Time for my annual advice to graduating seniors. I'm going to once again concentrate on college-level seniors, but to high school graduates I have this reminder: You haven't accomplished anything. According to the census bureau, nearly 90% of U.S. citizens over age 25 have a high school education. Congrats for not being the 1 out of 10, if it makes you feel better. You know those graduation parties your parents threw to celebrate? Those weren't actually for you, they were for your parents and other relatives, who survived your vain teenage years. Call me in five years and we can talk about your accomplishments, if any.
As for our college graduates, I've decided I may have been too hard on you the past couple of years. If you've got a bachelor's degree but no job or plans for independent living, you may not be entirely to blame. It's clear there is another culprit, and I'm not referring to the economy. It's your parents.
That's right, your parents are at least partially to blame for your troubles. The children of the so-called 'greatest generation' have become the greatest coddlers.
You'd think that after hearing about our own parents winning World War II, then partaking in a mechanical and transportation revolution that put hard work at a premium, we would teach that same toughness and work ethic to our kids. Instead, we've gone the other way. We've excused your (in)actions, and often allowed you too much slack during college, where many of you now don't even attempt to find a full-time job until after graduation.
And there's no pressure to find a job, because we parents will do you graduates an even greater disservice by acting like we're your best friends. We bring you back in to room with us while you consume without cost or limit, halfheartedly looking for full-time work during the day while wholeheartedly going out with your other unemployed friends at night. Of course, you'll accept this offer -- why not? It isn't as if you have anything else to do.
This seems especially crazy to me, because when your parents were your age, moving back in with their parents would have been less than a last resort. Back then, college grads found a cheap apartment, a roommate (or two), a jalopy car, and a so-so job -- whatever it took to remain independent. Have you become so lazy and reliant on your parents' money that you aren't willing to do these things? For many of you, the answer is yes.
In summary, at your age, your grandparents were fighting a war, and your parents were on their own, possibly even married with children. Most of you graduates are about as far from that as you can be. So much for learning what you live.
So, it's up to you, graduates. Your parents have sold out to be your friends. Your friends have sold out to be your enablers. Unless you have a trust fund, you're going to have to pick yourself up by your bootstraps (have your parents tie them first), and self-start your way out into the big world.
Good luck. And remember, in the immortal words of Judge Smails from Caddyshack, "The world needs ditch-diggers, too."
Tuesday, May 27, 2014
Tuesday, May 20, 2014
Maintenance Required
This week I tweeted about how fed up I am with dog owners who never walk their dogs, and instead let them just pee and dump in their front or back yards. (The one good thing about this is, at least they aren't doing their business in MY yard.) Even though I've mentioned this issue on a prior occasion, I've decided I need to expand on this mini-rant.
If you buy a pet, and specifically here I will refer to a dog, you are going ALL IN. That means there will be a lot more to do than just have the dog sit in your lap or play with your kids on the lawn. It means you need to keep them fed, and healthy, and sheltered. And yes, you need to walk them probably twice a day.
You're an idiot if you buy your kids a dog and just expect them to take care of this. Ain't gonna happen. Oh sure, it'll work for a few weeks or maybe months, but eventually the kids realize it's a chore and give up on it. That means the primary dog-walker is going to be the adult(s) in the house, unless you hire it out.
If you aren't willing to walk your dog in the elements on a daily basis (even factoring in a few days when it simply isn't possible), then don't buy a dog, dummy. Find another form of companionship -- it will be better for both you and the dog.
And while I'm at it, I'm going to throw in the same sort of logic for residential homeowner lawns. If you aren't going to take care of your lawn, please don't buy a house with a lawn. Or hire someone else to take care of it for you.
This is especially true if you live in my neighborhood, effectively de-valuing my property by your lack of attention to yard work. At least I have the ability to contact the weed commissioner about you, which I've been known to do for repeat offenders.
In summary, don't buy things that require regular maintenance, and then refuse to maintain them.
If you buy a pet, and specifically here I will refer to a dog, you are going ALL IN. That means there will be a lot more to do than just have the dog sit in your lap or play with your kids on the lawn. It means you need to keep them fed, and healthy, and sheltered. And yes, you need to walk them probably twice a day.
You're an idiot if you buy your kids a dog and just expect them to take care of this. Ain't gonna happen. Oh sure, it'll work for a few weeks or maybe months, but eventually the kids realize it's a chore and give up on it. That means the primary dog-walker is going to be the adult(s) in the house, unless you hire it out.
If you aren't willing to walk your dog in the elements on a daily basis (even factoring in a few days when it simply isn't possible), then don't buy a dog, dummy. Find another form of companionship -- it will be better for both you and the dog.
And while I'm at it, I'm going to throw in the same sort of logic for residential homeowner lawns. If you aren't going to take care of your lawn, please don't buy a house with a lawn. Or hire someone else to take care of it for you.
This is especially true if you live in my neighborhood, effectively de-valuing my property by your lack of attention to yard work. At least I have the ability to contact the weed commissioner about you, which I've been known to do for repeat offenders.
In summary, don't buy things that require regular maintenance, and then refuse to maintain them.
Tuesday, May 13, 2014
Berky Meeting Nuggets 2014 (Abridged)
For the first time in longer than I can remember, I wasn't able to attend this year's Berkshire Hathaway annual meeting. Warren Buffett and Charlie Munger went ahead without me this year.
Here's one meeting summary. Here's another. Both are good, but unfortunately, both are largely devoid of the humorous interplay between Buffett and Munger as they answered questions.
They no doubt missed me.
Here's one meeting summary. Here's another. Both are good, but unfortunately, both are largely devoid of the humorous interplay between Buffett and Munger as they answered questions.
They no doubt missed me.
Tuesday, May 6, 2014
A Fitness Problem
Central Iowa has a fitness problem. But not like you might think.
In the next few weeks, LifeTime Fitness is going to open a huge franchised health club in suburban Des Moines. This is the latest of many other large 'full-service' fitness facilities in the metro area, including Prairie Life Fitness, Seven Flags Fitness, Aspen Athletic Club, Fitness World West, plus several newer YMCAs that exist in and around the city.
In the meantime, we have a variety of other not-quite-full service health facilities, such as Planet Fitness or CrossFit Des Moines. Of course, we also have a bunch of 24-hour self-service options, like Anytime Fitness or Snap Fitness.
We also have all kinds of other wellness entities (some with multiple locations and many locally-owned) that actually exist for various boutique exercise classes, including Farrell's Extreme Bodyshaping or Kosama, to name two of more than 20.
So in a metro area of about 300,000, we are overrun with health clubs. Unfortunately, we are not overrun with healthy looking people.
This begs the question, how do all of these fitness facilities make enough money to exist? The only logical conclusion I can come up with is, this is an industry that is given money in return for nothing. Think about it -- thousands of people pay monthly and/or annual membership fees to partake in the venue and/or classes, and then inevitably many of them never actually show up.
This is clearly a great business model, offering a pre-paid service that is never actually performed, with no guarantee of a better outcome. As a fee-based financial advisor, the cynical side of me would say this business model is a lot that of a commission-based financial advisor!
In the end, not all of these fitness places are going to make it. That's good, because later this year I'll be looking to buy some excellent used exercise equipment.
In the next few weeks, LifeTime Fitness is going to open a huge franchised health club in suburban Des Moines. This is the latest of many other large 'full-service' fitness facilities in the metro area, including Prairie Life Fitness, Seven Flags Fitness, Aspen Athletic Club, Fitness World West, plus several newer YMCAs that exist in and around the city.
In the meantime, we have a variety of other not-quite-full service health facilities, such as Planet Fitness or CrossFit Des Moines. Of course, we also have a bunch of 24-hour self-service options, like Anytime Fitness or Snap Fitness.
We also have all kinds of other wellness entities (some with multiple locations and many locally-owned) that actually exist for various boutique exercise classes, including Farrell's Extreme Bodyshaping or Kosama, to name two of more than 20.
So in a metro area of about 300,000, we are overrun with health clubs. Unfortunately, we are not overrun with healthy looking people.
This begs the question, how do all of these fitness facilities make enough money to exist? The only logical conclusion I can come up with is, this is an industry that is given money in return for nothing. Think about it -- thousands of people pay monthly and/or annual membership fees to partake in the venue and/or classes, and then inevitably many of them never actually show up.
This is clearly a great business model, offering a pre-paid service that is never actually performed, with no guarantee of a better outcome. As a fee-based financial advisor, the cynical side of me would say this business model is a lot that of a commission-based financial advisor!
In the end, not all of these fitness places are going to make it. That's good, because later this year I'll be looking to buy some excellent used exercise equipment.
Monday, April 28, 2014
(Un)American Pickers
First, a lesson on stock dispersion in investing.
Low stock dispersion means that stocks are generally moving in the same direction. High stock dispersion means that individual stocks are headed in more unpredictable directions, as has been the case so far in 2014. While the so-called financial experts are always calling it a ‘stock picker’s market’ (because they make money on trading), they are louder about it during those periods of high dispersion.
If stocks have low dispersion, presumably an active stock picker should find it more difficult to beat a relative benchmark index. Conversely, when stocks are acting more independent of one another, there should be more opportunity for skillful (or lucky) investors to outperform. Of course, there is also a greater opportunity for the less skillful (or unlucky) investor to underperform.
A new study titled Dispersion: Measuring Market Opportunity, by S&P Dow Jones, suggests there is no evidence to support the notion that stock picking is easier or better done when there is wide dispersion among individual stock returns. In fact, the data suggest the probability that actively managed mutual funds will outperform the market (already a less than 50% chance after expenses) is no higher during periods of high dispersion than low dispersion.
It all makes sense. Why should a greater percentage of active fund managers outperform during periods of high dispersion? Their skill doesn't suddenly increase during these periods.
Money managers who masquerade as financial advisors have lots of marketing ploys they use when promoting their services, and saying it’s a ‘stock picker’s market’ is among the most used. But the truth is the same as always – there’s no extra benefit to the guesswork of active management. Use a passive, index-type approach to investing, and you’ll be farther ahead in the long run.
Low stock dispersion means that stocks are generally moving in the same direction. High stock dispersion means that individual stocks are headed in more unpredictable directions, as has been the case so far in 2014. While the so-called financial experts are always calling it a ‘stock picker’s market’ (because they make money on trading), they are louder about it during those periods of high dispersion.
If stocks have low dispersion, presumably an active stock picker should find it more difficult to beat a relative benchmark index. Conversely, when stocks are acting more independent of one another, there should be more opportunity for skillful (or lucky) investors to outperform. Of course, there is also a greater opportunity for the less skillful (or unlucky) investor to underperform.
A new study titled Dispersion: Measuring Market Opportunity, by S&P Dow Jones, suggests there is no evidence to support the notion that stock picking is easier or better done when there is wide dispersion among individual stock returns. In fact, the data suggest the probability that actively managed mutual funds will outperform the market (already a less than 50% chance after expenses) is no higher during periods of high dispersion than low dispersion.
It all makes sense. Why should a greater percentage of active fund managers outperform during periods of high dispersion? Their skill doesn't suddenly increase during these periods.
Money managers who masquerade as financial advisors have lots of marketing ploys they use when promoting their services, and saying it’s a ‘stock picker’s market’ is among the most used. But the truth is the same as always – there’s no extra benefit to the guesswork of active management. Use a passive, index-type approach to investing, and you’ll be farther ahead in the long run.
Friday, April 18, 2014
Swimsuit Power
When I was around 10 years old, my parents acceded to my request to subscribe to Sports Illustrated magazine. In those days, this was one of the only ways to get national sports information beyond a daily paper or local newscast, plus get good photos illustrating the action.
Even back then, once a year in February, SI published a swimsuit edition. There really wasn't much to it then, in the 1970s. Kind of a boring issue, really, until 1978, when Cheryl Tiegs and her fishnet top created a controversy that would quickly go viral by today's standards. Short-term, this meant a lot of canceled subscriptions for SI; long-term, it meant that annual edition would become a cultural icon.
This past February, SI published its 50th anniversary swimsuit edition. I just bought it this week. (While I stopped subscribing to SI several years ago after a run of about 30 years, I've always purchased the swimsuit issue -- to keep up on the pop culture of it!) Because of the anniversary, SI had photos of the cover models it made famous over the past 50 years, along with their comments about how being on the cover changed their lives.
Here's the gist: Many of the models mentioned how SI not only launched them to supermodel status, but also how they were able to parlay that fame and fortune to help others. Not only was this done through charity work, but also by the way SI empowered them -- they felt their success helped other women know they could be successful in their endeavors.
I loved reading this. So many times over the years people would criticize SI for how the swimsuit issue 'exploited' women. I received that comment many times from others for just owning that particular magazine. But my reply was basically always the same, which was to assert that these women are the opposite of exploited. They are willing and wealthy and healthy, and how could that be a bad thing for other women?
Maybe I'm not able to comprehend the gender-specific argument, but you can bet if I get that exploitation argument anytime soon, I'll be using the 50th anniversary swimsuit edition to be its own defense.
Even back then, once a year in February, SI published a swimsuit edition. There really wasn't much to it then, in the 1970s. Kind of a boring issue, really, until 1978, when Cheryl Tiegs and her fishnet top created a controversy that would quickly go viral by today's standards. Short-term, this meant a lot of canceled subscriptions for SI; long-term, it meant that annual edition would become a cultural icon.
This past February, SI published its 50th anniversary swimsuit edition. I just bought it this week. (While I stopped subscribing to SI several years ago after a run of about 30 years, I've always purchased the swimsuit issue -- to keep up on the pop culture of it!) Because of the anniversary, SI had photos of the cover models it made famous over the past 50 years, along with their comments about how being on the cover changed their lives.
Here's the gist: Many of the models mentioned how SI not only launched them to supermodel status, but also how they were able to parlay that fame and fortune to help others. Not only was this done through charity work, but also by the way SI empowered them -- they felt their success helped other women know they could be successful in their endeavors.
I loved reading this. So many times over the years people would criticize SI for how the swimsuit issue 'exploited' women. I received that comment many times from others for just owning that particular magazine. But my reply was basically always the same, which was to assert that these women are the opposite of exploited. They are willing and wealthy and healthy, and how could that be a bad thing for other women?
Maybe I'm not able to comprehend the gender-specific argument, but you can bet if I get that exploitation argument anytime soon, I'll be using the 50th anniversary swimsuit edition to be its own defense.
Thursday, April 10, 2014
Terrorists > VEISHEA
For the uninitiated, VEISHEA is an annual week-long celebration held each spring on the campus of Iowa State University. VEISHEA is an acronym for the original 5 colleges of the university: Veterinary Medicine, Engineering, Industrial Science, Home Economics, Agriculture. It's presumably the largest student run festival in the nation,
VEISHEA has been marred in the past two decades by off-campus, late night, alcohol-induced, party-goer rioting on the last weekend, causing mostly minor but some significant damage and injuries. The last time it had happened was 2004, and the university president at the time canceled VEISHEA for the following year. Another riot happened again this week (this time early in the week), and in response the new university president, Steven Leath, suspended the rest of -- which is to say most of -- VEISHEA for the year.
Lots of losers in this, but hands down the biggest losers in all of it are.....the ISU university presidents.
While there is no defending the instigators or participants in these, neither is there a rational defense of canceling VEISHEA in response. By all accounts, it wasn't so much a riot as a social-media inspired mob scene with a few drunken idiots. To make matters worse, Leath acts as if his action has the full support of the university leadership.
Let's drop the public posturing and consider the facts that Leath is ignoring, and would like others to ignore:
1) He says he's thinking of the institution and safety in making his decision to cancel, but what exactly does he mean by institution? The administration? The faculty? Because the university institution doesn't exist without the students, and the vast majority of them want VEISHEA to go on. So do the surrounding campus businesses.
2) Speaking of the administration and faculty, while they made be around for dozens of VEISHEA festivals (thank you, tenure!), the students are only there for a few. Many of them volunteer and put many hours of work into it. Now Leath has taken away the fruits of their labor, because of a few folks who might not even be students. It's bad enough that the majority are made to suffer for the few in elementary school or high school, but this is college. C'mon, man.
3) By canceling VEISHEA, Leath has unquestionably increased the probability of more trouble. Now there will be no alcohol-free alternative activities, and more students are likely to attended the off-campus parties, which have always been a source of mob-like behavior. This probability has already become reality, as police have stated that in the following two days after the 'riot' there have been about twice the usual off-campus incidents reported than in past years. (Note: This year's riot was in part a result of police closing down an off-campus party. Is it really that hard for Leath and his institutional cronies to put 2 and 2 together?)
4) Leath could easily allow VEISHEA to commence while law enforcement reviews the volumes of video evidence (something other riots didn't have), and both they and he can ultimately take action against the few who deserve it. Instead, he chose to rush to judgement, and punish the many who don't deserve it. When are educational institutions, at any level, going to accept that they effectively govern behavior that goes on beyond their physical territory?
This continues a pattern of questionable, socially-conservative decisions from Leath. He was the pansy for the conservatives on the state board of regents a year ago in stopping the Harkin Institute at Iowa State, and by not allowing freedom in their research, valuable senatorial papers will now go to Drake University instead. And no one has any idea why he's single-handedly prohibited a player from participating on the men's basketball team this year, even though said previously-suspended player has been cleared by the legal system.
How much longer before the contributing alumni just suspend their donations in the same way Leath seems to arbitrarily suspend things? Maybe they should -- then I'm guessing he'll suddenly find ways to make things work, instead of thinking of reasons for things to not work. I noticed one alumnus already commenting that if there was a student uprising at a sporting event, the president wouldn't cancel the rest of the athletic season. But apparently, canceling VEISHEA is OK, because it only hurts students and not the big donor fans.
By canceling VEISHEA and threatening its future, Leath and his predecessor have simply allowed the terrorists to win at the expense of the students. At Iowa State, this is called leadership, but it's really just retreat.
VEISHEA has been marred in the past two decades by off-campus, late night, alcohol-induced, party-goer rioting on the last weekend, causing mostly minor but some significant damage and injuries. The last time it had happened was 2004, and the university president at the time canceled VEISHEA for the following year. Another riot happened again this week (this time early in the week), and in response the new university president, Steven Leath, suspended the rest of -- which is to say most of -- VEISHEA for the year.
Lots of losers in this, but hands down the biggest losers in all of it are.....the ISU university presidents.
While there is no defending the instigators or participants in these, neither is there a rational defense of canceling VEISHEA in response. By all accounts, it wasn't so much a riot as a social-media inspired mob scene with a few drunken idiots. To make matters worse, Leath acts as if his action has the full support of the university leadership.
Let's drop the public posturing and consider the facts that Leath is ignoring, and would like others to ignore:
1) He says he's thinking of the institution and safety in making his decision to cancel, but what exactly does he mean by institution? The administration? The faculty? Because the university institution doesn't exist without the students, and the vast majority of them want VEISHEA to go on. So do the surrounding campus businesses.
2) Speaking of the administration and faculty, while they made be around for dozens of VEISHEA festivals (thank you, tenure!), the students are only there for a few. Many of them volunteer and put many hours of work into it. Now Leath has taken away the fruits of their labor, because of a few folks who might not even be students. It's bad enough that the majority are made to suffer for the few in elementary school or high school, but this is college. C'mon, man.
3) By canceling VEISHEA, Leath has unquestionably increased the probability of more trouble. Now there will be no alcohol-free alternative activities, and more students are likely to attended the off-campus parties, which have always been a source of mob-like behavior. This probability has already become reality, as police have stated that in the following two days after the 'riot' there have been about twice the usual off-campus incidents reported than in past years. (Note: This year's riot was in part a result of police closing down an off-campus party. Is it really that hard for Leath and his institutional cronies to put 2 and 2 together?)
4) Leath could easily allow VEISHEA to commence while law enforcement reviews the volumes of video evidence (something other riots didn't have), and both they and he can ultimately take action against the few who deserve it. Instead, he chose to rush to judgement, and punish the many who don't deserve it. When are educational institutions, at any level, going to accept that they effectively govern behavior that goes on beyond their physical territory?
This continues a pattern of questionable, socially-conservative decisions from Leath. He was the pansy for the conservatives on the state board of regents a year ago in stopping the Harkin Institute at Iowa State, and by not allowing freedom in their research, valuable senatorial papers will now go to Drake University instead. And no one has any idea why he's single-handedly prohibited a player from participating on the men's basketball team this year, even though said previously-suspended player has been cleared by the legal system.
How much longer before the contributing alumni just suspend their donations in the same way Leath seems to arbitrarily suspend things? Maybe they should -- then I'm guessing he'll suddenly find ways to make things work, instead of thinking of reasons for things to not work. I noticed one alumnus already commenting that if there was a student uprising at a sporting event, the president wouldn't cancel the rest of the athletic season. But apparently, canceling VEISHEA is OK, because it only hurts students and not the big donor fans.
By canceling VEISHEA and threatening its future, Leath and his predecessor have simply allowed the terrorists to win at the expense of the students. At Iowa State, this is called leadership, but it's really just retreat.
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