January 28, 2022 – Stock Market Corrections, Klara and the Sun & Station Eleven

  • Stock markets have had a rough start to the year. The Standard and Poor’s 500 (S&P 500) – an index tracking the performance of the largest 500 companies listed on stock exchanges in the United States – is down about 10% since the beginning of the year. While it’s never fun to see your investments lose money, it’s important to remember that a stock market “correction” (i.e. a drop of 10% or more) is a perfectly normal occurrence and happens once every couple years. You can’t get high returns over the long run without experiencing some painful losses along the way. If you are saving money on a regular basis (e.g. through bi-weekly contributions to your 401k or 403b), corrections are a really good thing, since you are buying stocks on the cheap. In my opinion, anyone under the age of 55 should rejoice at the chance to invest in the stock market during a correction so as to lock in lower prices during one’s prime working years. The other nice thing about a correction is that it provides a gut check for investors. If the recent drop has you spooked, now is a good time to revisit your investment portfolio to see if you are taking on too much risk. Things could always get worse: it’s not unimaginable that stock markets tumble another 10-15%. If such a scenario frightens you, now might be the time for changes. It’s during a correction that you figure out whether your investment portfolio suits your needs, risk profile, psychological makeup and time horizon or someone else’s. Plan accordingly.
  • What makes a person? What makes a life worth living and remembering? And, more importantly, what does it mean to love? I’m certain that I don’t know, but Kazuo Ishiguro’s latest novel, Klara and the Sun, makes an interesting attempt at answering these very questions. The novel is set in a foreboding, not-too-distant future, a period of time when Artificial Friends (AF) – essentially lifelike robots bought as companions for the wealthy’s offspring – are commonplace. The story unfolds through the eyes of an AF, Klara, as she begins to observe the world through the storefront window where she sits patiently day after day waiting to be bought. Klara eventually finds her “forever home”, and it is during her time with her new family that she comes to understand the messy nature of human relationships, the harmful impact rampant inequality has on families, and the real reason she was brought to the home in the first place. Klara’s an outsider who doesn’t fully understand the world she lives in but nevertheless feels tremendous amounts of hope and empathy for humankind. Her childlike exploration of the world is endearing and honest, providing subtle observations of daily life that create a story rich with nuance and meaning. I absolutely adored this book and recommend it to anyone who enjoys a poignant, slow-paced read about the lengths we are willing to go to help those we love.

 

  • My wife and I recently finished watching Station Eleven on HBO Max. Based on a 2014 novel by Emily St. John Mandel, this show was green-lit before our current pandemic began, which is surreal since it centers on the fallout from a devastating viral outbreak – one infinitely worse than what we’ve been grappling with in real-life – that has decimated the world’s population, killing 99.9% of humankind. The survivors the show follows are, let’s just say, an eclectic group – a relapsed alcoholic looking for redemption; a troupe of Shakespearean thespians traveling around Lake Michigan to perform for other survivors; a mysterious cult leader; and a former journalist struggling with his professional ambitions – whose complexity we grasp slowly as the show zig-zags between past and present, showing what happened to the characters when the pandemic first struck and what has transpired in the 20 years since. “Yes, Zach,” you might be saying to yourself, “that all sounds great, but who would want to watch a show about a pandemic-ravaged world right now?” If you can handle the show’s proximity to reality, you are in for a treat. I found it to be cathartic and deeply inviting of the idea that things can – and most certainly will – get better. The show’s central message is one of hope and urges you to seek out meaning in your own life. Not bad advice under normal circumstances. Words to live by in our current moment.

 

November 23, 2021 – Cash isn't Trash, MacKenzie Scott & Our Country Friends

 

  • Do you remember that feeling in high school when you knew there was a party happening somewhere without you? Not only did you suffer the slight of not being invited in the first place, but you then had to hear about how great a time everyone had the following Monday during lunch. For investors who hold a significant amount of their wealth in cash, the teenage angst of missing out – not to mention the feelings of inadequacy and self-loathing spurred on by seeing your peers prosper – is all too relatable. Returns on risky assets (e.g. stocks) have trounced those on cash since the global financial crises. While true that cash provides the opportunity to buy cheaply when others are selling, periods of panicked selling (i.e. early March of 2020) have been few and far between the last decade, in large part thanks to central banks, which have been extremely generous in supplying money during times of crisis. So the question then becomes, why hold cash at all? Two reasons. First, inflation has begun to rear its ugly head of late. The price of everything is going up. Were interest rates to rise sharply in the coming year, folks holding cash would get the benefit quickly even as other assets suffered losses. If you have a portion of your money held in a high-yield savings account, for example, you may have already noticed a small uptick in the interest it pays. The second reason relates more to your personal circumstances. For instance, if you lost your job, do you have enough money to get you (and your family) through a spell of unemployment while searching for a new role? Holding cash will always be a drag on your portfolio. So be it. Missing out to make certain enough money is available during a period of hardship is well worth it. You might even make a decent return.

 

  • MacKenzie Scott may be the world’s most unusual billionaire. As you already know, she came into a vast fortune when her 25-year marriage to Jeff Bezos ended in 2019. Under the terms of the divorce settlement, Ms. Scott received a 4% stake in Amazon, or roughly 60 billion dollars at the time, making her the 22nd richest person in the world. Despite her wealth, she is by all accounts a modest person, remarrying a science teacher and signing the Giving Pledge, which commits her to donate most of her wealth. But it is the manner in which Ms. Scott has decided to give away her money that has proved exceptional. Most philanthropists in her wealth stratum take a technocratic approach when giving out money. What this means is they set up a foundation, establish a grueling application process for perspective grantees, fund specific projects and monitor them closely. Ms. Scott, on the other hand, has taken a lighter touch, donating her money to a bunch of small organizations and letting them do what they think is best with the money. In other words, her priority is getting money out the door, not micro-managing how it is spent. For many organizations on the receiving end of her largesse, Ms. Scott’s approach has been a godsend. They have been able to hire more staff, invest in technology, and spend far less time on bureaucratic time sucks, such as monthly reports and other forms of evaluation. Implicit in her giving is the recognition that the person with the money does not always know how best to help. This allows folks working on the front lines – oftentimes the individuals who have the deepest knowledge of a particular issue – to determine how best to allocate resources, providing recipients with a sense of dignity, not to mention much-needed autonomy. Time will tell how well Ms. Scott’s style works, but it’s a fresh approach to philanthropy that seems promising.
  • I just finished reading Gary Shteyngart’s latest novel, Our Country Friends, and it was one of my favorite books of 2021. The novel takes place somewhere in the Hudson Valley during the early months of the pandemic as eight people – friends, friends-of-friends and one child – escape New York and seek refuge in a country estate. It’s an eclectic crew Shteyngart assembles: a globe-trotting dandy from a South Korean chaebol; a talented Indian American writer who has never reached his potential; a multi-millionaire tech executive whose latest app is all the rage; a Russian-born novelist whose best days are well behind him; his Russian-born psychiatrist wife; their precocious, K-pop obsessed daughter; a movie star; and a young, insecure writer seeking fame at any cost. While living together, many weighty issues arise: love, lust, betrayal, racism and, of course, death. Granted, the manner in which the characters act toward one another while trying to make sense of the world – to say nothing of their stalled careers and thwarted romances – is not always flattering. In fact, they are downright awful toward one another at times. But while trying to come to terms with their middle-aged ennui, the characters manage to have a lot of fun. Hilarious, warm-hearted scenes abound in the novel that are certain to put a smile on your face. It’s an engaging work, capturing the uncertainty, sadness and hopefulness that we’ve all felt at one point or another during the last twenty months. 

 

 

September 24, 2021 - Evergrande, Why Women Need the Office & Nine Perfect Strangers

 

  • You probably never heard of Evergrande prior to last week. I admit that I hadn’t a clue about the gargantuan property conglomerate before its name was splashed across the financial headlines. I’ve since read multiple articles on the company. But at the conclusion of each, I’m left wondering, will knowing more about this company really help to make me a better investor or impact my ability to reach my financial goals? The answer I’ve come to is a resounding, “no”. It seems like every few months articles appear raising the specter of another Lehman Brothers or Bear Sterns collapse only to see stock markets eventually shrug off the news and continue higher. Some financial journalists, in my opinion, still seem to be fighting the last war from the global financial crisis of 2008-2009 and are looking for any – any! – reason to provoke fear, not to mention attract eyeballs, as a way to convince folks that financial Armageddon is just around the corner. To be clear, Evergrande will negatively impact some investors and investments. There could still be some damage. But the reason the company doesn’t matter to you is that you are (hopefully) taking a long-term view with your money and are going to be dealing with issues like Evergrande for the rest of your life. There will always be scary headlines and, unfortunately, some of them will prove accurate and you’ll (temporarily) lose money. But spending time trying to predict every future geopolitical story and how it will impact stock markets is a fool’s errand. And even if you could predict the headlines, it is impossible to know how folks will react to the news with their money. You have to be able to live with inevitable bursts of volatility that come with investing in stocks. If you are having trouble doing so and need help, please reach out.

 

  • “It is a truth universally acknowledged that women carry a heavier burden than men when it comes to child care and household chores.” So begins an article, Why women need the office, that I hope my female readers will analyze. The author makes a persuasive case for why women need to return to the office, citing a recent British study warning that if more women than men choose to work from home, they will inevitably take on an even greater share of family responsibilities, which could result in, “an ever-bigger gender pay gap and an ever-harder glass ceiling.” The author recognizes the dangers of face-to-face interaction in today’s climate, but argues compellingly that it brings higher rewards, including emotional ones that are no less important than the monetary sort. There is also joy to be found working in the office. Although fleeting, “like seeing the Virgin Mary in burnt toast”, it does exist, even in the dullest corporate settings. Those brief moments are, the author states, “to be treasured precisely because [they] do not last.”

 

  • Why spend hours of your life watching a TV show? Many reasons: you want to laugh, to have fun, to enjoy a little harmless voyeurism, or simply be able to partake in conversations regarding a show that everyone can’t stop talking about. The most recent show my wife and I finished, Nine Perfect Strangers, would, at first glance, appear to check off at least some of these boxes. It has famous actors (Nicole Kidman, Regina Hall, Bobby Cannavale, Michael Shannon, and Melissa McCarthy, among others), is shot in a beautiful location (Byron Bay, Australia) and tackles a topic ripe for skewering (wellness culture). But instead of coming together to form an interesting story, these parts remain discordant, leaving the show watchable (i.e. good enough), but thoroughly underwhelming. To recap, the show follows nine people as they embark on a 10-day wellness retreat to resolve their various ailments (e.g. drug addiction, failing marriages, unresolved traumas, etc.) through meditation, psychotherapy, and a touch of psilocybin. As the show unfolds and the characters work through their issues, you appreciate the acting (the dynamic between Cannavale and McCarthy is great), but also come to realize that the show is trying to cram too much into every episode. You’re left wondering why certain characters were even cast in the first place: they simply don’t add anything of value to the plot. And why does Nicole Kidman need to be Russian in the first place and have such an affected accent? It’s almost as distracting as the hand-me-down nap dresses she wears throughout the show. You could do worse than this show, I give it a solid B, but don’t expect it to be in your top 5 for the year.

 

December 23, 2021 – FSA Spend Down, 401(k) Increase, Student Loan Moratorium Extended & Succession Season 3

  • With 2021 winding down, now is the time to spend down your Flexible Spending Account (FSA) if you’ve managed to stash some pre-tax dollars from your paycheck to help pay for medical expenses that your health insurance won’t cover (e.g. prescriptions, copays, etc.). It’s important to keep in mind that any money in a FSA that isn’t spent by December 31st gets forfeited back to your employer, except for up to $550 dollars that your employer may let your roll over into next year. (Note: due to Covid-19, there is an exception to this rule for 2021 wherein your employer might have chosen to allow its employees to carry over up to 100% of their 2021 FSA contributions into 2022. Ask your HR department about your company’s FSA carryover policy for 2021; this short-lived rule change applies to both health- and dependent-care FSAs and means you could start the new year with much more FSA money than previously anticipated). If you are looking for last minute ideas on how to spend down your healthcare FSA account, check out FSAStore.com. CVS, Walgreens and Amazon also do a good job labeling items that are FSA eligible. One idea on how to spend down a dependent-care FSA is to use a portion of the account’s money to help pay for your (under 13-years of age) child’s camp tuition next summer.

 

  • On the other hand, spending more money right now might be the last thing on your mind. It’s all too easy to get sucked into the holiday spending vortex and wake up one morning in early January to find your credit card bill as palatable as your leftover eggnog. If you are focused on saving more money next year, be aware that the IRS has increased deferral limits for 401(k) and 403(b) retirement plans to $20,500, an increase of $1,000 from last year. While that might not seem like much, a 40-year old who decides to save an extra $1,000/year – or $38 per pay check, if paid biweekly – throughout his/her career until the age of 67, can expect an investment gain of roughly $47,000 over that 27-year period, assuming a 7% rate of return. If you can do more than $1,000/year, fantastic! But, please, whatever you do, make sure that you are at least contributing enough to your 401(k)/403(b) to receive your company’s full matching contribution. By not doing so, you are leaving money on the table that is (legally) yours for the taking. If you don’t have access to a retirement plan through work, please reach out to discuss other ways to save. Also, on Wednesday, President Biden extended the moratorium on student loan payments and interest accrual until May 1st of next year. The moratorium has been in place since March 2020 and was set to expire on January 31st, but Omicron seems to have changed the White House’s mind. On the campaign trail, Biden stated that he supported canceling $10,000 in student loans per borrower but has so far not followed through as President. We’ll see what happens.

 

  • Finally, my wife and I just finished the third season of HBO Max’s Succession. If you haven’t heard about this show by now, you deserve every single look of withering contempt you receive from peers when it is brought up during conversation. I am slightly more understanding – but will nevertheless question how in step you are with cultural discourse – if you’ve tried watching this show and found it’s not for you. I get that the show’s characters are duplicitous, craven, and, aside from the patriarch, Logan Roy (played wonderfully by Brian Cox), laughably incompetent. But that’s the whole point! At its core, this show, at least to me, is a dark comedy masquerading as a drama about an ultra-rich, incredibly powerful family that, well, isn’t a family at all. It’s a single man who controls everything and gives his four grown children – as well as an assortment of other characters – the illusion that they actually wield power and have a say in the running of the family’s media conglomerate. The mental gymnastics that Logan’s children undertake while trying to appease (and torment) their father is what makes the show funny; they think what they do and say actually matters. Each child truly believes that s/he deserves to be anointed as the family’s successor, but the show makes clear – through their constant screw-ups – that they are too deeply flawed to have ever been in serious contention for such a vast undertaking in the first place. Logan’s children have been given everything, expect more, and are shocked when their recompense is anything less than the brass ring. The season finale is one of the best I’ve ever seen. Watch this show if you enjoy shifting allegiances, constant plot twists, and acerbic dialogue.

 

October 22, 2021– Global Economy Goobledygook, Intimacies & You Season 3

 

  • Can anyone make sense of the world’s economy right now? Although prices are increasing faster than expected, no one is quite sure whether or not inflation and wages will continue to rise. Workers, at least in the U.S., are quitting their jobs at a record rate, something that seemed unfathomable 18 months ago when many folks were praying not to be laid off. What’s more, few predicted the price of oil would be above $80/barrel, let alone the fleets of cargo ships waiting off the coast of California to dock at ports. And while inflation, labor shortages, and supply chain backlogs are serious problems, the stock market couldn’t care less; we are basically at all-time highs after a minor 5% correction last month. The reason I bring up this information – much of which you may have already known – is to point out one very obvious, but oftentimes overlooked, fact: no one can accurately predict something as complicated as the global economy, let alone its impact on stock markets. If it wasn’t apparent before the pandemic, it is now abundantly clear that economists, notwithstanding their fancy equations and theories, are often groping in the dark when it comes to selecting the best policies to maximize jobs and create growth. The best thing you can do when it comes to investing is to know how much you need to sock away on regular basis (e.g. monthly, annually, etc.) to meet your goals and then to stick to your plan come hell or high water. If world events make you nervous, go have a drink with a good friend, play with your kid(s), or do whatever it is that gives you joy. Crises always happen, and they always pass. Your money will grow substantially if you invest consistently and don’t deviate from your financial plan. If you have questions on how much you need to save to reach your goals and/or if you are investing your money in a responsible manner, please reach out.

 

 

  • I recently read Intimacies by Katie Kitamura and remain conflicted on whether or not I would recommend this novel. Its protagonist is an unnamed interpreter working at the International Criminal Court at The Hague. She has come to the Netherlands from New York after the death of her father and her mother’s departure to Singapore. While not explicitly stated, you sense that the narrator has a lot of unprocessed grief and feelings of abandonment. She’s untethered, uncertain, and in an unfamiliar place trying to figure out what exactly it is she wants from her life. In this fragile state, she begins a relationship with a married man while working long hours as the interpreter for a former African president on trial for war crimes. The story that unfolds in this context is one of small details as the narrator describes her day-to-day exchanges and assumptions about her friends, colleagues, lover and client. On the surface she’s controlled and measured in her actions, but in her head she is constantly reassessing her judgement of others, replaying conversations and events to nail down their meaning. She’s attuned to every interaction and you can really feel how the narrator’s relationships shift throughout the novel. That being said, don’t be surprised if you find this novel boring. Not much happens and there really isn’t a plot. While some readers find Kitamura’s writing style elegant, it can come across as sparse and detached. There aren’t any funny moments; the prose is very meditative and tense. At a certain point, I just wanted the narrator to take more control of her life instead of letting others dictate its direction. This novel makes you work really hard to uncover its truths, something you might not want to do when reading for leisure.

 

  • The third season of You recently dropped on Netflix and it’s great. I don’t mean the show is great in that it’s outstanding and bound to win multiple Emmys; rather, it’s just an entertaining ride that makes fun of contemporary life in a witty, engaging manner. If you’ve never watched the show, it follows Joe Goldberg (played by Penn Badgley), a serial killer now masquerading as a suburban dad in northern California who also volunteers at his local library. The show has got a very Dexter vibe as you have access to Joe’s inner thoughts and come to find yourself sympathizing with his actions. There’s no doubt Joe is evil, but the show manages to make him both fearsome and attractive. He’s awful but humanized in such a way that you find yourself rooting form him to not get caught as he and his wife, Love (played by Victoria Pedretti), fail to control their impulses and get pushed to murder while living a beautiful, Instagram-ready existence. Give this show a try if you like to see the bad guy win.

 

August 27, 2021 – Billionaires, A Swim in a Pond in the Rain & White Lotus

 

  • It’s hard to escape billionaires. Whether one straps himself to a rocket for a joyride to space, another mysteriously disappears after stoking resentment among apparatchiks for being too successful, or - in the case of one former billionaire – faces an upcoming criminal trial for defrauding investors of hundreds of millions of dollars for a blood-testing startup, dodging them isn’t easy. But what I find particularly hard to avoid is their advice on how best to manage one’s money. The idea that growing money slowly but reliably with a diversified portfolio has become frighteningly passé among billionaires. Mark Cuban – the owner of the Dallas Mavericks and one of the first investors on ABC’s Shark Tank – probably kicked off this trend a decade ago when he proclaimed that “diversification is for idiots”, and this way of thinking has trickled down to the masses. Investors tempted by the idea that big, concentrated bets are a reliable way to get rich quickly need only to look at Bitcoin, Tesla, and meme stocks such as GameStop Corp. and AMC Entertainment to give credence to such a viewpoint. And I know from numerous conversations with friends and colleagues that folks are ratcheting up their exposure to speculative investments in the hope of striking it rich. If you are reading this missive, please don’t be one of those people. If you want to have fun with your money and invest a portion of it on a purported highflying stock or a trendy non-fungible token (NFT), go right ahead. Just make sure it’s with less than 5% of your investable assets. There are other, safer, ways to invest that can generate a solid future rate of return. These investments aren’t sexy - and will not make you rich overnight - but they won’t put you in the poorhouse either. Please reach out if you need help determining where those investment opportunities exist.

 

  • Have you ever wondered what makes a story good? What, exactly, does an author do in his/her writing that makes reading it satisfying and compels us to continue page after page? If so, pick up a copy of George Saunders’ latest work, A Swim in a Pond in the Rain. This book is essentially a writing class in book form where Saunders takes seven classic Russian short stories from the likes of Checkov, Tolstoy, Gogol and Turgenev and explains what makes them great. This book is not academic – Saunders doesn’t waste time on any lofty concepts inherent in literary criticism – in its deconstruction of each story; rather, he writes about each one in a witty, readable, and very relatable manner. While reading this book I felt as though I was having a warm-hearted conversation with a good - and very patient – friend who was kind enough to take the time to explain why literature matters and how it helps us to better understand how to approach life and its big questions. You don’t have to be a fan of Russian literature to appreciate this book, just a desire to get better at interpreting what you read to see the world with more openness and clarity.

 

  • My wife and I recently finished watching HBO’s The White Lotus. As this series started out I found myself thinking, “Alright, not bad, some good-looking people, beautiful scenery mixed with a few quirky, odd-ball characters; this is some decent escapism.” In other words, it wasn’t blowing my hair back. Around the third episode, the series gets darker and more interesting, exploring how a group of wealthy guests tries to escape their troubles for a week while on vacation at a five-star resort. But the series never – at least for me – lives up to the high praise it’s been receiving. Every interaction in life does not have to be, as the series would have you believe, an exchange of power. You can do nice things for people and not expect something in return. We are not, as one of the characters says toward the end of the series, “just parasites eating the last fish and throwing our plastic crap in the ocean.” As Pollyannaish as this sounds, I wish this show would have demonstrated more fondness for the world. Not all rich people are as craven as the characters in this show, not by a long shot. Money and power can be used benevolently.