What I’m Listening To (Podcasts)

I walk a lot of places. Sometimes I want to listen to music, but sometimes I want to learn something. When I want to learn something, I turn to my trusty podcasts. I’ve got about 5 that I listen to pretty much every podcast from during the week.

When it comes to podcasts, I’m a firm believer that diversity is king, only one of the podcasts I regularly listen to is related to what I do day to day, and none of them are related to each other. They do have a few things in common, notably; high quality content, smart guests (only one doesn’t regularly have guests), and most of all, they all have a clear identity.

In no particular order:

a16z – Tech/start-up podcast that casts a pretty wide net – Thanks Andreessen Horowitz

Econtalk – An absolutely incredible amount of content out of Russ Roberts – top notch guests

The Tim Ferriss Show – Tim’s stated goal is to interview top performers and find out ‘how they do it’. He’s a hugely talented interviewer

Fireside Markets – I couldn’t actually find a link to the podcast area of the website, anyway… James Osborne, a financial planner, hosts this podcast mostly focused on the planning industry. He’s just starting out (maybe 8 episodes), lots of interesting content, hope it keeps going.

Jalen & Jacoby – Basketball podcast, they give the people what they want.

Honorable mention to the two fivethirtyeight podcasts, hot takedown and what’s the point (I think the latter is brand new), which I’ve enjoyed in the few listens I’ve given them.

I’m sure in time the podcasts will fall victim to the same cycle as the blogs I read — I’ll add more and more that I like until I can’t read them as much as I want, then the reckoning will come and I’ll unfollow 80%. For now, <10 feels like the sweet spot.

Jack’s Links

Grexit is all the rage, but all of the smart money seems to be focusing on the Chinese stock market. Do either of these matter? I don’t know.

Government steals raisins for the good of the raisin farmers. This sounds like a hypothetical problem from an econ class, but it’s real.

A dozen things: Peter Fenton — focuses a lot on VCs, which is very cool

California drought – El Nino for real this time?

ROE – Portfolio Turnover. Conventional wisdom should always come with the caveats of when it doesn’t work. There is always a condition that makes ‘common sense’ wrong.

Pitchdecks – Really interesting that NDAs are going away

Dyslexia and visual-spacial abilities – Everyone (including me) likes the idea that people with one disadvantage have an equal and opposite advantage. It might even be cooler if people with dyslexia develop visual-spacial skills through working them more often.

File under ‘unintended consequences of regulation’ – Health care edition

European commission in 2009 – They wrote a white paper gloating about how wrong economists were about the Euro. Hilarious. Starts with “The euro: It can’t happen, It’s a bad idea, It won’t last. US economists on the EMU, 1989 – 2002”

Critique of Mr. Money Mustache – definitely sums up many of my feelings when friends ask me about him

Finally, Grexit (login-wall, my apologies, it’s free, though!)- A nice piece by Niall Ferguson, takes a very Louis CK “everything’s amazing and nobody’s happy” line

Jack’s Links

Interesting article about social security and the broader implications of innumeracy among Americans. I for one can’t believe that “100% of your social security benefit” isn’t the age 62 or age 70 amount. Borderline ridiculous that it is a moving target in the middle of the range. Completely confuses everyone.

Apparently it takes a whole generation for a dominant strategy to emerge in basketball.

Between restrictive building codes and the ubiquity of negative gearing (when everyone you meet from an area knows about a sure-fire way to build wealth you know it can’t last forever), Australia seems to be in for some pain sooner or later.

It seems I’m a trendsetter. The Bank of England has started a blog.

Fireside Markets has a new episode. Not sure if the positive indicator that I’m still listening to it outweighs the negative one of having guest #8 be a repeat. A fun listen.

An article about custodians going into the advice business. The most interesting section is the part about the huge firms finally making a clear career path for financial advisors. I’m not sure if the comparison to the big 4 accounting firms is brilliant or has no chance of ever happening.

Great read about DAFs from Kitces. Nothing earth shattering, but definitely the basis for communicating the time, place, and value of them to interested clients.

A dozen things from Mario Gabelli. Fascinating how all of the uber-successful investors say the same 25 or so things and everyone seems to hear the 25 things that they are doing.

The more I read of the white coat investor the more I’m intrigued. It really is a pleasure seeing someone truly focus on a niche group, funny that it takes someone outside the financial advisory profession to do it.

Jack’s Links

Drought in California, overpriced corn, farm subsidy reform is coming

You can increase your withdrawal rate if you have a good start

The new newsletter writers

Sharing economy sounds better

So stocks aren’t expensive?

The Blackhawks won me a sandwich in a bet on game 6, I’ll go with clutch

I probably read 5 awesome pieces about the life of John Nash, incredible guy – RIP

How to interpret results

All hail the rise of the nurse practitioner

How to hire

 

NAPFA Spring 2015 Conference Review

NAPFA’s Spring conference was the second conference for financial planners that I’ve been to (after last year’s FPA BE in Seattle).

Some general thoughts:

  • I found the people to be friendlier (maybe they were just more dressed down?) than FPA BE
  • The vast majority of the sessions were extremely broad/not highly technical
  • The event was run extremely smoothly (kudos to the Grand Hyatt Staff – sorry about that guac I dropped)
  • Lots of sessions hosted by people pimping out their fund/product

I missed both of Kitces’ talks, however, he’s blogged about them before:

  • Longevity Annuities
    • This one is really interesting, I don’t think many people have wrapped their heads around the mortality credits idea
  • Reverse Mortgages (not sure if this is the latest he’s written)
    • I think the put option value of the reverse mortgage is really interesting, especially if there is a zero-cost mortgage – unfortunately houses around here are way too expensive for that option to have much value

A few (extremely simplified and occasionally poorly represented) reviews of selected sessions (in no particular order):

  • Keynote from Daymond John
    • To his credit, his speech was very entertaining and he made an effort to connect with the crowd
    • That said, his speech, which included a DJ (to play music and sound effects for him to speak over) and a slideshow that contained about a million pictures of himself and his famous friends, was pretty much the antithesis of NAPFA
    • I’m pretty sure everyone was confused by the choice of keynote speaker
  • Putting a Value on Your Value: Quantifying Vanguard Advisor’s Alpha – James Rowley
    • Pretty good session that focused for the most part on how people with advisors do vs. people without advisors
      • There is some interesting self-selection bias here
    • His best point was that advisors that do a good job will typically be undervalued because there is no available parallel universe where the client can see where she’d have ended up without an advisor
      • My interpretation of his point, I don’t think he mentioned parallel universes
    • To Vanguard’s credit, this presentation was all about the info and not about their offerings
  • Women in NextGen – Panel Discussion
    • Four young (27-35?) women on a panel, two who work as solo practitioners and two who are parts of larger firms
    • Was very interesting to hear about their career paths / what their businesses (especially the SPs) are like
    • Discussion only went toward their gender when the moderator realllllly steered it toward there, when asked about it, I’m pretty sure most/all of them said their age was a bigger problem for ‘older generation’ clients than their gender
  • Building Family Legacies Through Philanthropy – Sally Alspaugh
    • Most of the talk was about the statistic that dynastic wealth dissipates some really high % of the time within 3 generations
    • She believes that the way to prevent the dissipation is by having shared family values that transcend money, especially re: philanthropy
    • All of the things she said about ‘typical’ spendthrift inheritors/2nd/3rd generations is pretty much the opposite of what I’ve seen in my experience
  • The Gen-Savvy Financial Advisor – Cam Marston
    • Great speech, clearly an excellent speaker who has given this one more than a couple of times
    • Boomers+ want to hear your background/where you came from/letters after your name
    • Millennials/Gen Xers want to hear what you’re about/what you’re going to do for them
    • He seemed pretty spot on with most of the Gen X and older stuff – maybe it’s my bias or the fact that he was running out of time, but his piece about millennials seemed underdeveloped/not as accurate
  • Behavioral Finance and Investor Decision Making – Gregory La Blanc
    • Good speaker
    • Speech was essentially a run-through of a bunch of cognitive biases with the occasional reminder that it isn’t just clients, but also (especially) advisors that can suffer from these
  • Learning from History
    • This one was an unabashed plug for a fund
  • Chips, Jets, Myths, and Miles Davis – Neil Patel
    • Engaging throughout
    • Mostly boiled down to the need to adapt and have tight OODA loops
  • Tech Demo – Advizr
    • Slick financial plan creation software
      • Separate portal for advisor and client
    • Said their goal was “delivering more financial plans”
    • From a technical planning/customization point of view, the software should probably still be in beta
      • e.g., no way to (even manually, much less automatically) include file/suspend social security benefits, no AMT tax calculations
    • May be a good fit for planners working with very young clientele that don’t need ultra-accurate projections because their time horizons are long enough that there is more noise than signal anyway

I’d probably be interested in attending another NAPFA event in a couple of years, but I’d love to see some more technical planning sessions and fewer sessions that are nothing more than infomercials.

Jack’s Links

Where you’re born matters more for boys.

Jon Stewart on baltimore schools.

Kitces has an interesting post on wash sales. IRS will probably rule on this in typical timely fashion, maybe the next 5 years.

Good Sumner post on the proper measure of well-being. He is consistently very good at making sure things are measured properly.

Atul Gawande with a piece on healthcare. Maybe this is how America spends so much GDP on it?

The dangers of using poll results to describe public opinion.

Overview of a few estate planning strategies. When it comes to multi-generational planning the devil is in the details, but a good overview article.

People are bad at understanding currencies and exchange rates.

Civil Discourse. If more discussions happened with this level of quality, the world would be a better place. The topic of discussion is interesting too, the so-called “Growth Mindset”.

Tren Griffin on Julian Robertson.

Tim Ferriss on Brian Koppelman’s podcast. Interesting guys to listen to. They spent about 30 seconds on it, but the “microbiome” is really blowing up these days. If you haven’t heard of it you will. Not sure if too many things are being claimed of it now, but I can pretty much guarantee that people are going to start attributing things to it that are completely unrelated. For example, the attribution of weight gain to microbiome imbalances (versus eating too much) I find extremely suspect.

Jack’s Links

Ben Bernanke’s post on the taylor rule – Lines up with a lot of market monetarists who think rates should have gone negative (see: Europe) after 2009. I’m not sure if the equilibrium rate crossing back over and being higher than the fed funds means following the rule implies a rate increase, or whether you have to make up for some sort of “rate debt” and let the actual rates remain lower than the taylor rule implies to get back to ‘normal’.

Sumner – lots of my favorite posts of his are these shorter ones where someone has addressed a point he made, but is using faulty logic (or is reasoning from an identity).

Tren Griffin, a dozen things I’ve learned – These are always worth the read, and the archive is well worth an afternoon (or a whole day). This one on Irving Kahn, someone I had never heard of, but who undoubtedly had an excellent mind. Points 2 and 12 were my favorites.

Fireside Markets Podcast – A pretty light week for financial planning articles, so here’s a podcast. This one all about 401ks/how to increase savings rates in America. I’ve really enjoyed this series so far.

Jack’s Links – Edition #1

My plan is to save some of the good links I read for posterity. Or myself, when I mention them in conversation but can’t find them for the life of me. I haven’t figured out if this will be weekly, monthly, or just whenever I feel like it, but since I just started, I’ll go back an arbitrary amount of time.

Michael Kitces puts out his links each week, always pretty good. This week’s was particularly chock-full of interesting articles. I won’t bother curating them since he already did it. Needless to say, if you’re in financial planning, you should read what he puts out each week.

Optimal asset location, back-to-back Kitces, though this link is original content from him. Article on asset location. Kitces touches on how low-interest rate environments affect things, though he mostly focuses on the fact that most theoretical CFA-type analyses assume stocks use turnover assumptions which are implausibly low (see: dividends).

“Rates are artificially low” – I’ve been hearing this one more and more lately. This article from Scott Sumner helps make the point that rates are only too low if they are below equilibrium, and if equilibrium is ~2% inflation, then rates are artificially high.

Don’t penalize savers – Scott Sumner – I think one of the biggest topics that Americans will have to grapple with in the coming years is whether pre-retirement spending should be given a “bonus” by giving more tax-payer subsidized post-retirement income to those with less assets (and therefore less other income). My description is already feeling convoluted, but Scott’s example is great.

California drought – too many people in too dry of a climate?

Video games make kids smarter. Or smart kids like video games. Or something.

That goes back about a month… there were probably five times that many articles that deserve links, but I’m bad at capturing them all.

 

Oil and the United States

Author’s Note: Originally written as a letter on 12/29/2014, somehow still relevant.

The plummeting price of oil has become a major topic of conversation – and with prices that feel more like 2005 than 2015 – no wonder.  How has oil gotten so cheap, and is it too cheap?

Before we get into the why, how, and where next, let’s address a myth: America is not a net oil exporter. There are lots of ways to twist the numbers, but when it comes down to it, we import about 9 million barrels a day and export about 4 million.[i] We are also net importers of natural gas.[ii] Dispelling this myth is key; because while we have been the largest producer of oil this year, we are not totally insulated from the rest of the world.

Back to, “How has oil gotten so cheap?” In his most recent memo, Howard Marks astutely describes how high oil prices tend to lead to lower oil prices and vice-versa.[iii] The cliff notes version is: Supply and demand. The question is then, is the price too low?

While figures for the rest of the world are harder to interpret, less audited, and have the ultimate wildcards – OPEC and Russia – involved, we can look to America’s own figures for a baseline.

Per figures cited by the IMF,[iv] the current breakeven price (i.e., the price below which production is not profitable) for shale drilling in the US is between $40 and $80 per barrel. About half of North American shale production is profitable at a price of $50. The break-even price for shale is important because shale wells represent about 95% of new wells being drilled in the US today.[v]

Asking, “Is $60 the right price for oil?” is the wrong question. The right question is, “Is $60 the wrong price?” Looking into our own back yard, it looks like $60 is not the wrong price; most wells will continue to produce at $60. However, when we look abroad, we see increased levels of economic and geopolitical risk; we also see rapidly industrializing countries with billions of people. These factors, among many others, help explain why $80 or $100 oil isn’t the wrong price either.

While $60 oil seems to be on the low end of sustainable prices, the more people who think that oil is bound to go up, the more likely it is to stay flat. This phenomenon was described best by Yogi Berra, talking about a restaurant he used to frequent in St. Louis, “Nobody goes there anymore, it’s too crowded.”

Nobody has a crystal ball to know where the price of oil is headed, but I do know that following the crowd comes with the danger of being trampled by it.

[i] http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm

[ii] http://www.eia.gov/naturalgas/importsexports/annual/#tabs-supply-1

[iii] http://www.oaktreecapital.com/MemoTree/The%20Lessons%20Of%20Oil.pdf

[iv] http://blog-imfdirect.imf.org/2014/12/22/seven-questions-about-the-recent-oil-price-slump/

[v] http://energy.gov/sites/prod/files/2013/04/f0/how_is_shale_gas_produced.pdf