STAND UP AGAINST RACISM

I'm re-posting this one because I think it is timely in our increasingly divided country.

Just for the sake of variety, this post is NOT a myth.  We all need to be aware of and successfully discourage prejudice, not only by others but especially by ourselves.  None of us are innocent. 

RACISM
"The problem with the world is that the intelligent people are full of doubts,
while the [rest] are full of confidence." -
Charles Bukowski

 

PURPOSE OF THIS POST: 

·         To convey the courage of my convictions,

·         Emphasize the need for dialogue using the “is it true, kind and necessary” test while aiming for at least two of those criteria in any given moment,

·         The importance of a desire for equanimity,

·         The need for at least attempting empathy and understanding.

·         Being accountable for our feelings and actions by seeking education, nuance, specifics and evidence for, and against, one’s prejudices.

First, consider definitions so we’re at least on the same page as to what we’re talking about.
Second, consider causes
Third, effects
Fourth, solutions.

DEFINITIONS:
My favorite is from Oxford-
RACISM:  prejudice, discrimination, or antagonism directed against a person or people based on their membership in a particular racial or ethnic group, typically one that is a minority or marginalized . . . the belief that different races possess distinct characteristics, abilities, or qualities, especially so as to distinguish them as inferior or superior to one another.

PREJUDICE:  preconceived opinion that is not based on reason or actual experience.  Key words:  not based on reason or actual [statistically relevant] experience.  I added “statistically relevant” because a person’s racism could also be based on rare traumatic personal experiences.

CAUSES:
What is racism a subcategory of?  That is the source of its solution and dissolution.  I think the primary category of thoughts and behaviors is prejudice because prejudice is the fertile soil in which discrimination & antagonism flourish.

So, one achievement from this important word game is that it is fair to say no one is “a racist” nor is anyone “not a racist”.  Not a single one of us is free of preconceived opinions not based on evidence. Isn’t it important to recognize that no one is totally prejudiced nor totally not prejudiced?  It is simply a matter of degree, given a specific incident of prejudice. 

In a courtroom, a jury rendering evidence-free or hearsay-based judgment would be reversed by the judge.  Shouldn’t we be as disciplined in our thinking?  Why do we seem so susceptible to this bias?  What are the causes of prejudice?

Upbringing- familial.  There is high survival value- usually -in a child’s learning from the ancestral accumulation of family/tribal wisdom.  Unfortunately the not so wise stuff is also transferred.

Human Nature- we want our choices to be apparent and easy.  Skin color, dress, language & cultural differences are obvious and easy bits of information.  And irrelevant if we’re using them to distinguish others as inferior.  We’ve gotten intellectually lazy.

Evolutionary tribalism- worked well 10,000 years ago but now that we’ve populated the globe tribalism is destructive to the individual, society and the world.  Collaboration has the highest odds of success for both individuals and groups, not endless fighting.

Biblical misreading- good and evil, all or nothing, heaven & hell.  Dichotomies are rarely true or useful.

And false dichotomous thinking in general.  Again, there is no such thing as “a racist”.  There is no such thing as “a nonracist”.  We are all on the gradient, somewhere between.  A few are much closer to either end.

Easy scapegoats- insecure, abused, mentally ill people can inch their ways up a notch from the bottom by beating others down to their level of suffering.  Skin color, voice accent or visual cultural differences- dress, physical appearance, religious practices -become easy (but specious) indicators of who deserves to be abused.

EFFECTS:

In general- as with all prejudicial decisions involving other people -thoughts, feelings and decisions based on hearsay or prejudice are risky.  On the one hand, you risk missing valuable lessons from, and rewarding relationships with, those you may dumbly marginalize.  And, on the other hand, you risk enabling and empowering the prejudicial members of your “tribe” who are dangerous to you and to others.  Neither effect bodes well for your future as those effects spill over into all aspects of your life.

But I get it.  If you’re struggling financially, physically or psychologically (or all of them!), the emotional release of causing pain to another supposedly inferior or evil person or group of people is undeniable.  But that’s all it is.  An emotional release.  Your underlying problems aren’t solved and are in fact made worse.  Your gratifying but evidence-free behavior will also, at some level, eat away at your soul.  This becomes a vicious downward spiral:  pain > prejudicial action > more pain > more prejudicial action.

Evidence-free, prejudicial decisions are addictive; they are a logical fallacy known as the “sunk cost” fallacy:  The more you have invested in something- the sunk cost - whether it is time, effort or money, the more committed you become to that thing even when all the evidence suggest it’s time to fold ‘em, it’s time to evolve.  As Jim Rohn says, “We nourish the cause and curse the effect”. 

But here’s the encouraging thing:  All of these preconditions and effects are within our personal control.

 

SOLUTIONS:

From the above discussion it should be obvious that prejudices cannot be eliminated, much less the prejudice of racism.  But in each individual, each group and all systems, racist thoughts and behaviors  can be scaled down so less harm is caused.  Before talking about solutions, I want to single out one idea that is not a solution.

Etiquette, simply being nicer.  Yes, kindness is important.  (Remember my “True, Kind, Necessary” test for things you say to others.)  Focusing only on acts of kindness fails to deal with anything on this list of systemic racist results, from Alicia Sprague:

• people of all races use and sell illegal drugs at similar rates in the U.S., yet the imprisonment rate of African Americans for drug charges is six times that of white folks­­­­¹ and “the United States currently imprisons a larger percentage of its black population than South Africa did at the height of apartheid.”²
• lending and housing market practices continue to segregate people by class and skin color and relegate folks of color to poorer neighborhoods.³
• Native Americans have been forced off land where their ancestors lived for generations and coerced onto the most marginal and barren land in the U.S., ⁴ or that indigenous women are missing and murdered at disproportional rates. ⁵
• a person using a wheelchair cannot enter a building with stairs but no ramp, or more broadly, that our society is not built for people who are navigating the world with disabilities.⁶
• there are “food deserts” in our urban centers, where working class folks have to rely on fast food without the option of accessible grocery stores.⁷
• the maternal mortality rate of Black women is three to four times higher than that of white women.⁸
• private businesses can refuse service to folks who identify as LGBTQ+, whether this means denying them a meal or an education.⁹
• in Flint, Michigan, a community of predominantly Black folks, thousands of residents are still getting their water from lead pipes, 6 years after the initial water crisis began.¹⁰
• trans women of color are disproportionately at greater risk of violence than non-trans women.¹¹
• Latinx women make 54 cents for every dollar paid to white men.¹²
• Anti-Semitic incidents are on the rise in the United States and are at an 18 year high in Los Angeles, New York, and Chicago. ¹³

So what will work?

Personal Accountability- acknowledge that you are neither perfect nor innocent.  Just because you have the intellectual belief that you are not racist doesn’t mean you are not racist.  Remember.  It’s just a matter of degree.

Education- if you are an avowed racist, try stepping out of your echo chamber by reading black authors, talking to people outside your normal circle of friends.  If you are an avowed nonracist, do some serious introspection and outreach to discover and cure your residual racist behaviors.

Nuance- understand and find examples of the fact that the racist/not racist dichotomy is neither accurate nor useful.

Specifics- examine your specific presumptions about race.  Whenever you say, “All ______ are _______” about those you are prejudiced against, do some research.  What are the exceptions?  Are the exceptions actually the rule?  Does your statement have any evidence to back it up?  Are the sources scientific and peer reviewed?  Or, upon closer examination, does it even make any sense?

Standing up to racism requires that each of us stand up to our own prejudices and the prejudices of others while working to repair the system that perpetuates it.  Stand up.  

Your Constructive Comments are Welcome!

I Asked My Readers "What Makes You Happy?" - here's what they said

There’s a lot we could be talking- and worrying -about lately.

The pandemic.

Vaccination rates.

Earnings.

Impeachment.

Markets.

Politics.

Instead, we asked our readers something else entirely:

And here are some of the great responses  . . . which inspired us and made us smile!  From feeling the south wind blow to the smell of freshly-bloomed flowers, our readers reminded us of the importance of slowing down and enjoying the good things in life. 

• "My dog greeting me at the door when I come home with a happy wag." 
   
• "[After the 2021 snowstorm] I loved the way the ice sparkled on the snow and the limbs of the trees (and was grateful that I had the trees pruned last year)".  

• "Spoiling the COVID kitty my daughter loaned me for the past year."

• "Having the kids and the grandkids living with us has given me so wonderful times, laughs and most of all happiness. I have had the privilege of being part of their lives that I would have missed if we hadn’t lived together."

• "When I let the dog out first thing in the morning, I love the feel of the south wind."
  
  
• "I like to stay busy with productive projects, some very basic things like putting my shop floor tools on wheels"
  
  
• "Happiness is experiencing life, whether that's spending time with old friends or making new ones; whether that's writing, photography, other art; whether that's exploring the outdoors, lugging a 50-pound pack up a mountain, stopping at the top for the moment and easing down the other side."

• "My hot tub makes me happy!"

•  Wherever I go or what I do, I’ll pick up a hat to commemorate what I’m doing at the time. Kind of a story of my life collection. This brings a smile to my face when I reminisce about the places I’ve been and the many things I have done over the years.

• "The smell of high desert soil and dry country plants, like sage."

• "A regular written gratitude list with at least 3 to 5 different things on it. For today? Heat, indoor plumbing, corrective lenses and antibiotics."

• "Zoom meetings with my dance family."

• "The fragrance of honeysuckle, Lady Banks rose,  Rosa Penelope, Casa Blanca lilies, lavender, and rosemary."

• "When I notice I am in the space between a breath."
  
  
• Seeing things in nature such as birds feeding at the bird feeder.
  
  
• Seeing all the colors of a beautiful rainbow right here in Portland.
  
  
• Blue skies with fluffy white clouds and the sun shining.
  
  
• Spending time doing anything with my significant other whether it be a meal, a car ride, a walk, or just watching a good movie together.
  
  
• Planning future adventures with a friend or family member or significant other.
  
  
• Practicing my Spanish or playing brain games on my iPad Pro or listening to an audio book.
  
  
• Getting a really good nights sleep and waking up feeling refreshed and ready for the day.
  
  
• Having a day when I can do anything I want or even absolutely nothing if I choose to.
  
  
• Knowing I have some really excellent people in my life including you Gary Duell.  

• Nurturing connections with the people I care about.  
  
  
• Doing things to make the world a kinder place. 

My personal recipe for happiness is:

Being present with whatever and whomever I'm with in the moment.  

Not judging.  

Not wishing things were different, like some perfect past or idealized future.  Such fruitless wishing leads to stress, exhaustion and a feeling of lack of control.

If I can get some of that focus into each day, I call it a good day, even if it wasn't particularly fun.

I’ve also found that simple things bring me joy, even when I’m stressed or not feeling my best.

Our dog visiting me at my desk.  A nap in my lap (despite her fifty pounds).  Or a quick game of tug-o'-war.

Smiles and laughter from my spouse.

And, especially, time spent in nature, breathing in the air and hearing the wind in the fir trees, our footsteps on the trail & happy dog at our side. . . . then behind us  . . then in front of us.  Shinrin-yoku, Japanese for "forest bathing", is a practice I can identify with.

Your Constructive Comments are Welcome!

EVERYONE SHOULD PURSUE PEAK PERFORMANCE

I believe the title of this post to be a myth.  

In my business (financial services) I'm deluged with books, websites, videos, training programs, motivational quotes and memes, superstar mentor offers, mastermind groups, activity tracking spreadsheets, apps to kick my ass out of bed, and on and on.  The drive for maximum this and killer that and dominant this has spread out over all walks of life.  If you're not becoming steadily more awesome every day then you're an abject failure.

Now I did consider for a moment that perhaps my revulsion toward these pushes to achieve my ultimate wonderfulness was simply in defense of, and a rationalization for, my contented mediocrity*.  But I realized that the most successful peak performance schemes occur in areas that are easily measured.

If I'm an asset manager, the dollar amount of assets I manage reveals my superiority.  If I sell insurance products, my gross sales are my badge.  If I'm an investment banker the size of the deals is my yardstick.  If I'm an athlete there are a plethora of statistics and measurements.  But how do you measure simply becoming a better person, a better partner, a better citizen?  I'm very interested in that pursuit but have yet to find relevant metrics.  Is it:

• Popularity?  We have an excess of evidence that popularity usually is irrelevant and, in fact, almost a counter-indicator of one's quality as a human being.  
• Wealth?  Ditto.  
• Power?  Yet another counter-indicator.  

 How do we measure what is genuinely important?  Is it even measurable?  If so, how?  If not, how can we at least detect it to aspire to it and assess our progress?

I welcome your suggestions.

Your Constructive Comments are Welcome! 

*No, I don't really believe I'm mediocre.

Socially Responsible Investing Is Just A Feel Good Fad

 Like all these blogs the heading is a myth . . .for a number of reasons.

First, the largest asset management firm in the world, with $8.67 trillion on the books, is going all in with ESG investing.  BlackRock's CEO Larry Fink recently wrote a letter to CEOs predicting a "tectonic shift" in the pricing of climate risk into the value of securities.
"From January through November 2020, investors in mutual funds and ETFs invested $288 billion globally in sustainable assets, a 96% increase over the whole of 2019. . . . We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity."

 But just because Larry Fink is doing it and BlackRock is saying it still doesn't mean ESG isn't a fad.  But there are other trends that do.

The Dept of labor released a new reg 10/202 that intends to limit not only ESG investing in retirement plans but even the mention of it in plan documents!  It also requires plan fiduciaries to choose investments for their participants based solely on financial performance.  Which is insane.  Private prisons are very profitable while also being a scourge on this country.  Fracking for gas is a hugely profitable enterprise with massive externalized costs, from air pollution to sullying groundwater with as yet unknown chemical cocktails.  Both are enjoying short term profitability.  Until their hazards and damage get priced in.  I wonder which industries pushed for that regulation.

So how do you tell who is who?  Isn't greenwashing rampant?  Yes, it is.  But not for long.  Several organizations are growing in power and influence, based on science and increased computing power.

• TCFD- the Task Force on Climate Related Financial Disclosures. The TCFD recommendations on climate-related financial disclosures are widely adoptable and applicable to organizations across sectors and jurisdictions. They are designed to solicit decision-useful, forward-looking information that can be included in mainstream financial filings.
  The recommendations are structured around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management, and metrics & targets.
•  SASB- Sustainability Accounting Standards Board.  SASB Standards enable businesses around the world to identify, manage and communicate financially-material sustainability information to their investors.
•  CDP- Carbon Disclosure Project, helping persuade companies throughout the world to measure, manage, disclose and ultimately reduce their greenhouse gas emissions. No other organization is gathering this type of corporate climate change data and providing it to the marketplace.
• WDI- The Workforce Disclosure Initiative (WDI) aims to improve corporate transparency and accountability on workforce issues, provide companies and investors with comprehensive and comparable data and help increase the provision of good jobs worldwide.
• FASB- Even the old stodgy Financial Accounting Standards Board informally embraces sustainability reporting.
• Morningstar Sustainalytics - As Europe pulls ahead of us, perhaps multinational corporations will demand the same attention to ESG factors not only in their own organization but in their competitors' as well.  The leveling of the playing field is accelerating.
  

I'm confident these forces will cause the DOL to reverse its corporate-pressured stance on ESG.  A true fiduciary considers all things that can positively and negatively affect its clients.  ESG investing, and consumption, are the future.

Your Constructive Comments are Welcome!

-30 + 43 = 13

This is a mercifully short blog just to drive home a few points.
First, the heading

-30 + 43 = 13

is indeed a myth, it is false . . . if we're talking about rates of return.  The correct math is this;

-30 + 43 = 0 or, more precisely, -30% + 43% = 0% return for those two time periods.

Suppose last month you invested $1000 in Bitcoin and by the end of the year your share is worth $700, a 30% loss.  If next year you gain 42.85% you would be back to even (700 x 1.4385 = 1000), a zero rate of return. 

In frothy markets like we have currently, everyone is an investment genius.  But our selective memory for achieving double digit returns doesn't accurately project over the long term.  Here are the keys to staying afloat and avoiding herd mentality:

1. Take all ego and emotion out of your investment decision making.

2. Remember your goals.  Very few people come to me with a goal of making as much as possible, especially after we work through what that really means to them.  Over what time period?  Compare to what?  Starting with what and adding how much periodically?  And, most importantly, why?  So you can buy a mansion in Paris that you can't visit?

3. Stick with the plan.  If you've done your Expense Plan, with all your dreams and goals built in to it, and our plan achieves those goals with very little risk, do you really want to let your lizard brain kick in to start running the show?

4. But be flexible.  Sometimes new hazards as well as new opportunities will present themselves and we'll have to adjust, that is, without succumbing to shiny object syndrome or FOMO (fear of missing out).

One of my favorite motivational speakers, Jim Rohn, once said that we have two choices in life, discipline or regret.  It took me many years to understand and absorb that somewhat grim prescription.  Words will fail, you just need to examine and initiate your own disciplined efforts.  What gives your actions power is the order in which you make them.

Look at your heart, for example, and the astonishing daily discipline with which it keeps you alive.  It isn't suffering or complaining at the effort (unless you have heart disease) or wishing it could just stop  and watch some TV.  Its most important task is keeping you, and itself, alive and healthy.  

So, what's most important to you?  Wouldn't it be worth a discussion with someone expert in getting specific with your goals, plans and dreams?

https://calendly.com/g---5 

Your Constructive Comments are Welcome!

EVERYONE SHOULD DO ROTH CONVERSIONS

I should point out, again, that the titles of these blogs are Financial Myths.  Especially this one.
Conversions from your pre-tax retirement accounts such as:

• Traditional IRA
• SEP IRA
• 401k
• 403b
• SIMPLE IRA
• TSA. etc.

must be calculated every year to be sure you don't bump yourself up into the next tax bracket . . . except sometimes.  For example, raising your Federal marginal tax rate from 10 to 12% isn't a big deal, normally.  Unless you're on Social Security and that causes your Social SEcurity to become taxable.  At higher income levels it's not a disaster if the Roth conversion bumps you from 22% to 24%, the upper limit of which is $164,925 for single filers, $329,850 for joint filers.

But assuming Roth conversions make tax sense, what do you do with the money?  Where do you invest it?  How?  In many cases the answers are diametrically opposed in terms of investment strategy.  Let's focus on two examples:

**Background #1:  You don't really need the money in your $500,000 IRA that you rolled out of your 401k when you quit work at age 60.  But you know it is a disaster to pass pre-tax retirement accounts to your kids.  Until age 70 you plan to live off cash, capital gains and rental income.  When you start Social Security at 70 you plan to stop taking capital gains in order to reduce its taxation.  (You're delaying Social Security until 70 because when you took the https://www.livingto100.com/ calculator it indicated your mortality age at 94, well past the breakeven age of 83)
Your Roth Conversion Strategy-
a. Convert as much as you can each year up to the top of your 24% bracket.  Why?  Because taxes are going up. 
b. This is also your gift to your kids, taking care of the taxes for them.
c. Invest very aggressively for the long term.  This will easily recoup the taxes you've paid.
Now you'll have a spending cushion that you can tap if you need it without affecting your Social Security taxation.  And when the kids inherit, they'll pay no tax on the Roth funds.

**Background #2:  You've been very conservative in savings and budgeting and if you can just meet your budget throughout retirement you'll be OK.  You need every penny, can't afford losses, and want the assurance of adequate, guaranteed lifetime cash flow.  You quit work at 60 because it was killing you.  You have a nice pension which, right now, is enough to meet your budget.  But it has no inflation protection.  You still have great longevity.  You plan to spend down your excess cash savings to bridge the gap between age 67-70.
Your Roth Conversion Strategy-
a. Convert just enough each year to stay in the 12% bracket.
b. Over the next ten years put it into a Roth IRA income annuity that accepts premiums after the first year. 
c. Once your Social Security kicks in you will need to reduce or stop the conversions to keep Social Security totally or at least partially tax free.
d. Turn on the annuity income in 15-20 years, which will be tax-free and guaranteed to last your lifetime.  It will also have no effect on taxation of your Social Security benefits.  And it will be welcome step-up in income for your later years.  In the meantime your principal and interest credits are protected.

Naturally, all the rules could change in the ensuing years.  Or even this year.  And there are a virtually infinite number of "Backgrounds" we could consider.  I like these because they're based on real people and result in vastly different strategies.  Disclaimer:  Even if one of these examples mirrors your situation exactly I haven't detailed every thing you need to consider because I risk making this blog a sleep aid.  It is well worth the time and expense to consult with your adviser to be sure you make no mistakes.

Your Constructive Comments are Welcome!

Democracies Guarantee Absolute Freedom

I hope the degree to which this topic is an absolute myth is obvious.  Sometimes I wish the framers of the Constitution had also listed a Bill of Responsibilities.

I'll just leave this article here for you to read and to reach your own conclusions.  What does this have to do with financial planning?  Context matters.  Democracy matters.  Equity and fairness matter in our lives as well in the minds of our lawmakers.  Freedom without wisdom and responsibility is fatal.  And makes it extremely difficult for the average person to plan a future.

Statement on the Principles of Democracy

January 19, 2021

We, the undersigned, are scholars of democracy who have watched the recent deterioration of U.S. democracy with growing alarm.

We recognize in American democracy today many dangerous conditions from other declining democracies: hyper-partisan polarization, mutual political enmity and distrust, zero-sum politics, lack of tolerance for opposition and minorities, rampant propagation of falsehoods and conspiracy theories, and the encouragement or rationalization of violence. The willingness of prominent politicians to violate basic democratic norms is a common warning sign of democratic distress. And when these violations become routine and expected, the downward spiral is very hard to reverse.

But we also see something uniquely dangerous in America right now — an electoral system that allows for minority rule. It is not only possible but now common for one party to win the presidency and the Senate, and then seek to establish long-term control over the judiciary despite a majority of citizens preferring a different party. It has also become common under divided government for an opposing party to obstruct on purely partisan grounds a president’s ability to even have judicial nominations considered.

It is one thing to ensure that the rights of political (and other) minorities are respected, to plant, as our constitution does, restraints on majority rule. But it is quite something else in a democracy to give a political minority the power to rule.

Minority rule is dangerous in two respects.

First, it undermines the legitimacy of governing institutions. A basic principle of democratic legitimacy is that a government must have majority support in order to make policy. A government that allows a minority to rule over a majority (especially for a prolonged period) violates this principle.

Second, and more dangerously, minority rule can prompt and enable the minority party to take increasingly radical and anti-democratic actions to entrench its dominance, by changing the rules to make it harder for its opponents to win elections, or even to cast ballots.

The minimum condition for a system to be democratic is that its people can choose and replace their leaders in free and fair elections. When a ruling party bends the rules to suppress opposition votes or rig the political playing field, a country can no longer be said to be a democracy, no matter how much it may allow freedom of the press and association.

As the world’s oldest democracy, the American system suffers from many deficiencies and anachronisms in need of reform. But no goal of democratic reform is more urgent and foundational than the fairness and representativeness of our political system.

The Congress should take the following steps to enhance democratic equality and fairness:

• Defend and expand the right to vote for all Americans.
• Require nonpartisan commissions in each state to redraw congressional and state legislative districts, so that state legislatures can no longer gerrymander districts to advantage their party.
• End the ability of a small group of ultra-wealthy donors to secretly bankroll candidates and parties by requiring transparency in all political spending.
• Narrow the conditions under which the Senate filibuster can be used as a tool of legislative obstruction.
• Grant the people of the District of Columbia and Puerto Rico the right to vote for statehood, which would provide full and equal representation to nearly four million Americans who are currently disenfranchised.
• Establish a nonpartisan, independent federal elections agency to ensure that the voting process is fair, consistent, secure, and legitimate.
• Study ways to reduce politicization of the federal courts.

The first three of these steps would be accomplished by the passage of HR 1, the For the People Act.

None of these reforms should be dismissed as partisan. Each of them seeks to address problems of unfairness and dysfunctionality that are eroding the capacity and legitimacy of American democracy at home and abroad. Each would make our precious constitutional system a more just and workable democracy, better able to address the great policy challenges that now confront us.

This is only a partial agenda for renewing our democracy. There would still remain the longer-term task of altering other perverse incentives that drive the hyper-partisan polarization of our politics. But these are harder questions that will likely require even bigger solutions.

In the near term, however, we urge our elected leaders to take these initial steps to make our democracy fairer, more inclusive, and more capable of addressing our major policy challenges. Even a democracy that seeks to prevent “tyranny of the majority” through checks and balances must ensure that, over time, government reflects the voice and interests of the majority, as they emerge through free, fair, and equal elections. Otherwise, democracy deteriorates into “tyranny of the minority.”

Larry Diamond
Senior Fellow
Hoover Institution and Freeman Spogli Institute
Stanford University

Lee Drutman
Senior Fellow
New America

Steve Levitsky
Professor of Government
Harvard University

Daniel Ziblatt
Professor of Government
Harvard University

Deborah Avant
Professor of International Studies
University of Denver

Naazneen H. Barma
Associate Professor of International Studies
University of Denver

Frank R. Baumgartner
Professor of Political Science
University of North Carolina, Chapel Hill

Sheri Berman
Professor of Political Science
Barnard College, Columbia University

Robert Blair
Assistant Professor of Political Science and International and Public Affairs
Brown University

Henry E. Brady
Dean, Goldman School of Public Policy
University of California, Berkeley

Rogers Brubaker
Professor of Sociology
University of California, Los Angeles

John M. Carey
Professor of Government
Dartmouth College

Michael Coppedge
Professor of Political Science
University of Notre Dame

Katherine Cramer
Professor of Political Science
University of Wisconsin-Madison

Rachel Epstein
Professor of International Studies
University of Denver

Henry Farrell
Professor of International Affairs
Johns Hopkins University

Morris P. Fiorina
Professor of Political Science and Senior Fellow
Hoover Institution
Stanford University

Luis Ricardo Fraga
Professor of Transformative Latino Leadership and Political Science
University of Notre Dame

Francis Fukuyama
Senior Fellow
Freeman Spogli Institute for International Studies
Stanford University

Daniel J. Galvin
Associate Professor of Political Science
Northwestern University

Laura Gamboa
Assistant Professor of Political Science
University of Utah

Martin Gilens
Professor of Public Policy, Political Science, and Social Welfare
University of California, Los Angeles

Kristin Goss
Professor of Public Policy and Political Science
Duke University

Jessica Gottlieb
Associate Professor of Government & Public Service
Texas A&M University

Virginia Gray
Professor of Political Science Emeritus
University of North Carolina, Chapel Hill

David Greenberg
Professor of History and of Journalism & Media Studies
Rutgers University

Anna Grzymala-Busse
Professor of Political Science
Stanford University

Jacob Hacker
Professor of Political Science
Yale University

Hahrie Han
Professor of Political Science
Johns Hopkins University

Gretchen Helmke
Professor of Political Science
University of Rochester

Liesbet Hooghe
Professor of Political Science
University of North Carolina, Chapel Hill

Daniel Hopkins
Professor of Political Science
University of Pennsylvania

William Howell
Professor of Political Science
University of Chicago

Bruce W. Jentleson
Professor of Public Policy and Political Science
Duke University

Theodore R. Johnson
Senior Fellow
Brennan Center for Justice

Richard Joseph
Professor Emeritus of Political Science
Northwestern University

Eric Kramon
Associate Professor of Political Science and International Affairs
George Washington University

Katherine Krimmel
Assistant Professor of Political Science
Barnard College, Columbia University

Didi Kuo
Associate Director for Research and Senior Research Scholar
Center on Democracy, Development and the Rule of Law
Stanford University

Timothy LaPira
Professor of Political Science
James Madison University

Yphtach Lelkes
Assistant Professor, Annenberg School for Communication
University of Pennsylvania

Margaret Levi
Professor of Political Science
Stanford University

Robert Lieberman
Professor of Political Science
Johns Hopkins University

Scott Mainwaring
Professor of Political Science
University of Notre Dame

Jane Mansbridge
Professor of Political Leadership and Democratic Values
Harvard University

Lilliana Mason
Professor of Political Science
University of Maryland

Corrine M. McConnaughy
Research Scholar and Lecturer, Department of Politics
Princeton University

Jennifer McCoy
Professor of Political Science
Georgia State University

Suzanne Mettler
Professor, Department of Government
Cornell University

Michael Minta
Associate Professor of Political Science
University of Minnesota

Terry Moe
Professor of Political Science
Stanford University

Yascha Mounk
Associate Professor of the Practice of International Affairs
Johns Hopkins University

Pippa Norris
Professor of Political Science
Harvard University

Anne Norton
Professor of Political Science
University of Pennsylvania

Brendan Nyhan
Professor of Government
Dartmouth College

Norm Ornstein
Emeritus Scholar
American Enterprise Institute

Benjamin I. Page
Professor of Decision Making
Northwestern University

Kathryn Pearson
Associate Professor of Political Science
University of Minnesota

Tom Pepinsky
Professor, Department of Government
Cornell University

Anibal Perez-Linan
Professor of Political Science and Global Affairs
University of Notre Dame

Paul Pierson
Professor of Political Science
University of California, Berkeley

Ethan Porter
Assistant Professor, School of Media and Public Affairs, Department of Political Science
George Washington University

Robert D. Putnam
Professor of Public Policy
Harvard University

Kenneth Roberts
Professor, Department of Government
Cornell University

Amanda Lea Robinson
Associate Professor of Political Science
Ohio State University

Jonathan Rodden
Professor of Political Science
Stanford University

Nancy L. Rosenblum
Professor of Ethics in Politics and Government Emerita
Harvard University

Kim L. Scheppele
Professor of Sociology and International Affairs
Princeton University

Kay L. Schlozman
Professor of Political Science
Boston College

Daniel Schlozman
Associate Professor of Political Science
Johns Hopkins University

Cathy Lisa Schneider
Professor, School of International Service
American University

Gisela Sin
Associate Professor, Department of Political Science
University of Illinois

Dan Slater
Professor of Political Science
University of Michigan

Anne-Marie Slaughter
Professor Emerita of Politics and International Relations
Princeton University

Rogers M. Smith
Professor of Political Science
University of Pennsylvania

Susan Stokes
Professor of Political Science
University of Chicago

Alexander George Theodoridis
Associate Professor of Political Science
University of Massachusetts Amherst

Chloe Thurston
Assistant Professor of Political Science
Northwestern University

*Institutions and titles are listed for identification purposes only.

 

Your Constructive Comments are Welcome!

Financial Advisers Keep Their Clients From Procrastinating

Well, all know this isn't true.

But it isn't your fault.  This last year Gary Duell was the procrastinator.  None of the smartest people in the room (not including yours truly) could agree on what was going to happen and what to do about it.

 

Now that a major source of craziness will largely be out of the picture, I'm more comfortable with recommendations for this year:

 

1. Focus on Goals and Cash Flow-  block out the massive media intrusions into your lizard brain, the eat, lust, fight, flight instincts.  Focus on your goals and the plans in place- or that we're working on -to achieve them.  Review your budgets and determine which expenses are in your control and which don't contribute to your goals.  Then eliminate them.
2. Manage Risk- note that I don't say avoid risk, commonly defined as volatility.  As I say repeatedly in my classes, when you're accumulating savings volatility is your friend due to dollar cost averaging.  When you're spending, or on the cusp of spending, your retirement funds then volatility is your enemy.  Manage where and to what degree you allow volatility in your portfolio.  This usually consists of either algorithm-based risk managed ETF and/or third party backed guarantees.
3. Remember Taxes!  Taxes, not healthcare, will be your largest retirement expenditure (on average).  Do you have a plan for future [higher] taxation?
   
4. Be a perpetual student.  Recent studies have shown investors procrastinate 5-10 years before implementing our advice.  That hasn't been my experience.  But I get chagrined if my clients wait 5-10 months!  Especially now.  So never stop listening and learning.
   
5. Seek good returns but follow evidence and ethics.  As data becomes easier and easier to collect and analyze, the bad actors in our economy will be taken out of the game.  It's inevitable.  I am really encouraged by the surge in ESG, SR & Impact investing.  Most of us know without being told that lying, cheating and stealing never work out well in the end.  Companies that foist their costs onto the environment or other people will either evolve or die.  Don't invest in them.
   
6. Take care of your physical, mental and social health.  Without a mind and body it's tough to enjoy anything.  Keeping connected to others, to nature and things outside yourself, your odds are improved!
   

Your Constructive Comments are Welcome!

Divinely Inspired Algorithms Can Beat the Market

As the case I'm going to describe would indicate, it is a solid myth that divine inspiration can feed your greed.  

That is so wrong on so many levels, isn't it?  But some investors apparently didn't think so.

(this blog post is based entirely on the case described in Wealth Management magazine regarding two Utah con men titled, "SEC:  "Divinely Inspired" Traders Were Mere Frauds") 

Thomas J. Robbins & Daniel J. Merriman "lost" $11 million of their clients' money by investing them in a fake company aptly named "ConTXT",  They claimed their algorithm-from-God (my portrayal, not in the article) would yield returns of 7.5% per week.  That's right, per week.  And with no risk!  I think you'd even have trouble doing that dealing crack.  But I don't know.

They appeased early investors for failure to achieve these returns by explaining technology was not yet sufficient to manifest their "spiritual revelation".  This while never investing the money and just spending it on themselves, using it all up within months.  To keep investors engaged, Robbins & Merriman touted their religious faith and phony large clients like the Mormon church, the Rothchilds, etc.

The article didn't mention this but a common thought pattern of such crooks is they believe their victims deserve to lose their money for being so greedy as to think they could actually get such outrageous returns.  I nearly agree with them in this case; but tell me how that thought can exist in a healthy mind, all at the same time.

So here are the key points, if we're to learn something from yet another bunch of scammers:

• Both men (four were actually involved) were ex-cons who had met in prison, their attendance in which had been precipitated by prior financial fraud.  
• As a result, neither was licensed or registered to give financial advice or sell financial products.
• None of the investors had looked them up on https://brokercheck.finra.org/ before handing over their money.  It's free.  It takes one minute.
  
• The investors were driven by misplaced trust (religion and money never mix well) greed and FOMO (fear of missing out), the worst investor motivators.
• Had they performed some due diligence, none of them would have been victimized.
• Had they focused on their goals and reasonable proven ways to realize them they wouldn't have had any interest in ConTXT to begin with.  (I love that name.  What a blatant giveaway.  Robbins & Merriman put the "Con" in ConTXT.)
  

Your Constructive Comments are Welcome!

Fiduciary Advisers Who Offer Insurance Products Are Just Out To Make Money

Just to be clear, this blog is about Financial Myths and the name of this post is indeed a myth.  Or can be.  There are "advisers" who sell insurance products in the absence of a financial plan in order to make a quick buck.  But at prevailing money management fee rates (1.02% as of 9/20/20)
an adviser would make twice as much over a ten year period selling asset management vs. an annuity for example.
As this article points out, "selling" insurance products is a "hot-button" issue, unjustifiably so.  The celebrity "advisers" (hack, gag) often use this as a deal killer, "run in the opposite direction" they say, if your adviser offers annuities or life insurance.  Unfortunately, life isn't this simple.
A true fiduciary recognizes the importance of risk management through transference of risk, the law of large numbers, and risk pooling.
Risk management starts with identifying, measuring the impact of and weighting a client's existing and future risks.  Then the practicality and cost effectiveness of solutions are explored.  Then the practical and cost effective solutions are implemented.
Which involves transference of risk, normally to a legal third party such as- for example -an insurance company or options seller thereby taking advantage of the law of large numbers (as the size of a statistical population increases, its behavior and outcomes become more precisely predictable) through risk pooling (combining resources with others on a mass scale).
It is impossible to be a genuine fiduciary and ignore or- worse -disparage well-proven yet boring actuarial science.

Your Constructive Comments are Welcome!