People want to move up in status rather than increase their survival chances

[william the wie]

Most people realize this about themselves and many realize that:

Status does not buy gas and groceries, lottery winners generally go broke and debt is what can make you homeless.

The higher status choice is usually the wrong choice for survival, getting nicer toys with debt is the express lane to skid row or living in your car.

Starting with your smallest debt and paying it off first is less understood but that is the most effective way to get out of debt getting rid of the mortgage and car payments is the last thing to pay off so why do people value the survival of themselves and their offspring so little?

 

[william the wie]

The standard answer to the first question is that such behavior makes sense to remnant hunter-gatherers and my point is that it is suicidally stupid in the modern era. It is suicidal because of oversimplification. According to the standard model of investing, the efficient market hypothesis, (EMH) the following things are mythical:

Technical analysis as used with great success by Value Line since 1931. It is pricey and some of the portfolios it uses like the one issue portfolio are down right scary but it does deliver the goods.

Mechanical timing systems such as don't invest during he Jewish high holy days or sell in May and walk away but always remember to buy in November. Both of these timing systems do work in reality as back testing does demonstrate. The point being that it takes an 11% gain to offset a 10% loss so loss avoidance is very important. These timing mechanisms work in the southern hemisphere and in countries where Jews are next to non-existent. That blows up effectively all criticisms so far tried.

Then there is the fundamentalist exemption. Warren Buffett's mentor Benjamin Graham beat the Dow 4 to 1 in the period 1926-56. The former investors in Graham-Newman thought rightly that Buffett was a reasonably good substitute for Graham and piled into what would become Berkshire Hathaway. Less famously Graham's other students also did well, for the most part.

"Beating the Dow" by Michael O'Higgins works and drives EMH believers totally crazy and like Value Line he has a one issue portfolio that is terrifying. (Cheap to buy used so buy a copy of the book and read it before you invest.

Then there are DIPs (Direct Investment Plans) Capital intensive industries such as utilities will sometimes sell you shares at a discount to market for up to 5%.

"Get Rich with Dividends" by Lictenfeld is another model that works best at driving Finance professors insane. But this is another one that you should buy from an online used bookstore. Gaining 0.5-2% while the S&P is going down 5% is shocking. Also increasing dividends plus high dividends have two entire mechanisms Dividend Champions and Dividend Aristocrats to help you sell high so this is super charged.

Robert Shiller a Nobel prize winning economist developed the percent earnings growth (PEG) model of undervaluation PE (Price to Earnings)/PEG>1 means an issue is a good buy.

All of the above is not supposed to happen

 

[william the wie]

What is dangerous to your well being, your child's return on education and very survival is that the politicians, the courts and the bureaucracy have bought into the idea that status is good and the Efficient Market Hypothesis is right to a nearly psychotic degree. The net present value of many college degrees from well known schools are negative, that in turn means that they are money pits. This outcome is based on the principle of settled law which in the case of the corporations, courts and congress normally means the use of wildly out of date Data. And this kind of political malpractice is often absurd. Take the Blue Wall/Red edge split.

In the Northeast and industrial Mid-west the Erie and Michigan-Illinois (the canal link of the Great Lakes to the Missouri river) canals were bypassed by the St.Lawrence Seaway in 1959 and ripped much of the economic heart out of NYC and Chicago.

The reversion of the Panama canal to Panama in 1979 has meant that increasing improvements in the canal results in the steady bypassing of the mountain ranges of the west coast to end up in the very much cheaper Mississippi barge network.

The results of these changes have made the Blue Wall an increasingly bad place to live and those that can are increasingly leaving but the deed is done and the Changes were made in reinforced concrete. Our political elites know all of the above but do not connect the dots and the Ds are risking becoming a regional party ruling over declining states. That is all due to the settled law mindset.

 

[william the wie]

The basic problem right now is that our political elites understand the Calculi at least somewhat and statistics as well but not so much when it comes to the finite math needed to deal with logistics. This blind spot has been growing since the completion of the Panama canal August 15, 1914 was so close in time to the start of WWI in August 6,1914 no competent political analysis of its effects on the US has ever been possible, too much noise from other things going on. For example the shift to the "sunbelt" that was first confirmed in the 1930 census when the center of population moved decidedly south but no one knows when the move started except that it was after the 1920 census. This lack of knowledge is pretty profound:
The inflationary guns and butter budgets of LBJ was followed by,
Nixon's wage and price controls suppressing the economy at least as badly as Obama's QE
Then Ford's bail out of NYC.
Followed by Carter's deregulation that led to even greater stagflation
Reagan supporting Volcker in breaking the back of inflation.
Bush the elder dealing with the collapse of the housing market and the S&L collapse
Clinton overseeing the dotcom economic collapse
Bush the younger cured that with the housing bubble and meltdown.
Obama's economic suppression elected
Donald Trump that led in turn to the cap on SALT (State And Local Tax) deductions. That in turn is driving the out migration that is making the Blue Wall such an unpleasant place to be in with a high likelihood of state defaults

 

[william the wie]

So what is the best way to survive this kind of thrashing around? I don't know. Taking a simple instance Climate Change has become a buzz word for whatever change happens in the climate and the climate will change. How and when is just as unpredictable as it has always been. Other examples abound

 

[william the wie]

Both political parties have dis and misinformation outlets and trusting either the Main Stream Media or the "CT" media is the express route to poverty and possibly death. My advice is to stick with the low cost access to Reuters ($10K /year for their terminals), Bloomberg ($25K/year for their teminals) and CNBC because putting out dis or misinformation involves potentially massive losses for the first two and CNBC is surviving despite the competition with the two monster outlets for business news. I am not guaranteeing that an absence of political bias is found in these outlets but there is much less agenda pushing.

Using the officially mythical ways of beating the market can not always be done in tax favored accounts so ask your tax preparer about the costs of an LLC. Also ask about restrictions and costs imposed by your broker such as do they have the screens you need for your strategies.
With the Ds trying for a real life reenactment of the fall of the Roman Republic while the Rs are busy turning the Blue Wall into the Sardinia and Sicily of the same era a passport might be useful as well.

 

[william the wie]

That Sardinia and Sicily remark may sound strange but both the eastern and western Blue Walls are experiencing a massive real estate collapse right now. Except for the lack of banking leverage this is a repeat of the meltdown. Another thing that is different this time is that the loss of the tax base is much more extreme this time around. No one in their right mind who survived the first collapse is going to buy into the same old lies again.