Dear Graduating Class of 2021

Another crazy, pandemic-altered scholastic year in the books.  One thing still the same, however, is my annual message to graduates.....

To the graduating class of 2021,

Wow, what a final year of school that was, huh?!  You probably spent more of it learning online than in a classroom or lecture hall, depending on whether you lived in a 'red' state or a 'blue' state.  (You'll learn more about the color of states one day, as we run up to the second civil war.)

Was the year really so bad?  For you and for your parents, yes, yes it was.  Regardless of whether you were in high school or college, not being able to fully enjoy all of the curricular and extra curricular of that senior year had to suck.

On the other hand, your sacrifice, such as it was, allowed academic society to function during a pandemic in a way that didn't endanger more lives.  You aren't getting a medal for that, and not many will remember how your senior year was less than it should have been because of it.

Which brings me to my main message -- get used to it.  Meaning get used to not being praised, much less rewarded, for making sacrifices.

This is going to be a theme for most of your life.  Your work bosses are going to take the praise you want, and give the grief you don't want.  That's also going to suck, but like the pandemic, it also won't last.

If you keep your nose to the grindstone and work hard, you'll eventually be noticed and get what's coming to you.  And another silver lining is, you now have a headstart on how to excel by working remotely, the new way of the future.

Let me put it into a different perspective:  The generations before you also had to make sacrifices that ruined their senior years.  These included things like living through -- and being victims of -- race oppression, economic depression, and war.  Imagine having to go overseas to dodge bullets instead of going to homecoming dances or kegger parties.

Unfortunately, those real, major sacrifices didn't garner them the praise they deserved either.  (Some of them did get medals, like purple hearts, if you consider that an acceptable reward for being hurt, or losing a limb.)

So, Buck Up, Class of 2021!  You got the shaft, similar to the Class of 2020, but at least you got a graduation ceremony.  And it doesn't give you permission to live in your parents' basement forever.

Can't Spell Old-Fogie Without G-O-L-F

We interrupt our regularly scheduled blog post for a message on recent news.  At age 50, somebody just won the PGA Championship, one of the four most important golf tournaments in the world.

Phil Mickelson, nearly age 51, did this a few days ago.  He's the oldest person to ever win a major golf championship.  This is a tremendous feel-good story for both sports and aging.

Over the past two decades, golf has become a sport that requires significant power and clubhead speed to be played at an elite level.  On most American golf courses, it's a huge advantage to be able to hit a golf ball longer.  The course where Mickelson won, the Kiawah Island Ocean Course in South Carolina, was played at one of the longest yardages of any tournament in history.

Just as a late-30-ish person begins to lose their agility and skill at most sports, there's no way a guy in his 50s should be able to hit the ball as far as others that are 10, 20, even 30 years younger.  But Mickelson has stayed healthy and flexible and powerful enough to do it.  That he still happens to have one of the best chipping and putting games in the world is no small feat, either.

To top it off, Mickelson has long been a crowd favorite for both boomers and youngsters, so it was a very popular victory.  He's been my favorite golfer to follow in the past 30 years, going back to when my old favorite growing up, Jack Nicklaus, stopped seriously competing in the late 1980s as he was approaching age 50.

It proves that golf is a sport that can be played competitively, even at the highest level, at an age well beyond what can be done in other legitimate sports.  (A possible exception is bowling, or maybe billiards or darts, but if you can play them in a bar, is it really a legitimate sport?)

It also proves, once again, that people can accomplish great things throughout their lives, not just when they're 'young' whatever that means.

Berky Meeting Nuggets 2021

Unfortunately again this year, only virtual attendance was allowed at the Berkshire Hathaway annual shareholders meeting.  It was still quite different than last year, when the meeting was held in an empty arena in Omaha.

This year, the meeting was held in a studio / ballroom in Los Angeles, to make it easier for Charlie Munger to attend and participate.  Everybody missed having him around to make his smart aleck comments last year, including Warren Buffett.

I watched the entire stream again, almost five hours of Buffett and Munger answering questions submitted by email.  Buffett first kicked off the meeting by noting that not one of the 20 top companies by market capitalization 30 years ago are still among the top 20 today.  The point being, no one knows how things are going to change in the coming years.

This year, more questions were directed or re-directed toward the co-COOs, Ajit Jain and Greg Abel, so we got to hear more from them.  Which leads to the biggest reveal from the meeting.....

Munger inadvertently mentioned that Greg, (not "Greg or Ajit") would maintain the Berky culture, implicitly admitting Abel would become the CEO.  Buffett confirmed this after the meeting, and while it was highly expected, it was the first public confirmation of something that has been a closely guarded secret for many years.

Aside from that slip of the tongue, the 97-year-old Munger didn't disappoint, sharing his disgust for things like cryptocurrencies, which he described as "contrary to the interests of civilization."  Both Buffett and Munger also held noted disdain for special purpose acquisition companies (SPACs), due to the self-interest of the participants over shareholders.  Same for new investing apps like Robinhood, which Buffett described as a "casino group that's joined the stock market."

Near the end, one of the best quotes came from Munger when he said about the past year, ""If you're not a little confused by what's going on, you don't understand it."

Buffett signed off by saying he hoped we could all get back together in person next year in Omaha.  I plan to be there.

Thinning The Herd Immunity

One of the more recent entries in the COVID-19 pandemic lexicon is 'vaccine hesitancy'.  This is the term for avoiding / refusing to receive a COVID-19 vaccination for a variety of reasons -- more on that later.

Vaccine hesitancy / avoidance / refusal has become the latest politicized issue in a pandemic full of them.  Republicans are generally rejecting vaccines while Democrats generally can't get vaccinated soon enough.  Unfortunately for both groups, not getting the COVID-19 vaccine is bad for everyone, since there will be no way to achieve herd immunity without a near 90% vaccination rate.

The reasons given for this hesitancy range from the ridiculous (the government is injecting people with tracking software) to the sublime (afraid of needles).  Regardless, the vaccine hesitancy group is, among other things, selfish.  They constitute a group of societal free-riders, essentially getting the benefits of a world where others are sacrificing, without making any sacrifices of their own. 

More unfortunately for the Rs in that group, however, is they will suffer the majority of future hospitalizations and death.  Pre-vaccine, everyone generally shared the consequences of those idiots who chose to behave recklessly (although front-line health care workers suffered more).  Post-vaccine, the harms of the COVID-19 virus will increasingly fall on the vaccine hesitant.

So, the pandemic outcomes are now bifurcating.  Those willing and able to get vaccinated will be OK, while the unwilling, science-denying, free-riders will eventually get the virus, and a certain percentage of them will be hospitalized and/or die.

Maybe herd immunity actually means we have to thin the herd somehow.

Let It Hit The Fan

Money.  In America, it's the number one reason why most people will do most things.  If you want to understand why adults are motivated to do things, follow the money.

Attention.  In America, it's the runner-up reason why most people will do most things.  If you want to understand why adults are motivated to do things besides for money, it's for attention, which is often monetized.  (See reason one.)

Is there a way to combine these two powerful motivators to accomplish something larger?  Absolutely.  And one of the main vehicles for this has to be the major organized sports leagues.

We've seen professional sports leagues and players, most notably from the NBA / WNBA, use their platforms to drive political and social change.  Just last year, players in those leagues so far as to boycott games in response to social unrest over the treatment of blacks in America.  It had limited economic impact due to the pandemic, but it got people's attention.

There are much better, broader examples from the past.  In the 1990s, states that didn't recognize MLK Day were eliminated as hosts for crown jewel sporting events.  (The NFL pulled the Super Bowl from Arizona.)  Something similar happened later in North Carolina and Indiana when those states passed anti-LGBTQ laws, and the leagues (along with the NCAA) avoided or pulled out from those states as hosts for events like the NBA All-Star game or the NCAA basketball tournament.

These actions also had a domino effect of making corporations not host conventions in those states.  Suddenly, when states realized the loss of revenue, not to mention the embarrassing attention, they got rid of those laws.

Examples like these highlight why organized sports leagues could be doing more now, as republican-led states pass anti-voting laws, and/or anti-LGBTQ laws.  If the NFL, NBA, NCAA, or Major League Baseball had their act together, they'd simply tell these states that they won't do business there, at least not outside of regular franchise operations.  An even more effective approach would be the players associations of the pro leagues boycotting games, ending the public's great desire to watch them.  Then things would hit the fan (pun intended!) although it would be a monetary sacrifice some players would not want to make.

This year, the Major League Baseball All-Star game is supposed to be in Atlanta, Georgia, the state most actively passing voter suppression laws.  They should move that game, and let the money and attention flow to states with smarter elected officials.  Then let's see what happens -- if the past is prologue, things will change fast.

Irony Is Wasted On The Stupid

Since the start of the year, states have been grappling with the procurement and end-user delivery of COVID-19 vaccines.  (States are doing this because there was no national plan, thanks to the incredible collection of dumbasses in the prior presidential administration.)  It's very similar to how the entire pandemic has been handled, which I've compared to the Wild West.  There are no laws, only unenforced guidelines that many people simply choose not to follow.

Most states / governors have tried to establish sensible vaccine distribution guidelines that seek to inoculate frontline healthcare workers and older-aged Americans.  However, some states have now decided to open vaccine eligibility to those under age 65 if they have an underlying health condition that heightens the risk of severe illness from COVID-19.  This seems benign enough until you look at what is considered (by our Centers for Disease Control and Prevention) to be a qualifying health condition.....

The most objectionable condition has to be those who currently or previously smoked cigarettes.  Those who choose to pollute their lungs, not not mention the air that we all breathe, get bumped up in this line.  What a travesty, spending a life-saving vaccine on people who are willingly shortening their lives every day of the week -- plus increasing everyone's health care costs while they're at it.  Bravo, CDC.

Another questionable condition has to be obesity.  Yes, I realize there are illness-based and genetically-based reasons why some people may become clinically obese. Even conceding that, this means many others who became obese simply by eating too much of the wrong things and not exercising, will be able to get a vaccination before others who made healthier choices.

Leave it to the government to nudge people away from living a healthy lifestyle by rewarding those who don't.  They should call it the 'anti-survival of the fittest' policy.

The bigger irony is, this pandemic would have hospitalized and killed many fewer Americans to begin with if its citizens had healthier diets / lifestyles. Now to add insult to injury, anyone who has spent a lifetime staying fit by eating right, not smoking, and being active, is going to pay a price for that by being made to wait to be vaccinated against a deadly virus.  Who knew that being healthy could be such a vice?

In the words of the great playwright Oscar Wilde, “Irony is wasted on the stupid.”

We're Not All Experts

I've been working in the retirement / investment planning world for a long time now.  I don't recall anyone I've ever talked to about retirement, meaning hundreds of people, expressing much confidence in their retirement planning.  There are just too many variables, and too many programs like social security and Medicare they don't understand.

However, when it comes to talking to many of those same people about investing, there is not only confidence, but more recently overconfidence about how to do things.  Why is that?  Consider a few macro-reasons:

1) Thanks to American innovation and capitalism, the stock market goes up over long periods of time.  It also goes down, sometimes sharply, for short periods of time, but people eventually forget about that short-term pain.  So, over long periods of time, they see their money grow, and they assume this means they're great investors.  In fact, all they've really done is to stumble into one of the greatest passive investment strategies there is -- put money in stocks, and do nothing.  This works fine, until retirement, when you no longer want too much invested in stocks.

2) The proliferation of financial media outlets in the past two decades has given people many opportunities to be 'enlightened' by so-called investing experts.  Watch enough TV or read enough on the internet, and soon people are convinced that they too, are experts by simply following the unsolicited advice of these other so-called experts.  If anyone actually tracked their results, they'd be disappointed, but rarely does anyone track the performance of a media-expert.  Also, no one wants to be inconvenienced by the truth.

3) A perfect pandemic storm that includes the introduction of no-fee securities trading, a massive surge in technology stocks, and social media platforms and influencers.  Many in the new 'work-from anywhere'  crowd have only been able to do this investing thing for a short time, during a prolonged market upswing.  At this point, they think the stock market and their investments only go up.  Their confirmation bias will ultimately lead them into one of the inevitable sharp short-term market corrections.  Unlike others, this millennial-heavy group isn't likely to have the patience or discipline to keep from exiting their positions.

Investing doesn't have to be complicated, but it decidedly isn't a simple thing.  The only sure thing is, being overconfident in one's ability to do it will lead to a bad outcome.