As an older FI blogger, do you ever get the feeling that technology is passing you by?

While I’d like to consider myself technologically adept, I have to admit that over the last five years, I’ve fallen further and further behind. The pace of technology (especially communication tech) is mind-boggling, and the numerous ways that people and business communicate. Just when I think I’ve got the latest tech down, it gets superseded by some other form.

This is happening at work as well. I hate to be the “old fuddy duddy” but there are a lot of new engineers being hired with a lot of tech savvy (and a desire to do robotics and computer simulation) but who don’t have much hand-on experience in the field. My boss, and our customers, are enamored with potential for this (because we are all having a hard time finding labor) so I sometimes feel like I am the odd man out, and becoming obsolete.

The reason I bring this up is that we had the annual “icebreaker” for my professional society this weekend, which was at a distillery in Philadelphia. It was a great time, with a lot of good fellowship, good food, and some drinking. Some of the members there were older (like me) and some were younger (late 20s, early 30s) and the topics eventually settled into our engineering profession. A lot of what was discussed was basic engineer and leadership “blocking and tackling” but some of it was the effect that technology was having on their business and their work. It’s exciting, but also troubling (am I obsolete?).

In the end, one of the concepts of FI is never stop learning, so if I choose to stay in this profession, I need to dedicate myself to continued work in the field. You never stop learning.

 

Mr. 39 Months.

 

Book Review – A Random Walk Down Wall street by Burton Malkiel

This classic book was originally published in 1973, and has been updated every few years to reflect updated data (the version I purchased was from 2003, so it had the dot.com bust in it, but not the 2008 meltdown). The general theme of the book in 1973 was that “an investor would be far better off buying and holding an index fund than attempting to buy and sell individual securities.” Over thirty years later, the data still bears out this lesson – one that most FIRE folks agree with.

Why follow-up editions over the last 30 years? The author states that there have been enormous changes in the variety of new financial instruments over that period, and these will need to be evaluated against the basic thesis of the book. Overall, it’s a very “readable” book, especially for those with an interest in investing and financial instruments.

The first part of the book is a history course of investing down the years, starting all the way back with the Tulip Craze of the 17th century and moving through the great depression, the 60s, 80s, and all the way up to the dot.com bust. In each era, the author points out the prevailing investment theories and provides data on how they performed. It’s a great read for those who want to understand how people have been investing throughout the centuries.

The second part of the book describes the current state of the investing world, and describes, in detail, the two main theories of stock analysis (Technical and Fundamental analysis). He again goes into some detail of the methods of each, their strengths, weaknesses, and effectiveness based on history. In the end, the author uses the findings to state that “investors might want to reconsider their faith in professional advisors.” He notes that most do not beat the market average – although some do, and some do consistently. His final conclusion is that the historical evidence does not support a theory that professionals can do better than the individual investor.

The third part of the book goes through more of the modern investing theory (Efficient Market Theory, Modern Portfolio Theory, etc.). Again, the author provides a wealth of data and comparisons so that the reader can make his own judgements. In the end, the data points to a very efficient market that is difficult for a professional to manage successfully and beat the market.

So what do you do then? The author provides a road map of exercises to follow to build your financial plan, including determining your objectives, insurance, tax avoidance, bond and other investments (real estate, precious metals, etc.). It’s a great read on how to diversify, plan for your life cycle, and winning the investment game. Just for the last quarter of the book alone it’s a valuable read.

I’d rate it an A, and a must read for any FIRE person who wants to learn about the Wall Street Game.

 

Mr. 39 Months

Frugal Fail

Well, I was hit with the frugal “bug” and tried something out. Our old washing machine’s transmission went, and the repair guy said he could fix it for $400 + parts. That’s pretty close to the cost for a new machine, with not guarantee that other parts wouldn’t start breaking as well.

So Mrs. 39 Months started doing research to find a replacement. She likes’ top loaders, so that is what we were going to go with. However, article after article kept coming back with how bad the new machines are. The government regulations on water use forced the manufacturers to come up with “innovative” ways to clean the clothes with about 1/3 the amount of water that used to be used. The result has been a lot of dissatisfied customers and poor ratings.

So I thought I’d look on you tube and see how hard it would be to change out a washer transmission. It didn’t look too difficult, and the part was $270 complete. So the frugal Mr. 39 Months said “hey, why don’t I try and do this to prove to myself that I can fix something significant.” A nice win.

So part ordered, arrives, date set (this last weekend), and Mrs. 39 Months out of the house to meet with a friend. Here we go! Yet once I started pulling the machine apart in order to replace the transmission, I found that one of the components had fused/frozen to the main transmission shaft – and I had to get them apart in order to do the replacement.

For the next 6+ hours I tried everything to get these two parts to come loose (bought some additional tools along the way). After much cursing, struggle, and cuts/bruises – no luck. By Saturday night I was very grumpy (and exchanged some harsh, undeserved words with Mrs. 39 Months when she just asked me “are you done yet”). So, we ended up going out on Sunday and ordering a new washer. Luckily it was in stock, so we were able to get it delivered today (Monday).

I hope to be able to get my money back on the new transmission (just opened the box, never used any of the parts, most are still in their packaging). I don’t regret making the attempt (other than being cross with Mrs. 39 Months) – it’s all part of the learning cycle in life, and I’ll know better next time.

So that was my adventure this last weekend.

 

Mr. 39 Months

Investment update for Sep 1, 2018

Things went well again, with another month of gains which pushed me further into the black for 2018. Still have some ground to makeup after the Feb/Mar meltdown, but its trending well. I am now up 2.24% for the year, with a 1.68% bump in August. An old investment saying was “sell in May and go away!” where you sell everything on Memorial Day (late May) and walk away till Labor Day (Sep). If you did this in 2018, you lost out on some significant gains (about 4% for those 3 months or the equivalent of 15.7% annual). Stick with the plan!

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

I ended up being about 1.6% up here for August, so they have continued steady increases for a while now. US Small caps continued to surge, and S&P500 and REITS did well. Bonds gained a little and International got hit. See my July post on this to look how each segment did for the first half of the year. Note that these returns include reinvesting dividends.

My 401K/Deferred account at work was up 1.7% for August, with the same general results on each segment. Remember that this account doesn’t have REITs, so it benefits more than above when REITs drop (but doesn’t do as well when REITs surge).

Dividend Income Account: Allocation:

  • 25% Dividend Stocks
  • 25% REITs
  • 50% Bond Index Funds

This account was up 2.2%, so up a bit (in July it dropped -1.6%). For the year, it is a little down, even counting in the dividends. I think this is primarily due to drops in bond index funds. Overall, it continues sending me dividends, but not growing much.

Value Investing Account: Allocation (remember I refocused this at the beginning of February):

  • 40% in individual value stocks I picked myself (2 each, 20% for each) – SBS and GILD
  • 20% USAA Market Index (my brokerage is USAA)
  • 40% in Vanguard Value Index fund

My losing streak starts back up again here, primarily due to my value stock picks. The leader, Cia Saneamento, suffers from the problems that all the international stock funds have (see above). My other value stock, Gilead, was down -2.7%. Meanwhile, my two mutual funds were both up (average of 2.7%). This continues to show me that I am not a good stock picker.

Again, another up month. Let’s hope we can keep this momentum going for the rest of the year, so we can rescue this one.

 

How did you do in August?

 

Mr. 39 Months

Labor Day Weekend with the family

Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

 

The first governmental recognition came through municipal ordinances passed in 1885 and 1886. From these, a movement developed to secure state legislation. The first state bill was introduced into the New York legislature, but the first to become law was passed by Oregon on February 21, 1887. During 1887 four more states — Colorado, Massachusetts, New Jersey, and New York — created the Labor Day holiday by legislative enactment. By the end of the decade Connecticut, Nebraska, and Pennsylvania had followed suit. By 1894, 23 more states had adopted the holiday, and on June 28, 1884, Congress passed an act making the first Monday in September of each year a legal holiday in the District of Columbia and the territories.

From US Debt of Labor website

Labor Day is often celebrated as the last day of summer. Many companies change company policy (dress codes, work hours, etc.) after Labor Day.  For many places, kids go back to school after Labor Day (after enjoying their summers off). There is a fashion rule that says you never where white after Labor Day. All of these point to the same thing; the day is a transition time, between one parts of the annual cycle to another.

Like many times of change in your life, folks tend to want to experience it with family and close friends. It’s a time of barbeques, picnics, and dinner conversation. Sometimes the conversations are serious, but most of the times the talk is light and enjoyable.

This week Mrs. 39 Months and I are traveling north to New York to spend time with her family (hence the rest area picture). Her sister is closing in on retirement, and since the two of them are very close, where she ends up relocating (she doesn’t plan to stay in NY) will have some impact on our plans.

I hope all of you have a pleasant and enjoyable weekend!

 

Mr. 39 Months