throughout the 1600s, the Netherlands continued to see further financial growth and innovation.
During that period, the Dutch economy was among the world’s largest. But its dominance faded over time,

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Needles in Haystacks

Adam M. Grossman  |  May 14, 2023

LOOK AT THE STOCK market, and you’ll see that certain stocks often do better than others. Technology shares have been standout performers over the past 10 years, and health care stocks have done very well.
But research has also found that certain types of stocks have done better than others. Smaller-company stocks, for example, have outpaced those of larger firms. In the academic literature, characteristics like this, which are correlated with outperformance,

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Not Crazy

Adam M. Grossman  |  May 7, 2023

SUPPOSE YOU WERE presented with two prospective investments. On the surface, they look similar, except one has outperformed the other in 12 of the past 15 years. Which one would you choose?
This example isn’t hypothetical. The two investments in question are the S&P 500 and the EAFE Index. The S&P 500 is broadly representative of the U.S. stock market, while EAFE stands for Europe, Australasia and Far East. It’s the most commonly referenced index for developed international stock markets.

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Beyond Valuations

Adam M. Grossman  |  Apr 30, 2023

WHERE DOES THE STOCK market stand? After 2022’s decline, is it now fairly valued—or still overvalued?
When I think about questions like this, I’m reminded of an opinion piece written by Robert Shiller a few years back. By way of background, Shiller is a professor at Yale University and a Nobel Prize recipient. Along with a colleague, he created one of the more well-known and well-regarded measures of market valuation: the cyclically adjusted price-earnings ratio (CAPE).

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Changing My Mind

Adam M. Grossman  |  Apr 23, 2023

A FEW YEARS BACK, I related a story about the comedian Joan Rivers. Her daughter, Melissa, likes to joke that her mother was always very consistent. Wherever she was, she would always drive at 40 miles per hour, whether it was on the highway, in a school zone or in the driveway.
This is funny, but it also illustrates a key challenge for investors. On the one hand, it’s important to be consistent. But at the same time,

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Be Like the Smiths

Adam M. Grossman  |  Apr 16, 2023

NETFLIX BEGAN AN experiment in 2003 that seemed crazy to management experts. It instituted a policy of unlimited vacation time for its employees. In the years since, a number of other companies have followed Netflix’s lead, offering employees unlimited paid time off.

The results have run counter to intuition: Employees who are offered unlimited vacation end up taking less time off than those working for companies with traditional vacation policies. Why? A common explanation is that people struggle when they lack clear guidelines.

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Risky Business

Adam M. Grossman  |  Apr 9, 2023

OPEN A FINANCE textbook, and you’ll find discussions of volatility and beta, value-at-risk, the Sharpe ratio, the Sortino ratio, the Treynor ratio and many other quantitative tools for measuring risk. But what should you make of these metrics? Are they an effective way to control risk in your portfolio?
These tools do have decades of research behind them, and they can be useful. But I believe they’re also incomplete. Worse yet, they can be misleading.

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Building a Barbell

Adam M. Grossman  |  Apr 2, 2023

IN THE WEEKS SINCE Silicon Valley Bank (SVB) disintegrated, there’s been a fair amount of post-mortem analysis. In the end, two factors drove the bank’s demise.
First, SVB’s customer base was concentrated among venture capital-backed technology companies. Because of that, nearly 90% of deposits topped the FDIC threshold and were thus uninsured.
Second, owing to 2022’s rise in interest rates, SVB’s bond portfolio took a hit. That sparked concern about the bank’s solvency, prompting depositors to overwhelm the bank with withdrawal requests.

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Don’t Regret It

Adam M. Grossman  |  Mar 26, 2023

I SPOKE RECENTLY with a fellow who had climbed Mount Everest. The first question I asked: What was it like at the top?
What I expected him to say was that the view was dramatic. Instead, he said, his time at the summit turned out to be less than he’d expected. For starters, it was 4:45 a.m., so there wasn’t a lot of visibility. In addition, it was minus 45 degrees. Because of that,

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Learning from Failure

Adam M. Grossman  |  Mar 19, 2023

IN THE WEEK SINCE Silicon Valley Bank (SVB) failed, a debate has raged: Did the government do the right thing when it decided to guarantee all of SVB’s depositors, including those that exceeded FDIC limits?
On one side of this debate are those who view the government’s action as an inappropriate and undeserved bailout. In an article titled “You Should Be Outraged About Silicon Valley Bank,” The Atlantic argued that the bank’s failure was the predictable result of incompetent risk management.

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Defying Logic

Adam M. Grossman  |  Mar 12, 2023

THERE’S SOMETHING ODD going on in the housing market. Mortgage rates are appreciably higher than they were a year ago, but home prices—on average—have yet to fall. As of the most recent reading, prices continue to rise on a year-over-year basis. It reminds me of the cartoon character Wile E. Coyote, who experiences a delayed reaction every time he runs off the edge of a cliff. It’s only after he looks down that he realizes he has a problem.

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Riding the Rails

Adam M. Grossman  |  Mar 5, 2023

“HOW MUCH CAN I withdraw from my portfolio each year?” It’s one of the most common questions that retirees ask.
In the past, I’ve talked about the 4% rule, a popular tool for addressing this question. Among the reasons it’s so popular is its simplicity: In the first year of retirement, a retiree withdraws 4% of his or her portfolio, and then that amount increases each year with inflation. If you have a $1 million portfolio,

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No Need to Guess

Adam M. Grossman  |  Feb 26, 2023

IN FORT LAUDERDALE, an unusual property sits wedged in among a row of waterfront mansions. It’s a 35-acre patch of wooded wilderness with just a single home, called Bonnet House. It was for many decades the winter residence of a woman named Evelyn Bartlett.
She first began spending winters at Bonnet House in the 1930s, and she continued to live there following her husband’s death in the 1950s. By the 1980s, however, the property’s assessed value had reached $30 million,

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