Yesterday I learned … II


1) Yesterday, I learned that some love to hug, and they hug so long that it starts to feel weird. We can feel the message they want to convey. We know that they want to tell us that they’re fond of us, that they miss us, and that they want to strengthen the bond we once had, but in the midst of trying to create that moment, some overdo it. ‘Why are we still doing this?’ we ask ourselves while in the embrace. ‘Is this becoming more meaningful to them, or did they lose themselves in the moment? Would it be impolite if I started patting their shoulder here to signify that this is over for me? Why are we still hugging? They didn’t fall asleep did they?’

Today, I learned that a hug is not just a hug. For a greater portion of my life, the hug was largely indigenous to the female gender. We knew males who hugged. We called them “huggers”, as in, “Watch out for that one, he’s a hugger.” At some point, a shift started to happen. Suddenly, men were hugging each other to say hello, to celebrate their favorite team’s touchdown, and to say goodbye. No one knows when this shift started, but I blame the NBA. We teenagers could distance ourselves and mock the huggers we knew, but NBA stars were the essence of cool in the late 80’s-early 90’s. When they hugged, it took an arrow out of our quiver. For these NBA players, a hug was nothing more than a physical form of saying hello. It was a step above a wave or a handshake, but to us, it was a deep and meaningful physical embrace. We didn’t have anything deep and meaningful to convey to our friends. Others did, and they appreciated the NBA influence. They took these “hello” hugs to another level.

“We’re cousins,” huggers would say. “Cousins don’t shake hands. Cousins hug. Get in here bro.” Some of them even embraced us when it hadn’t been that long since our last hug. Their hugs were so deep and meaningful that they thwarted our attempts to break free. Their hugs bordered on combative. “I think the world of you bra.” We non-emotional, non-huggers learned to adapt to the need others have to hug, but we never fully embraced it, and they could feel it. They adapted to our adaptation. “All right, I won’t hug ya’,” they would say, and they stopped, and we sighed in relief, until we were the only ones they didn’t hug. We never wanted back in, but we recognized the strange way abstinence makes the heart grow fonder.

2) Yesterday I learned that “a little after three” can mean 3:23. In what world is 3:23 a little after three? When I hear a little after three, I think 3:01-3:10. Anything after that should be a little more vague, such as “after three”. The next time block, the 3:23 time block, should list at “around three-thirty”. Today, I learned that we become more aware of time constraints and the relative definition of time blocks when a six-year-old is tugging at our sleeve.    

3) Yesterday, I learned that pop culture defines deviancy upward by defining any actions a criminal uses to evade law enforcement as those of a criminal mastermind. True crime authors characterize actions such as wiping fingerprints off door handles as brilliant. When compared to most impulsive, criminal acts, perhaps it’s worth noting when a criminal puts some thought into their criminal activity, but I’m not sure if I would call them brilliant criminal masterminds. If we take a step back from our desire to view them as brilliant, we might see that their methods are relatively mundane, based on information available to anyone with a TV and access to the internet. Today, I learned that criminals don’t want to get caught. They want to be free, and they want to be free to continue to hurt, maim, and kill as many people as they can. The Unabomber, for example, enjoyed the characterization of a secluded genius with a cause, but court documents of his trial reveal that he was “often unconcerned” with his targets. They reveal that he was meticulous about the construction of his bombs, and he went to great lengths to avoid capture, but he didn’t really care who the victim was as long as he maimed or killed someone. He basically wanted to shower in whatever rained down upon him in his elaborate fireworks show.    

4) Yesterday, I learned that criminal masterminds need a cause to justify their actions. They might not be able to justify their actions to anyone but themselves, but they do seek the satisfaction a cause provides. No self-respecting criminal mastermind would say that they did it, because they enjoy hurting, maiming, and killing people. That would diminish their value, their self-esteem, and their historic value. Today I learned that criminal psychologists say that we learn more from their initial crimes than those that follow, because impulses drive those initial crimes. If this is true, we find that most criminal masterminds are petty people who resolve internal and external, disputes in a violent manner. They also have a bloodlust, and as this bloodlust escalates the need for a cause escalates, until they slap a sticker on their actions to satisfy those questions we have about why they did it. It strikes me that everything these criminal masterminds say is window dressing to conceal their simple, primal bloodlust. They want to put a cause on it, because we want the cause. It wouldn’t be very satisfying, or entertaining, if a mass murderer, or serial killer said, “I just had some basic psychological, primal need to hear people scream.” No matter how many causes we assign to people hurting people, the simple truth is that some of us enjoy hurting people, and the rest of us enjoy reading and watching everything we can about it.

5) Yesterday, I learned that bad boys fascinate all of us. The only reason it’s noteworthy that bad boys fascinate women is that it goes against stereotype. Some of us want to know more about them than otherwise peaceful, normal individuals who accomplish great things. On a corresponding scale, too many of us want to know about the minutiae of the Unabomber’s actions, the motivations, and the aftermath of his terror, and too few of us, by comparison, are as fascinated by the actions and motivations behind Leonardo da Vinci’s artistic output. We label them both brilliant in their own, decidedly different ways, but the Unabomber fascinates us more. Today, I learned that I’m no different. Most of the people who fascinated me in my youth had violent tendencies. Some of my friends in high school, and some of my parents’ friends had violent tendencies on a much lower scale of course, but they fascinated me. I found their ways hilarious and engaging. Is this human nature, or do some elements of our culture encourage this mindset? Most of our favorite critically acclaimed movies have something to do with some low life committing violent acts. When someone found out that I listed the simple, feel good movie Forrest Gump among my favorite movies, they asked, “Why?” with a look of disdain. When I told her that I thought it was a great story, that didn’t help my cause. When I told her all of the others I had one my list that mollified her, but she still couldn’t understand why I would list a feel good movie like Gump among them. Today, I learned that the fascination with violence is universal and cool. 

6) Yesterday, I learned that I’m no longer interested in writing about politics. Today, I realized that I am far more interested in the psychology behind why every day citizens decide to become so political that they’re willing to create a divide between those who think like them and those who don’t.

7) Yesterday, I learned that psychologists state that we have a “God spot” in our brain. Today, I realized that this spot is inherently sensitive to the belief in something, if the rational brain accepts the rationale for doing so. This view suggests that the brain needs belief in a manner similar to the stomach needing food. We seek explanations and answers to that which surround us. Some of us find our answers in God and religion and others believe answers lie in a more secular philosophy, and the politicians who align themselves with our philosophy. They seek a passionate pursuit of all things political, until it becomes their passion, because they need something to believe in.   

8) Yesterday, I learned that there were as many differing opinions about Calvin Coolidge, in his day, as there are our current presidents. Today, I realized that no one cares about the opinions opinion makers had 100 years ago, and few will care about what our current opinion makers write 100 years from now. Some of those writers passionately disagreed with some of Coolidge’s successes, and history exposed some of their ideas as foolish. The historical perspective also makes those who passionately agreed with Coolidge seem boring and redundant. Once a truth emerges, in other words, it doesn’t matter what an opinion maker thought of the legislation at the time. Most opinion writers are less concerned with whether legislation proves effective or not, and more concerned with whether their philosophical views win out. In one hundred years, few will remember if our political, philosophical, or cultural views were correct or not, and even fewer will care. Yet, some of us believe in politics, because politics gives us something to believe in.

9) Yesterday, I learned that Tim Cook is an incredible, conventional CEO of Apple. Former Apple CEO, Steve Jobs, was the company’s incredible, unconventional leader, and he helped build the company from scratch. Steve Jobs was a brilliant orator, a showman, a marketer, and a great motivator of talent. If we went to an It’s a Wonderful Life timeline, in which Steve Jobs never existed, Apple wouldn’t exist. I had a 200-word list of superlatives describing Steve Jobs, but I decided to delete it, because it didn’t add any new information we know about the man and what he did. I decided to leave it at those two sentences. Better, superlative descriptions of the man, and what he did, are all over the internet. Walter Isaacson’s book might be the best of them. Steve Jobs and Steve Wozniak created and oversaw a team of talent that created the most innovative company of our most innovative era of America, but Tim Cook has proven to be an incredible steward of that technology. If we flipped the timeline around, and Tim Cook was the first CEO, Apple wouldn’t be the innovator it is today, but I wonder if the less conventional and more mercurial measures Jobs employed would translate to the same consistent levels of growth of Apple we see today under Cook.    

10) Yesterday, I learned that Apple’s stock was ready to fall. Anyone who reads independent analyses from stock market analysts thinks that not only is the smartphone market capped out, but Apple’s position atop this industry is also nearing an end. Reading through some of the analysis of Apple’s projections for their various quarterly reports through the years, we arrive at some common themes. “There’s no way the iPhone (insert number here) can deliver on the projected sales figures Apple is promising,” they write. “Everyone who wants an iPhone already owns one, and numbers show they’re not going to upgrade. Those who don’t want an iPhone are loyal to another brand. The market is saturated, and Apple’s reign is about to end.” Today, I learned these analysts began making such predictions years after Apple began controlling the market between 2008 and 2012. Some of the times they were right, in the sense that Apple missed some quarterly projections, but most of the time they were wrong. Some think that there might be an anti-Apple bias, and there might be, but I think it’s human nature to cheer on the little guy and despise the big guy. I also think analysts/writers want us to read their articles, and the best way they’ve found to do so is to feed into our love of doom and gloom. These stories have a natural appeal to anyone who owns Apple products, Apple shareholders, and everyone else in between, because we love the prospect of the leaning tower. Apple will fall too, for what goes up must come down, particularly in the stock market, but the question of when should apply here. After it falls, one of the doomsayers will say, “I’ve been predicting this would happen for years.”

“Fair enough, but how many times did you make this prediction? How many times were you wrong? How many times did a reader act on your assessment and miss some gains? Nobody asks the doomsayer analysts these questions, because most of us don’t call doomsayers out when they’re wrong. The answer to this question was that on 2/3/2010, Apple stock closed at 28.60 a share, adjusted for dividends and stock splits, per Yahoo Finance. If one of the doomsayer analyst’s customers purchased 35 shares for a total investment of $1,001.00 that investment would be worth $11,170.60 on 2/4/2020. Anyone who invests in the stock market relies on expert analysis to know when to buy and when to sell. We consider the positive assessments and the negative, and some of the times, it takes an iron stomach to read the negative and ignore it. These negative stock analysts had all the information the others had, and yet they consistently predicted Apple would fall, because they knew a negative headline would generate a lot more hits than a positive one.

In our scenario, Apple experiences a significant fall in stock price, and the analyst finally proved prophetic. How many times were they wrong in the interim? It doesn’t matter, because a doomsayer need only be right once, for they can then become the subject of email blasts that state, “The man who correctly predicted Apple’s downfall, now predicts the fall of another behemoth.” The penalties for incorrectly predicting doom and gloom are far less severe than incorrectly predicting good times ahead. The former doesn’t cost you anything except potential gains, which most people inherently blame on themselves, regardless what anyone says. There’s the key, the nut of it all, an analyst can predict doom and gloom all day long, and no one will blame them for trying to warn us, but a positive analysis that is incorrect could cost us money.

The prospect of investing our hard-earned money in something as mercurial as the stock market is frightening. We’ve all heard tales of the various crashes that occur, and we know it will occur again. Most of us need Sherpas to guide us through this dangerous, dark, and wild terrain, and most of them are quite knowledgeable and capable. There are a few who will tell you that it’s so dangerous that you should get out now, and some might even tell us that it’s so dangerous that we shouldn’t even consider making the journey. Those with an iron stomach will tell us that we can get rich working for money, but we can get filthy, stinking rich when our money is working for us.  

Boring Investment Advice from a Know Nothing


“You don’t know what you’re talking about,” was one of the most valuable takeaways I had from working at an online brokerage company. Soon after I landed this job, I entered the training room. The information overload I experienced in the training class was intimidating, overwhelming, frustrating, understandable, illuminating, and intoxicating. I thought I knew something when I finished these grueling classes, and I was eager to put that knowledge into play in the market. Every time I did, throughout my tenure there, “You don’t know what you’re talking about,” became the refrain of my pain.

Watching the brokerage’s customers put their knowledge into play in the stock market only reinforced the idea that I didn’t know what I was doing, because some of these callers knew a lot more than I did and they spent a lot more time studying trends. They could recite a company’s tiny, accounting numbers and explain to me how those numbers were indicators for future success. They could explain cyclical trends in the company’s industry and how those trends and numbers coupled with prevailing winds in the market and the nation’s politics could indicate that the company’s stock was ready to explode. They were eternal optimists on the subject of their stock, yet their results ended up being as unimpressive as mine were. 

Some of these callers didn’t have the money to pursue their once-in-a-lifetime opportunity, some didn’t have the stomach to pull the trigger, and others didn’t have the brains as evidenced by the fact that they asked me for advice on what they should do. Those in the latter group were more memorable for the creative ways they tried to blame the company, and me, when their too primed to fail moves fell through. The theme of these calls was, “You, and your company, shouldn’t have permitted me to do this.”

My lifestyle at the time was such that I provided friends the opportunity to use all of the clever and humorous variations of the word frugal. I had money at my disposal in the post-Reagan era that preceded the tech bubble bursting. Momentum, growth stocks were exploding all over the place, and the excitement from these gamblers (not investors, gamblers) was infectious. I forgot everything my grandpa and dad told me about investing, and I put my foot in the tide. I learned the hard way, that if I was going to make any money in the market, the last thing I should be counting on were my knowledge, or my knowledgeable instincts.

Invest in What you Know

“Invest in what you know,” The wizard of Wall Street, Warren Buffet, advised those of us overwhelmed by the information required to invest in the stock market. The question I ask those who follow this wisdom is how often do your personal preferences align with the popularity of products?

An aficionado of coffee might know that the blend corporation ‘X’ puts together is superior to their competition, but do they really know that, or do they think that? More vital to the subject of personal investing is the question, does the coffee aficionado know anything about the business practices of ‘X’? They might know that ‘X’ makes a superior blend, because ‘X’ only uses the finest quality bean, but do they know how much that bean costs the company? Do they know what percentage of that cost the company passes onto the consumer? The idea that ‘X’ might charge the lowest possible cost possible to the consumer might be a key component to their personal loyalty to the brand, but how does this action affect ‘X’s profit margin? On another note, how many knowledgeable consumers have been frustrated by the number of consumers who for whatever reason, stubbornly insist on drinking an inferior blend? We might insist that our friends try our brand with the hope that they might switch, but how many of them do? They stubbornly insist on drinking their brand, because they’ve been drinking that coffee for years. It’s called brand loyalty, and brand loyalty can trump any definition of quality. Repeat after me, “I know nothing.” Buffet’s advice might be great for novices who have some money to play around in the market, and for them investing in ‘X’ is another way to show brand loyalty, but for serious investors seeking a path to some level of financial independence, it’s been a formula for failure in my experience.

Why do our employers provide us a select list of mutual funds for our 401k? They do it to protect us from indulging in our creative impulses when investing. They know that the key to long-term investing involves slow growth, and they study the mutual funds market to determine which funds will produce long term and consistent growth.

“Investing doesn’t have to be boring,” I’ve heard creative investors say in response to the adage that if you find investing exciting, you’re probably doing it wrong. Creative investing involves an otherwise intelligent person finding creative end arounds to prove they are as skilled in the investing world as they are in their profession. Creative investors seek to impress their friends with exclamation points!!! They want to tell their friends that they were in on the ground floor of an idea that made them millions, they want to show their friends a physical product to “wow!” them, and they want their friends and family to talk about that investment that put them over the top in the arena of accumulated wealth. Any common Joe can invest in a slow growth, blue chip companies that has an extensive record of paying consistent dividends. Investments in those companies requires little to no creativity or ingenuity, and they are the antithesis of sexy, creative investing. Watching such companies plod onward with miniscule, but consistent profits is about as boring as the professions most common people have, but seasoned investors will say that that long-term boredom might provide the most probable route to long-term success.

On that note, a vital mindset that an investor should maintain is one that recognizes the continental divide between investing and gambling. Some seasoned investors might say that all investing is gambling. If that’s true, we maintain that there is a continental divide between gambling on an upstart and gambling on a blue chip stalwart that has a proven history of consistent returns. There’s nothing wrong with investing in momentum and growth stocks versus defensive stocks, but most momentum/growth stocks are more volatile than defensive stocks.

The difference between stalwart, blue chip stocks that some call defensive stocks and momentum, or growth stocks are often found in their volatility. A theoretical measurement of a stock’s volatility is the beta number. If a stock has a .44 beta number, for example, the investor knows that that company is theoretically less volatile than most of the stocks listed in the market, a .62 is a little more volatile, but not as theoretically volatile as most stocks. A 2.15 beta, on the other hand, is a number that suggests that that company’s stock is more volatile than the rest of the market. This number is a theoretical variable that suggests that a 1.0 stock moves in line with the market.

The opposite of investing in growth stocks that promise growth based on momentum are the defensive stocks that generally sell the staples of consumer related products. Defensive stocks generally provide more stable earnings when compared to growth stocks, and they generally provide consistent dividends to the investor, regardless what’s happening in the rest of the market. There is always going to be some volatility in a company’s stock, of course, but some would say that a blue chip, defensive stock that offers a dividend could be a better investment for a potential investor than a bank’s certificate of deposit (CD).

At this point, many of these companies offer a yield (dividend) that is better than what most banks can offer in the form of a CD, and taxes are lower on dividends from stocks than they are on interest from a CD. The one caveat on investing in a dividend paying stock is the prospect of losing some, or all, of the principle investment in the stock, whereas a bank enters into a locked in agreement on the principle, and the interest, with the consumer when providing a CD for a specified amount of time.

Some call blue chip companies the major players in their industry, or the household names. The Dow Jones Index lists thirty of the major players that have a propensity to either move with the market, or dictate the movement of the stocks in their industry, and the subsequent moves of the overall market over an unspecified amount of time. The stocks listed in the Dow Jones Index are blue chip stocks that generally offer slow growth and dividends to its investors. These investments are what a creative investor might call boring investments.

Be Boring 

I am not an investment advisor, and I don’t pretend to be one on this site, but when I talk about investing it inevitably leads some to ask me what particular investments I would advise they put their money in. I tell them that I wouldn’t be able to sleep at night thinking that they might purchase a stock I’m tracking, because I know how much their family is counting on them to make wise investments choices. My one piece of general advice is that they avoid creative or sexy investing and develop an investment strategy that involves getting boring. I tell my friend if he wants to up his income, his best economic opportunities available to him are at the office and in his work ethic and loyalty to the company, for that might result in raises and promotions. If he wants to get filthy, stinking, and “I hate you now because you have so much money” wealthy, the best route to accomplishing that is to have your money working for you. “Working for you” can mean a variety of different things to a variety of different people, but I would advise that an investor in an optimum situation that entails having some disposable cash on hand find the least volatile, blue chip company that pays a consistent dividend. If they are in this optimal situation where they don’t have immediate need for the money from those dividends, they should set up a Direct Reinvestment Plan (DRIP) on that stock to watch the slow growth accumulate over the long term.

Those readers who blanch at the notion that “You don’t know what you’re talking about” is solid investment advice, should know that it parallels the advice Warren Buffet gave elsewhere. “If you’ve got 150 IQ and you’re in my business, go sell 20 or 30 points to somebody else, ‘cause you really don’t need it,” he said. “You need emotional stability. You need to be able to detach yourself from fear or greed, when that prevails in the market. You’ve gotta be able to come to your own opinions and ignore other people. But you don’t need a lot of brains.”

I agree with everything Buffet says here, except for the idea that the novice investor should ignore the advice of others. I advised my friend to create a fake portfolio on one of the platforms that provide that function. I advised him to input data that suggests that he’s made a purchase of some shares at the amount of that day, and then chart that stock’s progress for however long he finds necessary, and read all of the data and analytical reports that his chosen platform provides. Then, allow some earnings quarters to go by and read, or watch, interpretations of the company’s quarterly report, and digest all of the negative and positive data provided. (The optimum is to read the company’s quarterly reports, but most of these are about as long as Ernest Hemingway’s Old Man and the Sea and about one-tenth as interesting.) If he is still uncomfortable with his knowledge regarding individual stocks he chose to fake invest in, I told him to delete the stocks in that fake portfolio and start charting mutual funds and index funds in it. Investing in these vehicles requires as much homework as investing in an individual stock, but some outlets like Morningstar.com provide comprehensive ratings on various mutual funds. They also provide a description of the risk the potential investor will experience if they ever decide to push the buy button, a full breakdown on the mutual funds’ investments, or asset allocation, and an outlook that ranges from one month to ten years.

Investing in mutual funds and index funds might be even more boring than investing in blue chip stocks, as it takes away the personal rewards investors seek when picking an individual stock and riding it to the top. If the investor is using the art of investing to prove their craftiness, I suggest that they might want to consider the far less expensive route of downloading one of the thousands of strategy and war games in app stores to satisfy this need. If they are seeking immediate returns on their money, just about every state now has craps tables and roulette wheels in their casinos that provide gamblers a guaranteed payout. For those who have worked hard for their money and now want their money working hard for them, it’s vital that the investor take stock of what they don’t know, as opposed to what they do, or what they think they do. For those people, “You don’t know what you’re talking about” is the best advice I’ve ever heard.

The Uninformed and their Disinformation


A friend of mine recently stated that he is not in the stock market, because he thinks it’s on the brink of collapse.  There is the possibility that this was a genuine statement, and that the information that he has attained has led him to an informed statement in this regard.  Knowing him in the manner I do, however, I doubt it.  I think that he either doesn’t have the money to make a decent investment, or he doesn’t have the the degree of knowledge necessary to succeed in the system.  Rather than make such an embarrassing statement, the guy chooses to sound bold and informed on a level beyond mine.  Therefore, I become the naive one who believes in the system without anyone questioning him further.  It led me to realize what an easy road this man selected, and how my failure in this system has led me to being a greater embarassment than the one who doesn’t even try…as long as he puts forth the correct qualifiers.