Some Secrets to Investing Success

To be a "successful" investor, you've got to start by defining success. It is different for just about everyone. Two investors with nearly identical demographics including age, lifestyle, and net worth can have significantly different financial goals. And financial goals are almost never determined along one dimension. Thinking they are is a formula for a typical 80s movie, and most were bad depictions of how investing works even though they have classic status.

Here are five hot tips to get you a leg up on the competition:

1. Get a head start. As a Sooner I can tell you there is no substitute.

Imagine you, a very conservative person, begin investing at age 25 by putting $100 per month into a very safe bond index fund (perhaps BND). You do this for 20 years (240 months straight). Let's suppose this bond investment grows at an average rate of 3.5% per year. Although you put in $24,000 of your own money, that money is growing on average as it is invested. So after the 240th month you would expect to have about $34,576 of which about $10,576 is the growth of the investment. At that point when you are 45 years old you stop saving additional money and just let the bond investment grow for the next 20 years or until you are 65 years old (40 total years of investing). 

Now imagine me, a rather aggressive person the same age as you, waits until you are done putting money in to begin my own investing. At that point, 20 years after you started, I start investing $100 per month and I don't stop adding $100 per month until age 65 (20 years of adding to my investment just like you) and I invest in a stock fund with more risk and return potential (perhaps VT). Let's suppose this stock investment grows at an average rate of 8% per year--more than double your investment return per year. After 240 months I've added just as much as you, $24,000 of my own money. I've also enjoyed a higher rate of return on those investments. But do I have as much in total? In this case, no.

At age 65 you have over $68,798 while I have only $57,266. And if you would have chosen the stock fund instead of the bond fund keeping the other assumptions the same, you would have over $266,914--being early is an amazing difference!

See the chart below and notice how starting early allowed you to be invested more conservatively.

Here is a short video showing the same principles at work.

2. Protect against the downside first and foremost.

It is mathematically impossible to save enough and earn enough on that savings to cover spending more than you have. Try it and see. If you save $20 million and earn a return of $40 million on it (a 200% rate of return!), you still cannot spend $61 million. Even if you borrow against the $60 million to try and get an additional $1 million, you have to come up with that $1 million to pay back the loan. Spending prudence should seem self evident. So too should investing prudence because you mathematically cannot spend investment earnings you do not achieve. 

If I put all my investment (eggs) into one stock or bond (basket so to speak) and that stock or bond goes broke, my investment is gone. If I put all my investment into two stocks or bonds and one of those goes broke while the other is fine, I have only lost half of my investment. Repeat this logic for more and more individual investments, and you will eventually get to a point of diversification where the impact of picking a complete lemon (stock or bond that goes to zero) is immaterial to you. That should be a goal for most investors.

The entire stock or bond market basically cannot go to zero. If it does, you got bigger problems than your IRA balance like the colossal asteroid that must have struck the Earth. In fact, the history of economic growth has been a reliable (eventual) pattern of higher highs and higher lows. Diversification is your first best risk reducer against the threat of ruin.

3. Grab the right rate of return.

It is all about beta not alpha. Beta is the fancy way of saying give me the market's performance. Alpha is the fancy way of saying give me something different (hopefully better) than the market's performance. Beta is passive investing, boring, dull, easy, anybody can do it. Alpha is the sexy stuff. Alpha is the smart money, the guys zigging when the panicked sheep are zagging. At least, that is the story so many like to tell.

The fact is overwhelmingly most professional money managers do not beat their benchmark. Let that sink in--the guys paid millions of dollars to add value for investors by being better than their benchmark are most of the time subtracting value. Investors are paying a fee to get a lower rate of return than they could otherwise.

The key decision for most investors is not "can I beat the market?" but rather "can I be the market, and what market do I want to be?" Remember, every investor is different--different risk tolerances, different various goals, different unique circumstances and biases, etc. Getting the right mixture of various investments (AKA, asset allocation) is the first best method of achieving your financial goals--notice how this works hand in glove with diversification. The asset allocation decision will almost exclusively determine the risk/return path your investments travel making other decisions small contributors to performance.

4. Look for the rewards of liquidity and transparency.

Listen to Jason Zweig among so many others. Don’t trust hedge funds. Understand that private equity = public equity minus liquidity minus transparency plus fees plus leverage. As Cliff Asness points out, let others accept a discount for illiquidity (when a premium would be the theoretical demand of investors). You want access to your money while invested in assets and processes you can understand, fully benchmark against, and truly see the value of. 

5. Resist temptation and envy--the key drivers of FOMO.

This one has many short sub components (here are a few):

• Don't time the market -- This is an impossible task and anyone who tells you different is a liar or a fool.
• Therefore, stay invested and on your long-term plan -- Uncle Freddy very likely doesn't know something you should be emulating. This time (any time) is very probably NOT a time to go to (some different asset allocation as compared to your long-term plan).
• You will never be significantly invested in the best performing single investment because of rules 2 & 3 above -- You don't want the risk that has only luck as its investment thesis.

The bottom line of this is successful investing generally is simpler, cheaper, and duller than advertised.

Top 100 Movies - Required Viewing

This is my partially complete list of "classic", right-of-passage movies everyone should see. I had my kids in mind when crafting this list. I drew from a much larger list of movies I want them to experience wanting to cull it down to an elite must-see list. 

It is partially complete because while it is a top 100, I am open to changing what makes the list. But I do feel that 100 is a sufficient number such that to be added to the list a new entrant would need to bump a movie from the list. 

Do not confuse this with a “greatest 100 movies” as this is not a measure of cinematic excellence or advancement of the medium. It is closer to a kind of most culturally important list, which overlaps largely but not entirely with a most popular list. Case in point: no one would list Caddyshack as a movie that set a bar artistically. However, it’s influence on and depiction of the subculture of golf has been phenomenal. I would bet that virtually everyone who has played a round since the movie came out roughly 40 years ago has during a golf outing made or heard a reference (if not many) to that movie. 

Additionally, there are other criteria or factors that to some degree contribute to a movie’s inclusion on the list including: I enjoy the movie/it has some nostalgia value for me, it is a movie that speaks to an important truth/it teaches something about the time it is set in or its genre or its underlying story, and it has cultural importance. Being culturally important and being on the list means that you can’t just read a synopsis of the movie to fully understand the cultural importance. You have to see it to get it.

The list in alphabetical order (sorry about "The" titles):

2001: A Space Odyssey

A Christmas Story

A Few Good Men

A League of Their Own

Airplane!

Alien

Anchorman: The Legend of Ron Burgundy

Apocalypse Now

Apollo 13

Back To The Future

Beetlejuice

Big

Braveheart

Caddyshack

Casablanca

Christmas Vacation

City Slickers

Close Encounters of the Third Kind

Cool Hand Luke

Dead Poets Society

Die Hard

Dirty Dancing

Duck Soup

E.T.

Ferris Bueller's Day Off

Field of Dreams

Fight Club

Fletch

Footloose

Forrest Gump

Ghostbusters

Good Will Hunting

Grease

Gremlins

Groundhog Day

Happy Gilmore

Home Alone

Hoosiers

It's A Wonderful Life

Jaws

Jurassic Park

Karate Kid

Lethal Weapon

Life Is Beautiful

Match Point

Men in Black

Monty Python and the Holy Grail

Mr. Mom

Mrs. Doubtfire

Napoleon Dynamite

North By Northwest

O Brother, Where Art Thou?

Office Space

Old Yeller

One Flew Over The Cuckoo’s Nest

Planes, Trains, and Automobiles

Poltergeist

Psycho (1960)

Raiders of the Lost Ark

Rain Man

Raising Arizona

Remember the Titans

Star Wars: Episode VI - Return of the Jedi

Rocky

Seven

Spaceballs

Spies Like Us

Star Wars: Episode IV - A New Hope

Swingers

The Bad News Bears

The Big Lebowski

The Blues Brothers

The Breakfast Club

The Dark Knight

Star Wars: Episode V - The Empire Strikes Back

The Godfather I

The Godfather II

The Goonies

The Jerk

The Lord of the Rings: The Fellowship of the Ring

The Matrix

The Princess Bride

The Royal Tenebaums

The Sandlot

The Shawshank Redemption

The Shining

The Silence of the Lambs

The Sixth Sense

The Terminator

This Is Spinal Tap

Three Amigos!

Titanic

Top Gun

Trading Places

Vacation

War Games

Weird Science

When Harry Met Sally

Young Frankenstein

You've Got Mail

The Age of Trump

Tomorrow one third of the United States' government leadership will change hands from one who once promised hope and change to one who now promises the same but supposedly of a different variety.

The tension around this transition is particularly elevated. Not since Hoover-Roosevelt has a U.S. presidential interregnum been so ugly. How will the final moments play out? Will Obama be gracious or will he smugly toss the football? Will the White House be adorned with golden accents? Will a great wall emerge protecting us from things we'd like to buy and people we'd like to meet? How great shall our greatness be?

Below is a partial list of my areas of optimism and pessimism as yet another self-greatness seeking charlatan proceeds to chase away our ideals.

Before I begin, a quick look at the optimism/pessimism I predicted about one year ago when Trump was but a surprising front runner though still a dark horse.

Optimistic - Shows why we should lose (and should have lost a long time ago) our reverent awe for the U.S. Presidency; prevents major government action/intervention/meddling on any number of issues by being a circus act writ large (his administration's priorities will be prestige and showmanship rather than policy accomplishment); forces a meaningful debate and action on limiting executive power (a little bit in tension with the previous prediction as this one mitigates a Trump administration that is actually trying to do something).

Pessimistic - Engages in major international war actions (beyond the high amount the each of his opponents would do anyway); sets back trade freedom and immigration substantially; creates strong racial, ethnic, nationalistic, and gender divides.

Overall - I estimate the optimistic possibilities are more likely than the pessimistic possibilities. 

 Optimism:

• Taxes - As with many of these, Trump himself is not really the source of optimism. Rather the Republican Congress is the new hope. Trump is just the chance that a good reform will be drafted with the expectation that he will sign it into law.
• Regulation - He continues to talk strongly about reducing the monstrous regulatory burden our federal empire exerts. The areas of particular expectation are banking & finance (Dodd Frank) and health care/medicine/insurance (ACA/Obamacare), but also environmental; although I am less sanguine about the prospects there. 
• Presidential Power & Authority - This one is borrowed my original. I believe the return of the left is long overdue in this area. Perhaps it will take this time... doubtful. The same can be said for the anti-war movement. Their 8-year hibernation is now over. Remy puts it well in the second verse. 

There is no doubt these are important areas; yet, so are those I put in the pessimistic camp.

Pessimism:

• Trade - Astute readers will notice how many of these in the pessimism category are related. Is his rhetoric enough to satiate the unintentional, populist desire to be poorer? Our trade deficit/capital account surplus is not some phantom menace plaguing our economic well being. Is he really so dense as to believe the nonsense he speaks on this issue? . . . based on the rest of his behavior . . . Okay, good point.
• Immigration - The free exchange of labor is every bit as important a contributor (perhaps even a greater contributor) to our economic wealth as is the free exchange of goods and services. His attack on those not from around here is both disgusting and discouraging. Again, I hope this is a clone of the prior item where it is all about rhetoric and not action.
• Nationalism - We don't need more tribal thinking in this world. Unfortunately, he nurtures this toxin. He wants revenge on those not allowing us to be great.
• War - Here my outlook is just slightly negative. I'm grading on a curve based on the past two Commanders in Chief. I think he will tend to reduce the areas of conflict where both Bush and Obama took us. However, the risk he runs of allowing an awoken force from Russia or China is elevated compared to the prior administrations. Think reduced magnitude across the bulk of the probable war fronts but with increased risk in the extremes (tail risk).
• Drug policy - I suspect he views drugs in the traditional simplistic framework (good versus evil). Drug users are rogues who must be dealt with. The first one to tell him he can't win the war on drugs will seal our fate in continuing the evil work that is that battle.
• Government Meddling - From the Carrier deal to GM to you name it, the picture so far is bad for economic growth specifically and bad for liberty in general.
• Free Speech - For as much as he deplores PC, he certainly can't take criticism. He has flat out said we need to reign in speech. 
• Internet freedom - This may be a small issue, but perhaps it is a litmus test for how he will govern overall. He said we need to look into 'closing that Internet up'. His nominee for Attorney General, Jeff Sessions, as well as his vice president, Pence, are outspoken in their disdain for internet poker. They want to keep us safe . . . from ourselves and our choices.
• Surveillance State - I suspect no relief. 
• Gender Issues/Tolerance - While I actually think he actually takes a lot of unfounded and unfair flack regarding areas like race and sexual orientation, his sexism is undeniable. He is not just crude. He is misogynistic. It is hard to be very trusting that this strong character flaw and his errors in judgment don't and won't extend beyond objectifying women. 

Overall:

The Trump years (and they will be years despite the hope of so many for impeachment or that he would divorce America to be president of some younger Eastern European country) might be an odd combination of dramatic progress and colossal retreat. I think the eventual decisive factor will be how strong and righteous Congress is. I believe the case for optimism has a greater magnitude than the case for pessimism, but the negative sensitivity is high--meaning prospects are skewed with more downside risk than upside potential while the balance is still to the upside. 

Point of No Return

As Burton Malkiel points out in this article, popular sentiment is growing that the stock market is reaching or has passed fair value. As he also points out, beware your attempts to "time" the market--selling out to buy back in after the "inevitable" dip.

The stock market will go up and down and up and up and down and up and down and down and up and . . . Of course, history shows that those downs don't fully counter the ups. The composition of ups and downs in both frequency and magnitude matter. Historically it has been the case that the rides up are slower and longer while the trips down are sharper and shorter. I've discussed this before. While that pattern isn't always followed, the strong historical trend has been an upward bias in returns--the long-term trend in the stock market is positive.

Add to that the fact that the market is very efficient, and you are left with virtually no reason to try to time the market. Yet, many are not convinced. They still feel compelled to sell out with the belief (hope) the market will decline allowing them to buy back in cheaper. My advice then comes in the form of a question: What if you're wrong? What is your contingency plan for that?

It better be to find a point to throw in the towel and get back into the market. Of course, you'd like to know how to recognize you were in fact wrong. After all, just because the market has risen from where you exited doesn't mean it won't come down still.

Here is perhaps a little guideline. Looking at the monthly total returns for the S&P 500 since January 1970 through June 2014 (44.5 years or 534 months), I isolated all of the drawdowns for the index. I then ranked them and calculated the implied percentage gain for each. This last figure would be the amount the index would need to increase in order to overcome the drawdown. For example, if the market declines 25%, it would then need to increase 33% to get back to even. A 50% decline requires a 100% increase from that new low point. Here are all 36 drawdowns for the period charted:

Your reentry point might be once the market has gained some threshold amount above the point in which you sold out. Because the general trend is for the market to grow, you would want to buy back in once that threshold of growth has been achieved no matter how difficult it feels to do so. And it will feel difficult--you sold out at a lower point for a reason. Your complaint might be that just when you thought you were out, the market pulls you back in.

To give you some comfort, though, notice how rare very large drawdowns are. Couple that with the fact that over this time period (January 1970 to June 2014) the S&P 500 increased over 8,300%. Like I said, are you sure you want to time the stock market? If you do, consider that once the S&P 500 has increased about 20% from your exit point only five times in the past 44 years has it dropped so much that it would return to your exit point. And that drop needs to happen ASAP. The index's average growth over this period was about 10.4% per year or about .83% per month. You risk being left behind for good.

When it comes to beating the market, market timing as a strategy isn't even on the map. The implication is discipline beats (mythical) exceptional skill--most value added by professional financial advisers (perhaps as much as 90%) comes from simply finding appropriate asset allocations, fulfilling it with appropriate (not sensational) investments (styles and classes are more important than particular names and issues), and KEEPING with it in good times and bad.

Wisdom from the Rubber Duck

On my recent travel of the holiday road I saw many, MANY a semi truck. On the back of one was a message that struck me as interesting. It read, "I get paid for all my miles. Do you?" Obviously this is an attempt at employee recruitment--not a message of disparagement. The implication is other truckers aren't getting all they can out of their particular employment arrangement. 

But an economist looks at this differently. Looked at through the eyes of the economic way of thinking, the message seems nonsensical. Let me explain. 

Suppose you are a trucker who only gets paid for the miles driven when actually delivering goods. If you cannot find a return load, you drive back to your point of origin "unpaid". Presumably this or something similar is what the message is getting at--the trucker with the "better" arrangement gets paid for the load-free return journey. But how can this be? To wit, it would be a remarkable thing if these two trucking situations were in existence at the same time with no meaningful differences between them otherwise. What we would have is a disequilibrium. Markets abhor those. They work to rectify them, and they do so quickly. 

Maybe we are witnessing the first step in movement toward the equilibrium, but that seems very unlikely. The message on the truck was probably there for some time. Yet it shouldn't take long for the message to do its work. And the solution it causes is not likely to be every trucker goes to work for the two-way paying firm. Much more likely truckers start to demand higher wages for the one-way journey or to have some other form of compensation, OR, and this is key, the competition for two-way payments bid down that type of pay. Of course, a combination of all these is the expected outcome. 

Finding an example of two truckers that seemingly are paid differently probably just means one is taking on a different wage risk/reward tradeoff. One way or another we would expect that every trucker gets paid equivalently once the proper adjustments are made. So the answer to the truck's message is "Yes, how could it not be the case?" 

The Cape Crusaders

I've just returned from a family vacation in Cape Cod and Maine. We spent four lovely days in Cape Cod followed by two in lower-coastal Maine with Portsmouth as our base of operations. Here are some thoughts:

• There is plenty to do on the Cape as well as plenty of ways to do nothing but relax. It is a highly recommended retreat. 
• It is hard for an outsider to appreciate how out in the country Cape Cod can be. As we learned navigating our way back from Scituate (see "Boston detour" below), you travel from rural to rural. And New England is not the flat, open, grid-patterned world a midwesterner is used to.
• To uncharitably generalize, Cape Cod is the Upper East Side gated by Branson . . . if the Upper East Side were in the country and the cast of Hair Spray ran Branson. This is quite unfair, but it gives a sense of how diverse some of it is. 
• There are different traffic norms up there. I noticed stopping to let people in including stopping on a busy two-lane road to let someone make a left turn. As a result, many drivers proceed with the expectation that you will allow for this. Hence, many times cars pulled in front of us or stopped to wait for us with the drivers giving irritated looks when I didn't notice what they were expecting from me.
• In many places there was a tolerance and incorporation of weeds (I'm saying in the small green spaces of nice businesses) that would not be acceptable in this part of the country (particularly Texas and Oklahoma).
• But there is seemingly less tolerance for "neglect" of a property or perhaps more respect for what "neglect" a neighbor will see. Upkeep is impressive in almost all corners. In that same vein you see a bit of the delicate balance between historic devotion and modern adaptation. Political signs about proposition XYZ being "wrong" for [insert a Cape Cod town] allude to this. Of course one problem is  what if the Cape Cod style of house falls out of fashion. What if population/ownership turnover leaves these many properties significantly less desirable? 
• On the road the exit numbers do not match the mile markers. They simply count up from the road's origin. This seems so wrong that we can call it stupid. Am I missing something? Isn't the system in the west superior in every sense? And do we really need a full mile marker sign every tenth of a mile? Is this a kickback to Big Sign? 
• The Boston Detour aka, the Undependable Train, a lesson in good business practices, character, and adaptation. To my three-year-old son, Max, there are two things in this world: trains and not trains. On Tuesday we were to do a bit of the former by riding the Cape Cod train from Hyannis to Provincetown. This is a narrated scenic ride with one departing at 11:30 and one departing at 2:30. Since we were 30 minutes away in Chatham, the 2:30 was the better option leaving us time before to take in Sandwich (a place but we did coincidentally eat a sandwich there). Upon navigating the mess that is Hyannis, we arrived at the train depot about 1:45. The whiteboard sign out front read "TUESDAY: no trains today [frowny face]". Ever the optimist, I went inside to confirm our fear. Two people sat chatting, and it took them a minute to process that I might need some assistance. Once awoken from their unresponsiveness, they were friendly, but the answers I was given were unsatisfactory on several levels. I was told mechanical issues halted today's trains. But then I was told that I really should make reservations rather than just walk up. You see sometimes they don't have enough customers to run the trains. But then I was told there is no way to know, which I would like to being that I was coming from some distance away, because often they have a lot of walk-up traffic at the last minute. Contradictions aside, the fact remained that I had to go out to the car to tell a little boy he was not going to ride a train today. The letdown was as predictable as it was sad. We scrambled for ideas. There are lots of commuter trains in the area running to Boston. If we could connect with one, that might save the day. Thankfully smartphone technology enabled that brainstorm hope to become a reality. We headed toward Plymouth, but after further research we opted to go farther to Scituate for the best chance to make a train with time to spare. Thirty minutes later we were waiting at the station enjoying donuts with plenty of time before the 3:40 arrived. Into Boston we went. We emerged from South Station as rush hour was projecting people into it. We cleared the crowds and made our way to Quincy Market. Lobster rolls, clam chowder, and pizza recharged us. Outside we saw a familiar performance: a street performer we had seen a little over a year before in Denver. Her act, style, and looks were unmistakably the same. Time was ticking and we wanted to do a little more. We went to the North End both for me to see the fruits of the Big Expense Dig remarking how "close" the North End is to downtown now (it is amazing the effect) and to enjoy some treats from Mike's Pastry. The charm of the streets and excitement of the restaurants made me long for more time. But we didn't have it. After a moment enjoying gelato, the kids didn't want pastry, we began our trek back to South Station. Only now the overcast had turned to sprinkles which turned to drops. We had one umbrella between the four of us walking with the youngest curled under the stroller's awning. While at first we thought we could make it, the heavier rainfall was changing our minds. We ducked into a doorway for cover. By luck it was a CVS. Inside we fled for two essential items. Our unexpected detours had us in need of both an additional umbrella as well as a phone charger. Remember, outside of Boston travel is rural to rural. The combination of navigation and train planning had drained our phones. The pictures of Boston finished them off. Getting back from the train station to the main highway in the rain-filled dark was not an attractive idea sans Google Maps. At this point I was excited for the character building exercise I was about to put my kids through. We had about .7 miles to walk, much of it uphill, in significant rain, with temperatures dropping, and pushing a stroller. But they didn't even flinch. In fact they enjoyed it. My daughter protested loudly when we considered a subway ride escape. We made it to South Station. The imaginative story we concocted on the train-ride back will be the inspiration for a future post. This could have been a low-point or breaking point in the trip. Instead it was just another highlight.
• The apparent housing irrationality: I thought I had stumbled onto an obvious business mistake. On the scenic highway 6A leading into Provincetown, there are quite a few condos for rent. In the pictures below is the group that first caught my eye. They start at $200,000 a piece. Presumably the ones with ocean access are even pricier. Zillow has them at $325M. They appear to be the size of Monopoly pieces. My conclusion of an apparent business mistake came when I spotted similar real estate about a half-mile down and farther from town that was for sale--price undisclosed. The second set of properties was in shambles. Something seemed amiss. Was this a great arbitrage opportunity? Was it simply irrationality on the part of the sellers of the highly priced condo properties, et al? Land restrictions perhaps were to blame, but that didn't quite jibe unless coupled with building/renovation restraints. Materials and labor would be perhaps $50 per square foot. These were priced at approximately $2,000 per square foot. If that is the going rate, the dilapidated property and many others are free hundred dollar bills laying in the street. How could a freely functioning market let such a disequilibrium exist? My first conclusion was a poor one--that uninformed/disengaged sellers were suffering housing crisis amnesia. My second conclusion wasn't much better--that government restrictions must be preventing supply at a drastic affect. Upon more thoughtful reflection, I think I have the missing consideration: risk. While all of the prior explanations probably were at play somewhat, we should never underestimate the effect of uncertainty. This was no disequilibrium per se. Once I had properly channeled von Mises, it became clear. Markets are only in equilibrium in textbook models. In the real world markets are constantly moving toward equilibriums taking in new information and realizing new knowledge. Pricing down the quaint, efficiency condos carried a big risk of lost profit. Investing heavily in renovating the run down properties or converting raw land was far from a sure bet as well. The next sale at $325M might be the last for a long while or it might be the start of a boom. These huge unknowns implied huge bid/ask spreads--just what we found travelling highway 6A.
• I couldn't help but notice how recycling has gone cultish in New England. No sooner had I done so I saw this excellent Cato Unbound issue on environmentalism. More on that to come . . .
• Portsmouth is an awesome town worth a weekend excursion for those in the area. 
• Travelling up the shoreline in Maine was excellent. I needed a lot more time for Maine. 
• The people of New England seem to have an appreciation for summer that is more taken for granted in the south. Their summers are beautiful. And the experience of them is a truer glimpse of nostalgic (perhaps stereotypical) Americana to me that what we see in the hot Southwest. I like it.
• Two gripes related to the rental car. First, we rented a Chevy Traverse. The short review on it is it sucks. The longer review is that it seems to be a car built by a factory in 1985 who happened to know about some technological and style features demanded by people in 2013. Remember how Soviet warplanes always had a "strange" resemblance to their better designed American counterparts? In Soviet Russia, Chevy Traverses you. Second, do we really need severe tire damage gating around rental cars? This is the best way to prevent theft? How many times is a driver in a confusing situation (like the Manchester Airport's rental car return garage) backing into these compared to how often a thief is deterred by them? 
• Speaking of the airport, the Stasi have a new method of winning compliance. The TSA agent who checks IDs gave my kids TSA sticker badges. I was hoping they would refuse when offered, and they did hesitate like it was a trick--smart kids. I had to bite my tongue. I found this little propaganda infuriating. Don't make my kids an advertisement for your unwarranted policies and ridiculous behavior. 
• Let's not end on a sour note. This was a great vacation. Here are some pictures:

These are $200,000+ condos.

Escape from New York

I've returned from a jam-packed trip to NYC that was part business and part pleasure. I always find it hard to leave New York without feeling that leaving is a mistake. It is such an amazing place. Very few places on Earth can boast the same wide-range of risk/return opportunity sets. Here are some thoughts:

• To my impression, by a wide margin no other American city is as much an international city. This is an underappreciated quality.
• It is a shame people tend to be too uncreative to appreciate experiences that are not "tourist traps". 
• The success of the city, largely a reflection and exacerbation of the success of American free enterprise, disguises and minimizes the drag of being in the People's Democratic Republic of Bloomberg [insert any prominent former or future mayor as well]. It is hard to see the forest of unintended consequences when dealing so directly with the trees of real-world problems. Viewed in this lens, it becomes easier to excuse the frequent acquiescence to bureaucratic and technocratic power.
• If your only impression of life in NYC was from television sitcoms, you would be missing 75% of it. If it were only from movies, I'd say you are still missing 50%, and most of that corresponds to the prior missing 75%. 
• Goldman Sachs, the business portion of my adventure, is a first-class organization. I am often a critic of the revolving door between government regulators of GS and executive positions at GS along with other regulatory capture issues. Being in the heart of the dragon, one sees clearly how that cozy relationship maintains harmony. Literally, the janitors at GS exude more confidence and professionalism than I've seen among bank presidents. Uniformly both in informal conversations and formal presentations, every representative of GS was quite impressive--not cocky or arrogant, but definitely assured of themselves and their organization and certainly serious. They can and do laugh (when appropriate), but I am certain they physically lack the ability to giggle. 
• I appreciate Goldman for having me as a guest at what was a very good conference filled with good information and entertainment. I now have more respect for them as a money manager, and it is with more confidence that I consider investments with them for my clients. 
• Here is a random thought I had during the conference: Does corporate paternalism and generosity breed acceptance for governmental paternalism? This is similar to the forest/trees thought referenced above. People in these companies are very well taken care of with all ancillary needs provided or sourced, they are used to showing ID cards and having limited access within their firm and even on their floor or in their business group, they work in "safe" environments insulated from the "chaotic" world outside, etc. 
• Depending on your perceptive sensitivity to any given behavior, you can get the feeling that "everyone" in NYC matches that given behavior. For example, everybody jogs. Of course, everyone doesn't. But it is easy to be misled being that there are countless examples of any behavior, activity, etc. to be found. That is one thing >60,000 people per square mile will get you. This goes a long way to explain misconceptions visitors come away with.
• Being in the beautiful jungle of so many choices, a thought I have had previously occurred to me again. A key to happiness is being easy to please. If you can see the good in things (be optimistic) and if you can refrain from pickiness (see things as highly substitutable), you can greatly expand your happiness. In economic terms, the flatter your indifference curves and the looser your budget constraint, the greater your utility potential. 
• Nearby our hotel was a Whole Foods grocery. We have a Whole Foods store in Oklahoma City, but the store in NYC, as a microcosm of so much else, is quite different from the store in OKC. The selection was larger in scope and scale, and the services included delivery for a flat $10 fee. No such delivery option is available in OKC. Discussing this with my wife dovetailed with other grocery economics discussions we have had. We've thought before about the intrinsic differences among stores like Whole Foods and Central Market versus Safeway and the local Crest Market versus Sam's Club and Costco. Not to get too far off on tangents, but this thought problem brings up the difficulty of finding a comparable basket of goods for inflation as well as other comparisons. Back to the central idea, what are people getting out of food shopping? The joy of bargain hunting (optimizing $/calorie) versus the joy of elegant shopping (optimizing the experience per se) could be generalized extremes along what seems a reasonable dimension of quality/quantity tradeoffs (optimizing selection and discovery). At what point is the only physical grocery shopping we do that done as an entertainment (elegant shopping) with the remainder done online including preprogrammed? 
• Enough random thoughts. Here are some pictures from a great trip. Enjoy!