OK, peoples. I purposely took four days off from work, largely for medical reasons (busy, busy); purposely did so over Election Day because I already voted so there was nothing I could do about the outcome; didn’t really get any time off (real estate is that busy on Whidbey Island); and checked back in to social media and the news to learn that we do not know who has won in too many races. The political situation will change. But comparing the news before and after my election hiatus taught me how little has changed.
For those who are late to my blog, it is based on my book about personal finance, Dream. Invest. Live. I should’ve subtitled it something like Personal Finance for Frugal Folk. The book was published as the economy crashed in November 2008. November 2008. The first post on the original blog was circa election night, 2008, the night Barack Obama was elected. I’d like to link to that post but that blog went away when Apple quit supporting the blog software. Allow me to paraphrase a memory of one line;
“And now the work begins.”
Celebrations are great, and change is the only constant; but waiting for the change can take too long.
Personal finance in our economy requires people to make assumptions about the economy, finance, society, culture, and the world in general. Personal finance plans need to adapt to changes in those influences. What has and has not changed since that election twelve years ago, since my ill-timed book was published?
Economy & Finance
The prominent NASDAQ index fell from just under 3,000 to about half that within a few weeks. Now, the NASDAQ is just below 12,000, a four-fold increase. In retrospect, yet again, a simple index fund could have done very well.
Mortgage rates were ~6%, now they’re ~3%; both of which are far lower than the terrible times of the early 80s.
US unemployment went from ~5% to ~10%, during the long recovery gradually fell to ~3.5%, and recently spiked up to then back down from ~15%.
Of the three, arguably jobs have been the most chaotic.
Primarily because of Covid, there are worries that a wide swath of businesses and hence employment are at threat as stimulus packages fade. Increased government debt is worrisome in the long term.
Regardless of Covid, wealth inequality continues to rise, further fracturing society. Several governments and banks are responding to wealth that is being accumulated and kept out of the economy by instituting negative interest rates. In some places that’s led to negative mortgage rates. Negative rates can scare economists that are worried about deflation because deflation is harder to manage that inflation.
Society and Culture
How people live, think, and feel is hard to quantify. Society and culture are basically subjective characteristics of our civilization. It is relatively easy to suggest that progress is being made, most readily visible in the greater variety of people recently elected to office. It is also clear that injustices are as egregious as ever. The main thing that may have changed is the transparency of the situation. Videos may be doing for social justice what independent war correspondent footage did for our awareness of the inhumanity of war.
Those videos are happening more frequently because we no longer need to rely on a limited population of correspondents. The smartphone, sites like YouTube, social media, and better internet speeds now mean news has fewer gateways to pass through. It also means there’s a lower percentage of fact checking, a decrease in privacy, and a fascinated audience.
People are cancelling their land lines. Cable companies are now competing with free content. And yet, media companies are cordoning off their content behind paywalls. You can watch any movie you want, as long as you can afford it.
The internet has graduated from luxury to necessity.
Solar panels have advanced from curiosity to inefficient luxury to pragmatic and economic preference. The power grid is decentralizing. It is now cheaper at the utility level as well, to build power plants based on renewable energy rather than fossil fuels.
Electric cars are becoming so common that they don’t grab the attention they did when the industry was new.
LED lights are so efficient that the debate over incandescent lights is being negated by lights that are cooler to touch, last long, and can run off batteries, no wiring required.
The climate continues to change. Sadly, as predicted, the change is accelerated. Also sadly, the conservative estimates discussed over a decade ago proved to be too conservative. It was difficult to discuss nominal or worst case scenarios because they sounded too extreme. Now we’re finding the changes are happening sooner than expected and it appears unknown feedback loops are accelerating the change. Look to Siberia that recently hit 100F. So much for that old stereotype.
The public’s perception of the change has changed. Now that the effects are becoming more apparent, people are beginning to react, but it may be too little too late.
Health professionals around the world have always been fighting pandemics, and were so good at it that few of us were affected or even aware. And yet, a review of the literature reveals their worries that a bigger pandemic was likely. The scary part is that many of today’s defenders fear that Covid-19 is a practice pandemic – serious, very serious, but not as bad as a pandemic that has a higher fatality rate, is more contagious, and is discovered too late. One consequence of having almost eight billion people on the planet.
Me? I’d be amazed at anyone who has read every post in this blog. Currently, that’s about one million words. If you try it, make sure your eyes get a break, regularly.
What hasn’t changed
What hasn’t changed is that change is accelerating, but if trying to understand every shift, retreat, and advance is too difficult, then focus on those things that haven’t changed.
While some of the details I described in my book have changed (hence the sequel that I am working on), some of the frugal elements remain; Spend less than you make. Invest the rest.
While the world is in turmoil, it still makes sense to Thinking globally. Act locally.
While it seems like there’s an infinity of divisiveness, there’s still the Golden Rule; Treat others as you wish they’d treat you. Or as I put it; Treat people as if they are people, because that is one thing we have in common. No other labels need to be applied.
Of those four days I tried to take off, one went to a long list of household chores, one went to a marathon writing/editing session for the sci-fi novel I’m writing; which left two days off, which went to a couple of twelve hour days working real estate as clients try to get things done before the end of the year. (Required disclosure: I am a real estate broker with Dalton Realty, Inc. in Clinton, WA on Whidbey Island.) So, maybe I’ll take Sunday off?