Birthday Luck

birthday-luckI had been fitfully and uncomfortably sleeping, dreaming of a small dog licking my leg and stealing my snack. I awoke to find an escaped boxer with a cute face avoiding my eyes and licking her lips. Once the flight attendant found her rightful owner, who was not nearly as embarrassed as she should have been, I reassess my situation.

I’m still more than an hour behind schedule and said to be losing even more ground on account of intense headwinds. I’m still scrunched into a long metal tube with the seat-back in front of me compressing my kneecaps into my hips while hurtling cross-country, still several hours from arrival home in San Diego. I’m tired from lots of planes and being away from home for too long. I’m not in the most conducive spot I can imagine for counting my blessings.

But count them I shall, as part of this birthday reflection. “Birthday luck” describes a nuclear explosion of luck that is supposed to happen inside you on that day, giving you the ability to do anything. I don’t really have birthday luck, of course, but my luck is so good that it’s hard to tell the difference.

We are self-serving creatures to the core, of course, and self-serving bias is our ongoing tendency to attribute our successes to skill and our failures to very bad luck. Being an early investor in tech stocks was really smart while being long and wrong in 2001 was really unfortunate. But the reality is that luck (and, if you have a spiritual bent, grace) plays an enormous role in our lives – both good and bad – just as luck plays an enormous role in many specific endeavors, from investing to poker to winning a Nobel Prize. In fact, if we’re honest, we’ll recognize that many of the best things in our lives required absolutely nothing of us and what we count as our greatest successes usually require great skill and even more luck.

That my birth, which I celebrate tomorrow, was into a loving and stable family that valued education and industry was not my doing. That I was born into a land of freedom and opportunity that would allow and even provide the means for a child of working class parents with just one high school diploma between them to pursue and secure a world-class education was not my doing. I merely had to provide sufficient effort. That I was blessed with some ability and interest in a field that provides a good living and constant stimulation was not my doing. I merely had to provide sufficient industry. That I have a boss who supports and encourages me in work I love is not my doing. That I married extremely well and have three terrific and productive children who have also married extremely well is only partly my doing (and surely less my doing than I’d like to think). The wonder of delightful grandchildren is grace personified.

I could have been born in the 7th Century. I could have been born in North Korea. I could have been born into a family that abused me. I could have had to struggle for even minor educational advancement. My boss could be a jerk. My children could be disdainful. My wife could be a little less wonderful (though I doubt it). My grandchildren might never visit. As the great Frederick Buechner puts it, “all moments are key moments and life itself is grace.”

So truly – happy birthday to me. For much of it – verily, for most of what’s happy about it – I have luck (and grace) to thank.

__________

This post initially ran on October 14, 2013.

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In Memoriam

I originally posted this on the tenth anniversary of 9.11. It remains applicable today.

September 11 is one of those “Where were you?” events which, for me, also include the Kennedy assassination (my second grade classroom), Neil Armstrong’s “giant leap for mankind” (my parents’ den) and the falling of the Berlin Wall (a New Orleans hotel room).

Ten years ago I was sitting in front of my Bloomberg terminal here in San Diego when I saw a headline scroll across the bottom of my screen about a plane crashing into the World Trade Center. Since I had been on a trading floor in the World Financial Center in 1993 trying to do a trade with a client near the top of Tower One when it had been bombed previously and remembered the earthquake-like rumble I felt vividly, thoughts of a dreadful accident involving a small private plane quickly turned to fears of terrorism and consequences that were far, far worse.

As it happens, I still spent a fair amount of time at the World Financial Center (which is adjacent to the WTC) back then and had a reservation at the World Trade Center Marriott for September 11, 2001. Fortuitously, I decided not to go to New York so as to attend a Back to School Night presentation for my kids.

Much has happened since that day, obviously. We are a different country today than we were a decade ago, and not all the changes are for the better. To paraphrase C.S. Lewis, progress isn’t always forward. But our advances are real and important as well.

The memories of September 11, 2001 linger — as they should — and still offer lessons for those of us who remain. But today, first and foremost, let us remember those who died that day and honor their memories.

2013 Addendum: I have visited The National 9/11 Pentagon Memorial and the 9/11 Memorial in New York City multiple times. Both Memorials provided experiences that were both moving and powerful. I encourage all of you to visit them. Other personal 9.11 stories worth reading are here and here. My 9.11 pieces relating to markets and our behavior are here and here.

Happy Blogiversary to Me

HappyBlogiversaryI have been now been writing Above the Market for four years. I began on August 1, 2011. I started and still write largely to clarify my own thinking and to force and enforce commitment on my part. Actual readers are a lovely bonus I didn’t expect when I started and that I never take for granted. After many hundreds of thousands of visitors from nearly 200 countries, I remain astonished at the level of interest Above the Market has received — it is far beyond what I thought possible, much less likely. I appreciate each and every reader. Anyone who writes wants to be read most of all.

As always, a few people deserve special mention and thanks.

Tom Brakke (his terrific blog is The Research Puzzle) generously offered outstanding help and guidance before I even had any readers to speak of and continues to offer wise counsel whenever I ask. Tadas Viskanta provided my first distribution (exactly one month in) to the expert community he serves via his blog, Abnormal Returns, which remains the standard for its type. I have now appeared there an astonishing 206 times — essentially once a week — and am extremely grateful for having done so. Joe Calhoun upped my exposure tremendously via Real Clear Markets, in which I have appeared almost as often (179 appearances). I am grateful and humbled to be featured often at these and other excellent sites, including Cullen Roche’s outstanding Pragmatic Capitalism (75 times), the indispensable The Big Picture from Barry Ritholtz (62 times), Bill Zimmer’s The Prudent Trader (59 times), Charles Kirk’s The Kirk Report and Josh Brown’s wonderful The Reformed Broker (59 appearances each). Other regular linkers include the CFA Institute, Ben Carlson’s fantastic A Wealth of Common Sense, Michael Kitces (the authority on financial planning), Wade Pfau (the authority on retirement income planning) and the previously mentioned Mr. Brakke. Jason Zweig and Morgan Housel — giants in financial journalism — have provided much help and inspiration. And finally, but in no way least, I greatly appreciate Research magazine publishing my monthly columns. Thank you all.

My “top ten” posts this year, based upon reader numbers, follow in order of popularity. I hope you will give them a look (or another look).

  1. A New Kind of Investment Outlook
  2. Crash Ahead!!!
  3. Pants on Fire: 10 Big Lies in the Financial Services Industry
  4. Follow the Money
  5. The Maleficent 7
  6. Kobayashi Maru and the Forecasting Follies
  7. Make Fewer Decisions
  8. Math is Different
  9. Everybody Plays the Fool (Sometimes)
  10. You Can’t Outrun the Boulder

My all-time “top ten” posts, again based upon reader numbers, follow in order or popularity. I hope you’ll check them out (or check them out again).

  1. Investors’ 10 Most Common Behavioral Biases
  2. Financial Advice: A Top Ten List
  3. Establishing Your Top 10 Investment Default Settings
  4. My Investing Checklist
  5. Math Suckage and Dave Ramsey
  6. Top Ten Ways to Deal with Behavioral Biases
  7. Investing Successfully is Really Hard
  8. Saving Investors From Themselves
  9. We Suck at Probabilities
  10. Is the Yale Model Past It?

Finally, I’d like to focus on the following “not top ten” posts that didn’t get nearly as much attention — sometimes because they appeared before I had many readers — but which I think are worth reading. I encourage you to check them out.

  1. Beguiled By Narrative
  2. Financial Products are Sold, Not Bought
  3. It’s Not You, It’s Me
  4. Just Put the Ball in Play
  5. Gaming the System
  6. The Semmelweis Reflex
  7. Bias Blindness and Political Polarization
  8. Demand for Hitmen and Yield
  9. Luck, Skill and Jim Harbaugh
  10. Librarius Booker, Confabulation and Choice Blindness

I have enjoyed a nice holiday from blogging this past month and a vacation to boot. I welcomed my first granddaughter and got a good rest. Now I’m ready to get back to it. To everyone who has read, supported and helped me with this effort: Thank You! I hope four years leads to many more.

I’m Honored

honorsPerfect Client has included Above the Market among its 15 Financial Advisor Blogs Worth Following.

Above the Market is the blog of Bob Seawright, former lawyer turned investor. The blog is a wealth of information, and is a great source of investing advice, financial solutions for hypothetical clients, and industry insight. Mr. Seawright contributes articles to many other publications, and his wealth of knowledge is finely displayed (and shared) on his blog.

I’m deeply honored, particularly as it’s a very good list.

To a Happier New Year

"homeless - please help" signNot surprisingly, I have been thinking a lot about my annual Investment Outlook (due out in about a week) of late. It’s a great opportunity for me to look at the “big picture” overall and at the major themes that we should be following in the markets as 2015 opens. The overall picture seems very bright indeed. The U.S. economy has continued to improve, if not as quickly as we all would want. GDP has remained in the 2-2.5 percent range with some recent signs of quickening growth. Inflation has dipped below 1 percent, largely thanks to the tanking of oil prices. The unemployment rate, 7.9 percent in 2012 and 6.7 percent in 2013, dropped below 6 percent in 2014. The economy is doing pretty well in the aggregate.

Stocks were up solidly again in 2014, if not by as much as in 2013, continuing a mostly uninterrupted upward run since March of 2009. The Dow ended the year up 7.52 percent while the Nasdaq and the S&P 500 rose 13.40 percent and 11.39 percent (13.7 percent if dividends are included), respectively, for the year. The S&P is now up an average of 20.7 percent a year for the last three years including dividends, its best three-year return since the late 1990s.

Meanwhile, the bond market performed well too. Whether we’re looking at bonds in the aggregate (AGG was up 6.00 percent on the year) or at various component parts (LQD, representing corporate bonds, produced an 8.2 percent return, while EDV, a decent proxy for long-duration U.S. Treasuries, gained a whopping 45.10 percent in 2014), fixed income had a pretty good year too. Commodities (especially oil, obviously – after hitting a peak around $107 a barrel in June, U.S. crude oil futures finished the year at $53.27) did very poorly, while European stocks and emerging markets were spotty, but that’s mostly quibbling.

More broadly (as Steven Pinker, among others, persuasively argues), in many ways the current world is a huge improvement over what came before. Statistically speaking, tribal warfare was nine times as deadly as war and genocide was even in the 20th century, despite its concentration camps, gulags and killing fields. The murder rate of Medieval Europe was more than thirty times what it is today. Slavery, excessive and sadistic punishments, as well as frivolous executions were unexceptionable features of life for millennia, but are quickly disappearing today (if not nearly quickly enough). Wars between developed countries have all but vanished, and even in the developing world, warfare kills but a fraction of the people it did just a few decades ago. Rape, assault, hate crimes, deadly riots, child abuse and more are all substantially less common than they once were. Hunger has been halved in the developing world since 1990. Disease is waning dramatically, allowing most of us to live longer. Things are a long ways from perfect and plenty of problems exist, but the overall picture isn’t half-bad. Not many of us would jump at the chance to switch places with those who lived during other times or eras.

All of which brings me to yesterday. Continue reading

September 11: In Memoriam

I originally posted this on the tenth anniversary of 9.11. It remains applicable today. Please note the addendum I have included below.

September 11 is one of those “Where were you?” events which, for me, also include the Kennedy assassination (my second grade classroom), Neil Armstrong’s “giant leap for mankind” (my parents’ den) and the falling of the Berlin Wall (a New Orleans hotel room).

Ten years ago I was sitting in front of my Bloomberg terminal here in San Diego when I saw a headline scroll across the bottom of my screen about a plane crashing into the World Trade Center.  Since I had been on a trading floor in the World Financial Center in 1993 trying to do a trade with a client near the top of Tower One when it had been bombed previously and remembered the earthquake-like rumble I felt vividly, thoughts of a dreadful accident involving a small private plane quickly turned to fears of terrorism and consequences that were far, far worse. 

As it happens, I still spent a fair amount of time at the World Financial Center (which is adjacent to the WTC) back then and had a reservation at the World Trade Center Marriott for September 11, 2001.  Fortuitously, I decided not to go to New York so as to attend a Back to School Night presentation.

Much has happened since that day, obviously.  We are a different country today than we were a decade ago, and not all the changes are for the better.  To paraphrase C.S. Lewis, progress isn’t always forward. But our advances are real and important as well.

The memories of September 11, 2001 linger — as they should — and still offer lessons for those of us who remain.  But today, first and foremost, let us remember those who died that day and honor their memories.

2013 Addendum:  I have visited The National 9/11 Pentagon Memorial and the 9/11 Memorial in New York City multiple times.  Both Memorials provided experiences that were both moving and powerful.  I encourage all of you to visit them. Other personal 9.11 stories worth reading are here and here.  My 9.11 pieces relating to markets and our behavior are here and here.

Tony Gwynn, RIP

“What you hoped Tony Gwynn was like, he was like.”

San Diego lost another icon this week. He fully deserves the many wonderful tributes and memorials he has received. Vin Scully’s is here. Perhaps the best one is here. But to those of us who live in San Diego, we feel like we lost a friend.

Obviously, Tony Gwynn was a great baseball player, a near-unanimous first ballot Hall-of-Famer. Greg Maddux once explained that you could trick any hitter into not being able to read the speed of a pitch — “Except for that f***ing Tony Gwynn.” It should be noted that Tony hit .415 against Maddux, the greatest pitcher of the last two decades and one of the greatest of all-time. He also hit .444 against John Smoltz, .390 against Curt Schilling, .333 against Pedro Martinez, and a paltry .303 against Tom Glavine. Even George Will waxed eloquent about TGwynn. “Just tell the catcher what’s coming,” the excellent Bret Saberhagen (against whom he hit .400) said when asked about the best approach to take with Tony. “Then throw the ball down the middle of the plate. Let him try to get himself out.”

Gwynn Maddux

Tony Gwynn was an accessible superstar. In “retirement” he coached baseball at his alma mater, San Diego State and broadcast Padres games. He lived (how I hate using the past tense) about a mile from me and I would see him “around.” He was unfailingly warm and gracious, the quintessential good guy. I remember him best at high school basketball games — his daughter and mine played on rival teams — trying to hide in plain sight as just another dad (who happened to be a terrific basketball player too).

Tony Gwynn is gone, far too soon. All the baseball world mourns. San Diego weeps. “What you hoped Tony Gwynn was like, he was like.”

Affirmation

I’m not normally a fan of slideshows, but this one from MarketWatch caught my eye — probably because I make an appearance in slide 12. MissedItByThisMuch

Thanks for noticing. I also received a lovely accolade from Lauren Foster of the CFA Institute and its Enterprising Investor blog today. One of my posts was listed in Lauren’s “Best of 2013” column. Thanks, Lauren.