Ignoring the Rules
Joe Kesler | May 27, 2021
ONE HALLOWEEN, SOME of my teenage buddies and I were having a great time throwing water balloons at trick-or-treaters. It was a lot of fun—until we got caught. After getting hauled down to the police station for a lecture, and then receiving another one when I got home, I’ve been pretty much on the straight and narrow ever since, including when it comes to money. Over the years, I’ve discovered various tried-and-true rules of investing and those have been the keys to my success. In my personal Investor Hall of Fame, I’d include Warren Buffett for his lessons on patience and the value of letting compounding work to your benefit. I’d also include Burton Malkiel for the classic he authored, A Random Walk Down Wall Street. It taught me that the markets were so efficient that I’d be better off buying index funds than individual stocks. And, of course, there would be a place for Vanguard Group founder John Bogle, who made it possible to follow Malkiel’s advice by creating the low-cost index fund. These wise sages, along with others, provided me with the rules needed to succeed. But despite my reverence for time-tested wisdom, I give myself a little wiggle room. Most of us can’t always invest like robots. Sometimes, we want to do something with our money that doesn’t follow the established rules for investment success. A popular compromise: Set up a “fun money” account. I allow myself to play with 5% or 10% of my portfolio. Here are four examples of how I’ve had fun by not following the rules. 1. I’m a little embarrassed to admit that I have a position in bitcoin. Crazy? Yes, I know. Buffett calls it “rat poison squared.” But even Buffett gets some things wrong. It isn’t unusual in the history…
Read more » Say No to FOMO
Joe Kesler | Feb 11, 2021
I’VE LATELY FACED one of the investment world’s greatest dangers: It’s called FOMO, or fear of missing out. If you pay attention to the financial news, you may be wrestling with this one, too. Let’s start with bitcoin. I’ve studied it, but never invested. I’ve got friends who own the digital currency. I’m thrilled they’ve been wildly successful. But you know how awkward you feel when somebody tells an inside joke that you don’t get? Similarly, it’s a lonely feeling when those around you are enjoying a phenomenal rise in wealth—and you’re missing out. I pulled up a chart as I type this. It shows that in the last 52 weeks bitcoin has surged from less than $10,000 to almost $45,000, an increase of some 350%. Or take a look at Tesla. I heard Elon Musk talk a few years ago and knew he was capable of great things. But I never saw the potential in Tesla. The company wasn’t making any money back then. Tesla is up 420% in the last 12 months. How should we deal with FOMO? Having lived through many market cycles, I have six suggestions. First, we need to be comfortable with who we are and what our goals are. I love entrepreneurs and the risks they take. But I have a confession: I never wanted to work 80 hours a week, like many entrepreneurs do. I love having a good work-life balance. And I don’t like concentrating my assets in one or two stocks, because I like to sleep at night. I’m thankful that the world has risk-takers like Elon Musk. When I heard him talk, he was leveraged to the point where he didn’t have any more borrowing capacity. To be less than “all in” might lead him to lose focus, Musk said. I…
Read more » Labor Pains
Joe Kesler | Jul 29, 2021
I ALMOST MADE a waitress cry yesterday. It isn’t what you think. I didn’t yell at her for poor service. Quite the contrary. My wife and I went out for lunch at an Irish pub. I noticed the help wanted ad on the front door as we went inside. When it came time to pay our bill, I simply shared my heartfelt appreciation that she was willing to work and serve us in the midst of the current labor shortage. She teared up and told us how hard it is to offer good service when they’re short-staffed. I was so moved by her emotional reaction that I gave her a 30% tip. That’s a big deal for a frugal guy like me. I spent 40 years in banking working with Main Street businesses, but I’ve never seen anything like the current labor situation. And it isn’t just anecdotal evidence. We’ve set new records for job openings in each of the past three months. Labor shortages are disrupting everything. Banks are closing branches. New businesses are delaying opening. Restaurants are running at half-staff. Hospitals are losing nurses. In fact, nurses willing to travel are making more than $3,000 a week as contract laborers. It’s a mess. What should we do? I think about my dad and how he joined the army in the Second World War to fight fascism. He was a member of the Greatest Generation—a moniker they earned with their selfless giving. Perhaps we need some of that attitude for a time like this. Instead of asking how quickly we can retire, maybe we should ask how we can help even more. As we find our wait times growing, maybe we’ll once again view work not as a burden, but as a way to be of service to others.
Read more » The Joy of Work
Joe Kesler | Sep 16, 2021
I’VE HAD SOME dreadful jobs in my life. I spent one summer putting metal plates under a huge press for eight hours a day. Once the plates were in the right position, I’d push some buttons that would cause the press to crash down and shape the metal into something useful. The goal was to work fast because that meant more pay. Some of the workers disabled the safety features so they could produce more widgets and earn extra money. It was a joyful day when I walked out of that factory for the last time with all 10 fingers still attached. Factory jobs made me appreciate landing a job in finance. The industry pays above-average wages, it isn’t back-breaking work and you get to use your brain to find creative solutions for customers. But even a cushy finance career came with some curses. Granted, they weren’t physical curses, but more mental in nature. For one thing, everyone in finance is focused on the money. As a result, I think there are more fights over salaries and bonuses than in other industries. Those experiences partly explain why I find retirement so liberating. And I’m hardly alone. In retirement, many of us can, for the first time, untether the value of our work from the paycheck it generates. The habit of thinking about work as something we do to make money is deeply ingrained. We can scarcely imagine what a Copernican revolution it is to evaluate work without considering the dollars involved. Are you enjoying financial freedom or hoping to get there one day? Here are four suggestions to help you rethink the relationship between work and money. First, take the idea that work is what we need to do to live, and turn it on its head. The goal is…
Read more » Secret Sauce
Joe Kesler | Apr 26, 2021
I’VE READ A LOT OF retirement books touting the “keys to a successful retirement.” Some have great ideas. But I think they miss a key ingredient. My contention: To have a successful retirement, we need to start with a proper understanding of work. Admittedly, it’s a counterintuitive way of looking at retirement. But sometimes looking at a problem backward can help us find creative solutions. In other words, examine the opposite of retirement for lessons about retirement. To that end, ponder this: What is it about work that’s rewarding that we never want to lose—and, once retired, what is it about work that we want to eliminate? If you can answer those two questions, you’ll be well on your way to designing the ideal retirement. As I see it, work offers five rewards that we should strive to hang on to. First, it allows us to feel part of something bigger than ourselves. Many of us started our career with a vision of how we could change the world for the better. Teachers and health care workers epitomize this desire. For some people, this drive is a reflection of their faith. In many religious traditions, work is seen as a way to honor God, care for the world he created and help others to thrive. Meanwhile, non-religious folks often get a similar sense of satisfaction from their work, especially when they feel it helps others to prosper. In all cultures, we see this universal desire to contribute to society—a desire that typically doesn’t disappear when we leave the workforce. Second, I don’t think I’ve ever felt as alive as when I was fully engaged in creative learning at work. There’s something exhilarating when we have an “aha moment” and learn something new or find an innovative solution to a vexing…
Read more » The Case for Kids
Joe Kesler | Feb 5, 2021
I RECENTLY HIT THE “pay now” button on what I believe will be the last of 20 years of college tuition bills. That’s right, we have five kids. All went to college. None took out student loans. Was it worth it—not just paying the tuition bills, but the decision to have children in the first place? It’s a pressing question. A birth dearth is hitting the U.S. and other countries around the world, as many adults opt to go childless. Today, roughly half of all countries have fertility rates that are so low that the population is either stagnant or shrinking. That brings me to today’s topic: the case for children. It’s a complex subject. I don’t want to suggest I know how others ought to decide. Everybody’s situation is unique and shouldn’t be judged by anyone else—and certainly not by me. Still, I think those of us with good stories about raising kids should share our experiences. We can balance out today’s narrative that children are more trouble than they’re worth. I remember the subtle pressure in the 1980s and ‘90s from others, as our family kept growing. Folks expressed concerns about having so many children. I suppose that, if you treasure a quiet and peaceful life above all else, having kids may not be a good idea. Children are messy and bring chaos. I remember answering the door, only to come face to face with our upset neighbor. He was a prominent doctor in the community and complained about my kids shooting at the deer in the backyard from our second story bedroom windows. “Thank you, Dr. Smith, for letting me know. I’ll take care of it.” Ugh. But probably the greatest reason the U.S. no longer has a fertility rate necessary to maintain a stable population is related…
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