An Ode to Truck Drivers

As I was getting out of Florida ahead of Hurricane Irma, I couldn’t help but think about all the commercial trucks and their drivers that I saw. I’ve been thinking about the problem of truck drivers for years. Because they are doomed as a profession. Just as the car wiped out buggy drivers, the true autopilot truck is going to wipe out truck drivers. And it’s not some far-off sci-fi scenario. This is happening right now and will be complete probably within the next decade. The unions and politicos will try to fight it, but eventually they will cave to the extraordinary market forces that autopilot trucking brings. Imagine for a second that you are a trucking company owner. How would you like to have a fleet of trucks that is driving on the road for 23 out of 24 hours a day, stopping only at weigh stations and refueling ports? Imagine the trucks optimized gas mileage, lowering operating costs and maintenance costs. Imagine fleet that is several times safer and causing in lower insurance costs. What’s not to love about that? And in the long run, those lower costs will be reflected in more affordable goods to the consumer,  who is the ultimate king in any market economy. The only fly in this technological ointment is the drivers themselves. Truck driving is one of the most common professions for men in America. There is a huge segment of the population that will be obliterated. So what to do if you are one of these truck drivers? The good news is you do have options and a little bit of time. Option 1, security One thing the trucks will still need is an on-board crew to prevent hijackings. If these rolling treasure troves were to go without security, they’d be knocked over in a heartbeat. So each rolling cargo container will need at least 1 guard, possibly more depending on the route and duration of the trip. So start getting in shape. Truck driving is an extremely sedentary job, and drivers aren’t known for their muscles. Time to hit the gym and look more like a bodyguard, less like a pile of mashed potatoes. Take some security certifications. Learn the state of the art when it comes to defense and security. Get trained in weapons and certified so you can prove you know what you are doing. Option 2, a different line of work Let’s say you knew you had 7 years to find a new job. Could you do it? College only lasts 4 years. Even with professional or graduate schools, you are usually looking at around 7 years total.  Granted, that is full time work on a subject, but you aren’t starting from scratch like an  18 year old.  You have a lifetime of experience and skills already. If you weren’t driving trucks, what would you want to do with your time? How would you get paid in that field? What do you need to know to get […]

Mr Robot, Debt, and Jubilees

I just started watching Mr Robot on my Amazon Prime (Try Amazon Prime 30-Day Free Trial) because I wanted something to watch on the plane. If you haven’t seen it, there are going to be some minor spoilers. But the show is a couple years old already, so if spoilers bother you then you need to get cracking on your tv viewing! So after the first episode it looks like the over-arching plot (at least for season 1) is trying to create a debt jubilee by wiping out the credit records at a huge conglomerate, Evil Corp. For the moment, let’s set aside how that would never happen for both technological, legal, and logistical reasons. What would wiping out debt do? Would that be a net positive or a net negative for the world? At first glance, I’m inclined to say it’s a bad idea. What is debt? Borrowers want more money than they have. Lenders are willing to give it to them in exchange for a promise to pay over time with interest. Fundamentally, it’s the exchange between people with high time preference (borrowers who want money now) and people with low time preference (lenders who want more money later). And that’s OK. Who are borrowers? In the show they talk about personal borrowers. People who use credit cards, student loans, mortgages, car loans, personal loans, and so on. Of course there are corporate and government borrowers as well, but I want to focus on personal for now. Who are lenders? Banks, financial institutions, insurance companies, retirees, investors, central banks, anyone who holds a bond or a bond fund. Why do people want to wipe out debts? Unsurprisingly, the people who want to wipe out the debts are those that owe them. So if their debt were wiped out, the stuff they bought on their credit cards would still be in the living room, but the payments would disappear. The house would still be there, but free and clear. Those looming student loan payments would disappear. The cars might drive a little better without a car note weighing them down. The motivation is pretty obvious. But what about the other side? Banks would be obliterated. The debt is a liability to the borrower but an asset to the bank. Without those assets, the “solvency” of a bank is annihilated. Oh and by the way, your bank account balance is a bank’s liability. If the bank doesn’t have any assets to pay for its liabilities, your bank accounts goes poof along with the debt. The financial institutions like your car lenders would have spent all the money to enable the (former) borrowers to buy the cars, but the revenue coming back in would disappear. Then the lines of credit between the financial institutions and the commercial banks would also be gone, so the financial companies would close up shop. Insurance companies keep most of their assets in relatively safe loan instruments, so their capital to payout on claims would disappear. […]

Getting Real About My Health

So the last several years have been… challenging… for my health. My day job keeps me sitting at my computer all day. Kids being born has wreaked havoc on my sleep, although that is finally getting better. Said day job and unhealthy food habits have really packed on the pounds. And I had gall bladder surgery about a year ago. The bottom line is that over the last 5 or so years I’ve gained about 50 pounds. So last week I decided to go back to my healthier ways. I am going full keto/paleo and doing intermitent fasting on a daily basis. One could argue that it’s not so intermittent if you do it every day, but whatever. This morning I went to and got a DEXA scan, a basal metabolic rate test, and a VO2 max test. Bottom line is I am 44% fat (!) and my cardio is crap. My plan last week was to get used to my new diet for about a month and then start working out again. I should probably stick with that, but now I want to start working out immediately. We’ll see how it goes I guess.

401k vs Taxable Accounts – The Retirement Showdown

Well that was suitably dramatic. I made this video that walks through an analysis I did that compares investing through a 401k and investing through a taxable brokerage account. You always hear that you should max out your tax deferred accounts before doing anything else. But is that always true? Check out the spreadsheet for yourself: Basically, it comes down to the particulars.

BP Stock 6 Years Later – Does Dividend Reinvestment Work?

Another day, another argument on reddit about investing and logical fallacies. I was pointing out to someone that the decision to hold a stock is the same as the decision to buy a stock because of opportunity cost. Some people didn’t believe me, so I ended up writing this rant: es, but here are some examples that might make it clearer. Let’s look at BP stock. In March of 2010, the stock was trading at 57. Then the deepwater spill happened. In April of 2010, the stock was at 29. It was a huge drop. Holding BP in April 2010 is mathematically equivalent to buying BP in April 2010. Whatever you paid for the stock in the past is irrelevant (except for tax purposes). To think otherwise is to fall victim to the sunk cost fallacy. So if you were a holder/buyer in those dark days of horrendous press for BP, then you assumed either explicitly or implicitly that the then-current stock price did not reflect the long term value of holding the stock when factoring in dividends and capital gains. If, on the other hand, you believed that these events were going to permanently reduce the prospects for BP’s stock, then it would be wiser to sell and move the money into something with a brighter future. In this particular case we can see several years later that the person who held would have made about $13 in dividends (not reinvested) and about $5 in capital gains for a total return of 62%. If he had dumped the stock and bought the S&P 500, he would have doubled his money…. And the point about dividends not being reinvested got me thinking. I’ve been reading my friend Matthew Paulson’s book on dividend growth investing. So what would happen if you were holding BP through the Deepwater Horizon spill, all the associated bad press, and kept reinvesting dividends? Let’s take a look at the chart:   We can see that after the spill the stock crashed by about 50% and dividends were suspended for a few quarters. This is a disaster for any dividend buyer. So before we run the numbers on BP, let’s look at what has happened with the overall market since that time. So if your hypothetical BP holder had dumped everything and bought an S&P 500 index fund, a hypothetical $10,000 would have grown to $21,930. Now let’s run the numbers on BP and see what would have happened if instead of selling, our intrepid investor persevered and held the stock while reinvesting all dividends. If our investor friend had $10,000 worth of BP at the bottom of $28.88/share then he would own 347 shares. So here’s what happened… The $10,000 grew to $15,858. As it turns out with the price of oil crashing over the last few years in general, it would have been better to dump the stock and buy the index in terms of total return. But another way to look at […]

Scrivening 2016 07 05

Today Today I am following through with doing my 30 minute treadmill for my off-days of training. I forgot to pack my shoes, so I’ll be barefooting it again. After that comes a meeting with my accountability partner from Rhodium and then a day of taxes and PBNs. I decided to hire Josh to start my low-end PBN funnel, which should be an exciting project. Jean’s team is doing the writing and posting for my PBNs and I am super excited to use this as a solution. The content is decent and they do a pretty good job of uploading with pictures and everything. For such a low rate it’s a huge headache off my side of things. Yesterday Yesterday was pretty interesing. It was the 4th of July and I spent most of it in the office like I usually do. Since the tax office was closed, I was able to get lots of odds and ends done while talking with my team. This was a great opportunity to make sure we were all on the same page. As my team and scope of projects gets larger, the job of managing and keeping things on track becomes more complex. What I would like to do is get my systems more firmly established to reduce the time involved. I also have to develop better tracking systems in order to be able to see things at a glance. J took S to the fireworks show even after I told J that S would get scared. She did, and they had to go home after only a couple minutes. S kept saying “fireworks say, ‘boom boom boom!’” Which was adorable.

Scrivening 2016 06 16

In today’s reading, Robbins was discussing value sets and how important it is to make sure what you are doing is in alignment with your values. To do otherwise is to cause yourself misery. Part of the exercise is to write down your top 10 values. These are mine at this particular point in time: freedom honesty love contribution curiosity building health self-reliance planning conservation Putting it down this way really gives me clarity about what areas I need to develop. In terms of how fulfilled each value is, I’d say my list looks like this: freedom – 30% honesty – 100% love – 100% contribution – 50% curiosity – 100% building – 70% health – 20% self-reliance – 50% planning – 50% conservation – 10% A lot of these work together. I can fulfill my values for curiosity, building, and planning to achieve more freedom. So that’s a 4-bagger. Health I am working on by hiring a personal trainer and getting my diet in check. My biggest area for development is conservation. I think until I develop my permaculture homesteads that area will continue to be lacking. But overall this gives me a great view on what to do with new activities to check if they are in alignment with my values.

Scrivening 2016 06 15

Yesterday I stumbled across 2 very important videos on YouTube. The first one was from a neuroscientist in the UK who was making the point that physiology -> emotion -> feeling -> thinking -> doing -> results. The second one was a documentary on Wim Hof, the Iceman. In the first video, David, the speaker, was saying that to really change your life, you have to change how you feel. Interestingly, this lines up perfectly with what I’ve been reading in the Tony Robbins book. In order to get control over your feeling, you start at the base of everything with your physiology. And the single most important element in your physiology is your heartbeat. So his method is to control your heartbeat and train it into coherence through rhythmic breathing. Having done lots of breathing exercises in the past, I know this works for entraining the heart. Once the heartbeat is in coherence, the emotion (summation of physical states) becomes coherent. Once the emotion is coherent, we feel positive (expressing DHEA in the brain). This positive can be relaxed or excitatory. So long as it is positive, it will work. In the state of positive feeling, our thoughts will be more beneficial, more creative, and more results oriented. From there we not only know what actions to do, but will in fact do them. In the second video, the Iceman documentary, Wim Hof explains how his breathing method allows us to interact more directly with our brain stem and gain more control over our hormonal systems. This is what enables him to climb mountains without and clothing, sit in ice baths for hours, and so on. More importantly, anybody can do this with the proper breathing and focus. So exerting control over your endocrine system to release more adrenaline should enable you to have better exercise and overall health. What I especially love about all of this is that it dovetails nicely into the Miracle Morning method. The more I learn about human potential the more I realize that at the root of it all it’s very basic stuff and it follows the path of evolution. Breathe, Move, Think, Do.

Why Demographic Trends Matter for Investments

I came across a short article on the Washington Post today that maps out the net migration patterns between states in the US and shows us this map: And opportunity to talk about the importance of demographic trends when picking investments. If we look at the map, we see that some of the most attractive states in the country are Texas, Georgia and Florida. It’s worth going through the thought experiment to try to figure out why that is. All three of the states are in the South. That means that they have warmer weather, then places like the Northeast. But that’s not really a sufficient explanation as to why these places more attractive. California, New Mexico, and Arizona all have warm weather and they do not have the humidity that the American South does. So what else might be attractive about these places? For one, taxes. Both Texas and Florida do not have a state income tax. Georgia does have an income tax, but it’s middle-of-the-road as far as state taxes go. It’s about half the level of California, for example. Another factor that goes hand-in-hand with taxes is the overall business climate. These three states, Texas, Florida, and Georgia are all very business friendly. Texas and Georgia. For example, are the two most landlord friendly states in the country. In Georgia, you can have a nonpaying tenant out and evicted in four weeks and in Texas, you can do it in three. In this regard, Florida is not as business friendly as the other two. For whatever combination of reasons, people are moving towards Texas, Georgia, and Florida. So what the design mean for your business? There’s a saying out there that says demographics is destiny. If you do any kind of business or any kind of investing, you need other people to buy your products, services or your investment’s production. So it’s a matter of basic sense that you want to put your money into places where people are going towards rather than where people are leaving from. The great thing about a map like this is that it shows us the overall effect of attractiveness for state. It would be even more useful if it was broken down on the city or county level. But this is a good first approximation. So let’s say you want to start building your rental real estate empire. Where do you go? Fortune for me, I have home bases in both Georgia and Florida. So when I buy rental houses, that’s where I go. You might be interested more in Texas. Texas is an attractive state as receiver in the map, it’s got a great job situation overall. The oil refining business that is centered in Texas along the Gulf Coast is fairly robust even with the dramatic swings in the price of oil. So a stable and growing jobs base is always good for providing tenants for you. You might be interested in real estate or you might not. […]

What are the Risks of Buying Dividend Paying Stocks?

I got another question about dividend paying stocks on quora: Why wouldn’t I buy dividend paying stocks? Are there risks? So I took a minute this morning and recorded a video showing what kind of risks, you need to look out for. There are many steps that have to occur in order for you to receive a steady dividend. First, the company has to make a sale. Then that sale has to convert into actual earnings for the corporation. After that, the company has to decide to pay out the dividend. And finally, the company has to elect to pay the dividend. After all that you receive money in your account. Each one of these steps presents risk. Risk #1: Sales Growth Are the sales for this companies business growing? Are the following question mark on a steady? How reliable is a sales forecast into the future? These are questions you need to have answers to. Any projection about the future is going to have uncertainty, but you want to gain as much certainty and clarity as possible. Risk #2: Earnings Earnings are a much debated topic in the stock market world. Over the past few years, we’ve seen the rise of non-GAAP accounting as a major practice. What this means is that the company will report earnings excluding what they call one-time charges and other accounting gimmicks. The issue is that if company has one-time charges are year, then they are not really one-time charges. You have to know how much money the company is really clearing out of the sales. Some people look to Free Cash Flow as a better measurement of this than earnings. So you have to do your due diligence in order to make sure that the earnings of the company are steady, growing, or falling. Hopefully, the earnings are growing over time because this is where your dividends come from. If a company decides to pay dividends in excess of real earnings, that means that that they are eating into their balance sheet. They are disturbing cash that they cannot afford to lose. If the company does that long enough it will go bankrupt. See you have to make sure on your end that the earnings will support the dividend payout. Some types of companies like real estate investment trusts (REITs) are required to distribute at least 90% of their earnings, but other than that, most companies will distribute a much smaller percentage of their earnings. Risk #3: Dividend Payouts When a company chooses to pay dividend, it creates a set of problems for itself from a public relations perspective. Any company wants to have the highest price possible in order to attract investment over time so that current shareholders can sell into the market at a profit. Paying a dividend is one way to attract investors because a lot of investors view dividends as more rewarding and safer than playing capital speculation. And those investors are correct. The issue comes in when […]