tede02

Listened to the Coinbase CEO on CNBC this morning. He had some interesting things to say. For example, his view is most countries will roll out their own digital currencies over time and crypto will be complimentary to them. He also talked about his expectation that governments will regulate as they normally do to maintain control of their respective monetary systems. I'm curious what crypto advocates see for the future? Do people envision going into an ice cream shop or car dealership and having the option to pay in digital dollar, digital yuan, digital euro, bitcoin, ether, etc.? Do people see other means of digital payments as likely (such as paying for things in shares of common stock)? Eliminating intermediaries and instant settlement seem like very important things. But I struggle to see all of these different units being used/accepted for payments ubiquitously. It seems like it would be very complicated administratively and there would be lots of "currency" risk. Alternatively I keep contemplating as to whether crypto currencies end up as more of a trading unit like precious metals and never really take hold as a system of payment. Thanks for any comments. This is an intriguing topic.

I'm surprised there was no discussion about the lengthy article in WSJ about China's rollout of digital currency: https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118?mod=trending_now_news_pos1 It was a very interesting read. Brings up a number of points of how crypto threatens the control a country has over its monetary system and sovereignty more generally. Also discusses how much leverage the US presently has over foreign governments, businesses and individuals by being able to freeze them out of the global financial system. This leverage could be totally undermined obviously if transactions start settling in other currencies, soverign or defi crypto. The article says 60 countries globally are evaluating the prospects for issuing digital currencies. My takeaway was there is growing pressure for central banks to move forward with digital offerings because of the issues mentioned above. There's also obviously growing competition between the US and China in all kinds of respects, including dominance over the global financial system. The article generates the narrative that western nations are feeling more urgency to get into the game. Lets just say within 10 years, every major nation has a digital currency. What does this mean for crypto and defi? Don't soverign digital currencies present a major threat to non-soverign cryptocurrencies? Are there reasons why soverign and non-soverign would co-exist?

There was an article in the WSJ within the last week that I thought said it best...ultimatley bitcoin is software. More specifically, it is a decentralized account ledger that tracks the finite digital coins & transactions within the network.

Sir I beg to differ. I bought a very average honda suv for $26k, including added after market self driving. If we go back in time to 1990, how much would such a car be worth? I mean it can almost drive itself on hwy. Based on the inflation calculator prices have doubled from 1990 to now. So can I buy a smiilar car for $13k then? I wouldn't think so, so there..... in terms of suvs the price real costs have gone down. In terms of computers, I can buy a minimalist non-laptop computer with a basic monitor for about $200. In 1990, that computer would cost 2-3k? Cell-phones? they didn't exist. Jeans, I remember I had to work hard to save $50 to pay a decent pair of jeans, now? $20! I was a kid and we weren't wealthy and I wanted a chess clock (the type you see on the Queen's Gambit on neflix), those cost $50-80, I had to deliver papers to save up to pay for it. Now? we got the digital chess clocks that are much better, and they are $35, so now I can get a better quality product for less than 1/2 price. Travelling by airlines was a luxury, now it is so common it is like taking a bus. I feel we all just too easily fall into groupthink and don't challenge the complaints and negativity in the media. Inflation index calculates the average living expenses and for the most part I feel it is an accurate reflection but the cost of really long term assets like land and money generating assets, have gone to absurd levels..... cough cough hmmmm tesla cough hmmmmm. All very good points. I was trying to think of where we have experienced inflation. The ones that come to mind are: 1. healthcare 2. childcare 3. education 4. housing The whole debate about inflation vs. deflation is interesting. I heard about a study that valued Google's "free" services (search, email, storage, etc.) at over $20k per year per person. I have no idea of the methodology used. But the greater point is all these things that the internet provides for no-out-of-pocket to consumers definitely does appear deflationary. I heard someone say just this morning that the "inflation animal" that economists are trying to measure today is one that no one has ever seen in the wild. The point this person was making is there are all these online services that are virtually impossible to measure so no one really knows where the hell things are at. That resonated with me.

What would be so bad about that? I rather Central Bank's focus on the real economy and less on boosting financial assets. If main street is doing well with higher wages, better quality of life, and less inequity while stock markets are going down, I'm perfectly okay with that. But we don't really see that anymore. We can't withstand prolonged pain in the financial markets anymore. After some signs of distress, CB's come in with their massive rate cuts and QE infinity. I don't really disagree. My worries are mostly for my clients, many of whom are just regular retirees living off of a retirement portfolio. If we went through a 10-year period of no returns, that could create some major financial stress for a lot of people. The Fed surely knows this too which puts further pressure on policy makers. They also have to wonder (like me) if they are setting the stage for some major blow-up or extended period of stagflation.

This is a fascinating subject that I think about all the time. What will the Fed do? They've kind of put themselves in a corner. They surely know if rates jump 100-200 bps, that is going to have some real impact on assets prices across the board which could leak into the real economy. But they've explicitly said they want to keep rates low because the economy isn't where they want it to be. Therefore, it seems they plan to keep the fire hose on (to keep rates down) with indefinite asset purchases until something breaks. One of my worries is that few individual investors recognize how much stock market returns have been driven by low rates and QE. The sentiment is "investing is easy" without appreciating this HUGE tailwind. I worry we could experience a multi-year period of negative returns due to problems with inflation, rising rates and the money-out-flow negative feed-back loop that would probably be created.

I appreciate this perspective, particularly around negative yields in Europe which we've never had to deal with in the US. Maybe I would think about alternative currencies differently if I had to face negative yields. I'm currently reading a biography on JP Morgan. There's a lot of interesting history that seems relevant to the current crypto debate. There was no central bank in the US until the year of his death. So I'm learning a lot about the challenges of maintaining a currency, capital flight and the inherent tension between parties that want a strong currency vs. those who want easy money. It certainly isn't cut and dry.

Fed chair said today that they are looking very closely at issuing a digital dollar. If central banks issue digital currencies, does that upend BTC and everything esle? Or are people attracted to crypto because of its decentralized nature and supposed anonymity? I struggle to understand the bull case for crypto. The ledger technology seems to have real utility but I don't really grasp how these are solving a lot of problems unless one really fears inflation. I work with a lot of retail investors. My totally subjective view is the fervor for crypto is similar to 2017, maybe slightly dampened because there have been other hot assets running up simultaneously. You know its crazy when construction workers start asking about it... LOL (and I've had several).

I was thinking about this most recently. Just the cash on the balance sheet plus the AAPL position are worth nearly half the market cap.

I hope it's more than a moment! LOL. Been a long slog for value guys.

My wife, who is in healthcare, is getting hers today. I'll get one as soon as it's available. I understand some who have legitimate concerns regarding the newness of the vaccine. But there is real risk in contracting COVID too and the long-term effects of the virus will not be known for years either.

Jeffrey Gundlach has expressed a view that he believes the Fed is in-fact manipulating long-term rates via open market purchases. It's an interesting question whether or not long rates could go higher if the Fed doesn't want them to. You would think at some point, if inflation started heating up for example, that market forces would over-power the Fed's actions. One interesting relationship I've spent more time on this year is betweeen the 10 year Treasury and 30 year mortgage. The correlation between the two is nearly 1. My understanding of this is most mortgages are guaranteed via Fannie/Freddie, and therefore ultimately by taxpayers. Thus the market views Fannie/Freddie mortgages (and ultimately mortgage backed securities) as similar credit risk as Treasurys. But if you look at this relationship, the long-term average spread between the 10 year Treasury and 30 year mortgage is about 1.5%. I'm not an expert in this area by any means but one of the main reasons cited for the 1.5% spread over the 10 year is the pre-payment risk that comes with mortgage bonds. Watching the spread seems to be one of the best ways to determine how attractive mortgage rates are. For instance the spread gapped out last spring when the 10 year cratered all the way down to like 0.50%. Even now, the spread over treasurys is higher than average which suggests rates could be lower. Attached is a chart I keep on spreads. Couldn't figure out how to get it into message body.

This is a great book. It was the first large biography I ever read as a young adult in the mid 2000s. It definitely influenced me. You can't forget some of "Poor Richard's" one-liners like, "Early to bed, early to rise...!" I'd like to re-read this in the future. Will certainly read differently with accumulated knowledge vs. when I was 18 or 20.

If you're over the income limits, the "back door" strategy is the work-around to make Roth contributions regardless of your earnings. However, by establishing a pre-tax IRA, you'll eliminate your ability to execute this strategy due to the IRA aggregation/pro rata rules. I've seen people get tripped up by this. It can be a surprise at tax time and complicates the record keeping of pre/after tax dollars within an IRA. If you're not using the back door strategy, and never plan to, having a pre-tax IRA is no issue at all. The other thing I would add is if you retire at age 55, you can take distributions from a 401k without penalty. If the money is rolled over to IRA, penalty free withdrawals are age 59.5. If neither of these are an issue, rollover is a good deal. Few people know that they are paying fees inside 401k plans. The fees are usually built in to higher fund expenses so you never see them. The fees are generally lower in large-company plans. The flexiblity of IRAs is nice and the costs are hard to beat at the discount brokers.

I've had a Surface Pro 4 for several years. There are two things I don't like about. First is the "kick stand" support. I like sitting in a recliner and it just doesn't rest well on my legs like a regular laptop. Second, the touch screen has alway been problematic. Tends to freeze up the device somewhat regularly.

If you don't already have a pre-tax IRA, establishing one via a rollover will limit your ability to execute a back-door Roth conversion strategy due to the pro-rata rule. If you don't care about making Roth contributions via a non-deductible IRA, this won't be an issue for you.

LMAO! Ed Thorpe is the man. His autobiography is one of my favorite books.

We've been happy with Fidelity. Almost went with Schwab, but our firm uses eMoney financial planning software which Fidelity owns. That integration was important for us. I do like the fact that Fidelity is privately held. I think it give them more flexibility in making long-term decisions. But, Schwab has a good reputation in the RIA space. I'm sure you'll be fine either way. One strike against IB, in my opinion, is their website. I have a separate account there that someone on this board manages. I just find the website clumsey to navigate. Schwab and Fidelity seem to have far better platforms particularly for non-savvy retail investors.

My wife in I live about 30 miles outside Minneapolis where it the landscape really transitions into rural communities. What's kind of surreal about this event is you read the news and it feels like a frantic crisis, almost like war-time. Then I go for a walk at home, see the migrating ducks and geese, other wildelife, etc. and it's as if nothing is happening. Just another peaceful spring day. It's just a strange contrast.

I'm not out of the woods yet. Closing is in 30 days. But it's a non-contingent offer and buyer has already been underwritten for a conventional loan. Also, the buyer is a city employee so I'm guessing his paycheck is going to keep coming. Not sure what his wife does. I won't be one-bit surprised if larger events, like a nation-wide shut-down, delay the closing. At this point, the delay would actually help me because I need to find temporary housing for about 30 days before closing on my new place in late May.

On Wednesday morning last week, I woke up with an elavated heart rate. The coming economic blow of what's underway seemed to have hit me. I'm in the middle of real estate transaction. Buying a higher priced home for the area I live in (exurbs of Minneapolis). I told my wife, we need to get our house listed ASAP before the waves of unemployment hit. The last thing I want is to be stuck with our home, or have to sell with prices sliding. Our current home is considered affordable for the area (<$400k). I knew we had fundamental factors in our favor from the standpoint of extremely tight supply like the rest of the country. Low interest rates also helps. But I was deeply worried that the economic uncertainty may have already majorly damaged demand. I wasn't planning on listing until mid April but we scrambled to list last Friday. Despite my worries, the house sold in a little more than 24 hours for full asking price. Only give was closing costs. We would have had multiple offers if we waited but the offer we received appears extremely solid and likely to close. Long story short, demand for so-called "affordable housing" remains extremely strong at least in this area. It kind of amazes me how commerce persists despite major uncertainties.

It seems like many states and the federal government are taking a wait and see approach as the number of confirmed cases grows. Based on everything I've read, a national shutdown should have started last week if there was going to be any chance of significantly slowing the spread down. It looks like we're too late. By the time the president announces a national shelter in place, the numbers are going to be off the charts. My personal expectation is the US is a week or two behind Europe. The only upside is it might be over faster. My wife works in healthcare and they are preparing for an onslaught. One large hospital in the Minneapolis area has apparently been working to convert an entire floor to ICU beds. Many countries have effectively shelter in place . Germany has is for a couple days and they have escalated compliance today. It’s too early as there seems to be some weekend reporting effect (with lower numbers on weekends) but the numbers of new infections have begun to show promising trends and so far, the Heath care system is holding up. I think people have come to realize the seriousness last week and compliance has improved, which wasn’t the case in Italy at all. US is still in the exponential growth phase so who knows how it ends. This is purely based on the narrow observations in my own life and social circle, but I don't think enough people in the US are taking it seriously which means it's probably going to get ugly before people do take it seriously. The next 4-6 weeks are going to be nerve wracking.

It seems like many states and the federal government are taking a wait and see approach as the number of confirmed cases grows. Based on everything I've read, a national shutdown should have started last week if there was going to be any chance of significantly slowing the spread down. It looks like we're too late. By the time the president announces a national shelter in place, the numbers are going to be off the charts. My personal expectation is the US is a week or two behind Europe. The only upside is it might be over faster. My wife works in healthcare and they are preparing for an onslaught. One large hospital in the Minneapolis area has apparently been working to convert an entire floor to ICU beds.

Romney must be reading the message board ;) https://www.cnbc.com/2020/03/16/coronavirus-stimulus-romney-proposes-1000-for-every-american.html

I don't need the money either. But we don't have time scew around with the administration of figuring out who is in need vs. who isn't. Get the money in the public's hands quickly.