history

Same Old, Same Old

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From 1965 to 1967, more than a hundred US cities were convulsed with riots, another chapter in a long history of violence in America related to race. The promise of the recently passed Civil Rights Act and the Voting Rights Act stood starkly against the poverty endemic to the segregated ghettos across the land.

President Lyndon Johnson set up the National Advisory Commission on Civil Disorders in 1967, asking three questions. What happened? Why did it happen? What can be done to prevent it from happening again and again?

This commission released a report in February 1968. It noted that “our nation is moving toward two societies, one black, one white—separate and unequal.” It faulted failed policies relating to housing, education, and social services, and noted that society’s institutions created the ghettos, which society condoned. It talked about racism as a factor in the violence.

The report recommended the hiring of more diverse and sensitive police forces, housing programs designed to break up racial segregation, and programs to bring needed social services. Americans purchased two million copies of the report; Martin Luther King said it was “a physician’s warning of approaching death, with a prescription for life.”

One month later, King lay dead, assassinated by a white supremacist. Rioting broke out again in a hundred cities. The recommendations in the report were forgotten.

The American miracle has produced so much for so many even as its blessings have been, and are, unevenly distributed. I’m convinced its foundation is the degree to which each of us is free to unlock the highest fraction of our own potential. We would be richer as a people if that freedom were more true for more people, if it extended more fully to each of us, and to our children, regardless of the zip code in which they grow up or the color of their skin or any of the other factors which so needlessly divide us.

Fifty years after the Kerner Report, we face the same old, same old. Our institutions are made of people; they reflect us; their failings are our failings. Fifty years from now, our progress will be measured by how much potential might be unlocked instead of untapped for how many people. Our actions in business and in life can make a difference, can have an impact – as people dealing with people, united in our humanity.

Clients, if you would like to talk about this or anything else, please email us or call.

The More Things Change

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“Plus ça change, plus c’est la même chose.”
Jean-Baptiste Alphonse Karr wrote those words in 1849, which we know by the translation “the more things change, the more they stay the same.”

We are reminded of this epigram when we hear about the wide and sweeping changes that are supposedly with us forever now, in the aftermath of the pandemic. You do not need to go very far to find predictions that our daily lives will be changed forever. No more large-venue events like sports or concerts, restaurant dining becoming a rarity, central offices a thing of the past, airline travel shriveling.

The truth is, we humans are social beings. The biggest pandemic of modern times, the 1918 influenza, killed 50 million people worldwide, more than any war in history. Then as now, infection could mean death. And it was followed by the Roaring Twenties, notable for its gatherings and parties. Two or four years from now, we are likely to be attending as many group events as we were seven, fourteen or twenty-one years ago.

A home office teammate moved to a beautiful, larger living space shortly before concern about the coronavirus became widespread. I posed the question: was it possible to work from home? Their answer was, it was possible, but not desireable. The interaction with colleagues, the ease of finding the right expertise to help with a question, shared meals, the serendipitous exposure to unexpected ideas: those positives are hard to replicate working from home.

We humans are adaptable. We can do this lockdown thing, stay in touch with video calls, work from home effectively, get by without restaurant dining and parties and conferences. In other words, make the best of it. But we also tend to believe that current conditions will persist, and sometimes have trouble picturing a change.

Yes, there will be changes. But the more things change, the more they stay the same. Our humanity is not going away. We crave connection. We believe the enduring features of human nature will manifest themselves as soon as they are able.

Clients, if you would like to talk about this or anything else, please email us or call.

Life and Savannah, Georgia

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Traveling recently, I had the chance to spend 24 hours in Savannah rather than drive right by. This is a new thing again for me; my life has been too full for side trips most of the last few years.

At best, 24 hours does not even scratch the surface of a city like Savannah. The largest historic district in the country included markets, churches, temples, homes, and mansions. Now it is also home to museums, shops and restaurants.

The unique and beautiful squares or parks, more than twenty, were originally laid out from 1733 to 1801. Many have fountains or statues or otherwise commemorate notables from history. Ancient and stately oaks grace the squares, and indeed the entire city.

The river features shops, entertainment, and dining housed in the centuries-old brick buildings originally used to service a working waterfront.

In preparing for this day, it took some time to understand what all there was to see and do. And then, how to make the most of it? Trolley tours, boat tours, guided walking tours, solo hiking, or some combination?

(I won’t bore you with my decisions; they suited me. Yours would be, or will be, different.)

The task of figuring out how to spend 24 hours in Savannah, Georgia is akin to how we live our lives. When we choose to focus our time and energy, we forsake everything else for a time. And we can never get around to all that the world offers. And the span of our lives in the world is every bit as limited as 24 hours in Savannah.

I did learn that with planning you can see a great deal in Savannah in 24 hours; I am still in the process of learning that with planning you can do a great deal in life.

Clients, if you would like to talk about this or anything else, please email us or call.

The Long View

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The unemployment rate dropped to 3.5%, a fifty-year low, according to the Labor Department’s report for September. Like clockwork, some observers were quick to find the clouds around this silver lining.

That got us to thinking about life fifty years ago compared to today. Looking at the facts, it is hard to think of it as anything but unimaginable progress. In 1970, more than three quarters of homes lacked air conditioning. Televisions were only in 61% of them. 38% had washing machines. One in twenty lacked indoor
plumbing. There was about one land line telephone for every two people.

More startling are the things that nobody had in 1970, because they had not yet been invented. Mobile phones, digital cameras, post-it notes, email, video games, inkjet printers, MRI scanners, fiber optics, personal computers, GPS, and the internet, to name a few of them.

Median household income, adjusted for inflation, grew 37% over that half century. The rich got richer, but the average household made a lot of progress, too.

However, life isn’t all puppy dogs and rainbows, as an older acquaintance of mine likes to say. The economy grew and shrank in its cycle of expansions and recessions. The stock market, measured by its major averages, also went up and down year to year, sometimes sharply.

In between the record low unemployment rates at the beginning and end of the fifty years, we had three episodes of unemployment in excess of 10%.

We have noticed that when times are bad, some have difficulty imaging a recovery. And when times are good, some can scarcely think about the possibility of poor times returning. We humans like to believe that present trends and conditions will persist, good or bad.

The bad news is, the economy and the markets will continue to go up and down. The good news is, over the long term we have made amazing progress on almost every front. The past is no guarantee of the future, of course. In our opinion, there are many reasons to believe our progress will continue.

Clients, if you would like to talk about this or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Teaching an Old Stock New Tricks

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Consolidated Edison Company of New York (Con Ed) was listed on the New York Stock Exchange back in 1824. Known then as New York Gas Light, it holds the record for the longest listing on the exchange.

For every single day of those nearly two centuries, every share of its stock was owned by somebody. Through financial panics, recessions, wars, the Depression – through everything – every share of its stock was owned by someone.

It seems curious to us that some investment advisors advocate the belief that the vast majority of investors are incapable of owning shares of stock through the inevitable downturns. (Stocks do go up and down, as we often note.) Yet somebody has to own every share, every day.

These advisors with low expectations of you usually rely on one of two basic approaches.

1. Keep 40 to 60% of your long term assets in bonds or other forms of fixed income. This strikes us as an exceptionally poor idea for many long term investors, because of historically low interest rates, and potential losses from inflation and rising interest rates.

2. Expect to be able to sell out before big declines, and reinvest before big rises. This unlikely outcome is usually sold as a “tactical” strategy. It is a great one, too, but only on paper. Nobody to our knowledge has ever demonstrated a sustainable long term ability to reduce risk while maintaining market returns with in and out trading.

Our experience tells us that many people understand long term investing, and living with the inevitable ups and downs. Many more can be trained to become effective investors. We think you can handle the truth: real investments go up and down.

The thought of forfeiting a significant fraction of potential future wealth by pandering to fear of short-term volatility hits us wrong. We won’t do it here at 228 Main, nor would we pretend we our crystal ball works well enough for in and out trading.

Of course, our approach is not right for everyone. Clients must be able to live with their chosen approach, and not everyone can live with ours. We can handle the 60/40 or 40/60 mix for clients who want less volatility. But the fraction in the market is going to experience market volatility, a pre-requisite to obtaining market returns.

We mean no disrespect to advisors with different approaches. After all, they lack the main advantage we enjoy: working with the best clients in the whole world.

Clients, if you would like to talk about this or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

 

Life in Four Dimensions

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Kurt Vonnegut wrote about a race of beings who could see in four dimensions. The fourth dimension is time. “All moments, past, present, and future, have always existed, always will exist.” They could look at different moments from the past or future the way you and I might look at a stretch of the Rocky Mountains.

This is an interesting way to think about the work we do together with you, planning for the future. It requires us to see the future we want, and do what is needed to make that plan potentially become reality. People in their working years need to see ahead a decade or two or three, and envision the future.

Our investment process relies heavily on history, being able to see the past. Most conditions in the economy and markets repeat from time to time in one form or another. We can better understand these things when we know what has gone on before. In other words, seeing the past may provide clues that help us in the present.

The Vonnegut quote contains an implication with which we strongly disagree. The idea that the future is already set implies that nothing we do matters.

In fact, our whole philosophy is that the choices we make are crucial in shaping the future. There are many things beyond our control, but we control our actions. We do not control the future, but we can work to make the best things more likely to happen.

Putting this all together, we can formulate our own idea about life in four dimensions: learn from the past to shape the future we desire. When we work together, we have a better chance to pull this off.

Clients, if you would like to talk about this, or anything else, please email us or call.

Everything’s Connected, Chapter 137

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The world is both numbers and ideas, math and language, money and art, computers and nature. A lot goes into connecting your money to your life and ambitions. We were reminded of this in learning about the life and work of Ada Lovelace.

The world’s first computer programmer was not working out of a garage in California in the 1970s—but like the computing pioneers of Silicon Valley, the 19th century thinker Ada Lovelace saw possibility where others didn’t.

Born in London, Lovelace’s education started at age four. She was a young adult when she began work with other early computing minds on an analytical computing machine: a giant engine that could process numbers mechanically.

Although their genius wasn’t recognized at the time, Lovelace’s notes about this machine have helped lift her from history: she was one of the first people to suggest that if a machine could process numbers, it could process other forms of information, like text and images and other symbols.

The insight that resonates with us is, math is “the language through which alone we can adequately express the great facts of the natural world.” Certainly arithmetic is key to working out the money ends of your goals.

We owe a lot to Ada Lovelace, her contemporaries, and succeeding generations of pioneers of the modern age. We are all beneficiaries of their breakthroughs, and wiser for understanding the philosophy behind their achievements.

Clients, if you would like to discuss this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

  1. Ben Rabinovich, “Ada Lovelace Day 2018: When is it and who was Ada Lovelace?” The Daily Mail: https://www.dailymail.co.uk/sciencetech/article-6256519/Ada-Lovelace-Day-2018-Ada-Lovelace.html
  1. Julia Markus, Lady Byron and Her Daughters: https://books.google.com/books?id=nOtwBgAAQBAJ&lpg=PP1&dq=ada%20lovelace%20education%20insanity&pg=PT131#v=onepage&q=translation&f=false.

 

Hit ’em Where They Ain’t

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Investors can learn a lot from Willie Keeler, one of the smallest major league baseball players in history. Wee Willie stood 5’4” and weighed 140 pounds.

Playing from 1892 to 1910, Willie was a prolific hitter, with a batting average of .345 over that long career. He explained his success with words that have become part of baseball lore:

“Keep your eye on the ball, and hit ‘em where they ain’t.”

We believe it makes sense to strive to understand investment opportunities, researching companies, trends, and economic developments to try to gain an edge. This is what it means to “keep your eye on the ball.”

As contrarians, we seek to avoid stampedes. If the crowd is there, we probably want to be somewhere else. As Warren Buffett once said, “be greedy when others are fearful, and fearful when others are greedy.” Isn’t this the investment version of “hit ‘em where they ain’t?”

It would be interesting to know whether Wee Willie Keeler did any investing. Did his investing philosophy match his baseball hitting philosophy?

We cannot know the answer to that. But we do know, our investing philosophy matches up very well. “Keep your eye on the ball, and hit ‘em where they ain’t.”
Clients, if you would like to talk about his or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Eternal Truths and Changing Times

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228 Main Street, the real-world inspiration for 228Main.com, sits in the middle of beautiful downtown Louisville, Nebraska. The village was platted out just after the Civil War; some descendants of its founders are reading these words.

The building, a typical commercial Victorian structure of the kind that dots small town Main Streets through much of the country, was built at the end of the 19th century. It housed The Louisville Courier newspaper and print shop. More than a century later, it is the center of the business universe for our 21st century digital communications, descended one might say from those earlier forms of media.

When The Louisville Courier began publishing, there was no traffic on the roads to neighboring towns during much of the winter and spring. Horses and wagons could not navigate the muddy roads, especially along the Platte River bottom. The newspaper could only serve the village, and little else.

228Main.com was similarly conceived as a way to communicate with a small community: you who are our friends or clients or both. We provide answers to the questions you ask us, tell the stories that we used to tell only one or two people at a time, and a lot more. 228Main.com is a way to keep our community informed, people who share an understanding about life and investing that we believe is special.

Unlike The Louisville Courier, 228Main is not limited geographically. Since it began in 2015, 26,000 views of its pages came from the United States, and another 3,000 from all over the world—103 other countries. We really do not have time to concern ourselves with anyone but you; the interest of others is perhaps a sign that our work is on the right track.

We recite this history to illustrate that some things are fundamental and unchanging—principles, values, community, human nature. But methods and tactics and the routines of daily life and other things evolve and change. Our object is two-fold: to understand and apply the universal truths, and also keep abreast of the changing times. This seems to be working for you and for us.

Clients, two way communication is vital to get you to your goals. If you would like to discuss any pertinent topic, or update us on your life and objectives, please call us or email.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.