French Stocks, Protestantism, and Old Money
One of the reasons I haven’t been around much this month is I’ve been working with members on both sides of my family, adjusting portfolios now that we are in a new tax year, reviewing plans to make sure everyone is on track for retirement, and dealing with some paperwork that includes a nightmare of an annuity transfer that has gone so wrong, I had to have the annuitant involve the regulators of two different states.
Most of my time the past couple of weeks has been spent going through the family’s holdings for an annual review and, if necessary, rebalancing. I think best in quiet so I tend to get up early, go out to a restaurant for breakfast, and sit in silence with a stack of tear sheets, annual reports, and a notebook to see each persons’ holdings; how well-rounded they are or what exposures they share that could cause a problem in the event of a correlated decline. With the volatility happening in Europe, the quiet, almost unnoticed repeal of the socialist taxes that were put in place several years ago to much fanfare now that they have utterly failed to achieve what they hoped it would achieve, and the strengthening U.S. dollar, I had my parents sell off some of their American banks to expand their French oil and pharmaceutical holdings, their Nestle stake in Switzerland, and a couple of British and Australian positions, as well. Sure, Europe could get ugly quickly depending on how things go in the future with the potential exit of Greece from the Eurozone but it won’t matter by the time they’re ready to retire.
The 10,000 or so words I have written in the past 30 days have all gone to About.com as I’m working to overhaul the site completely in the coming six months, with pieces focusing on basic concepts for beginners such as comparing the opportunity cost of a decision using two time value of money formulas and breaking down what I consider one of the top enemies of wealth accumulation in private portfolios: turnover. By the time it’s done, I want the navigation to be a lot easier, which is frustrating because I have little control over the layout of the site itself (or the ads … please don’t write me about the ads because I have no say in the frequency, placement, or ubiquity).
I’m also still looking into a forum for this site, based on requests from several of you, so the community can have conversations when I’m not around based on shared interests in a wide range of topics. Oh, and Google just sent me a message saying that if I don’t create a mobile version of the blog, they will basically drop it from search results on mobile phones. Given that I hate mobile versions of sites, and disable them, I’m not particularly inclined to agree now that technology is almost to the point where there should be no meaningful difference between desktop and mobile devices. Personal taste and all of that, but I want the exact same experience no matter how I access information.
Meanwhile, Aaron and I are launching a series of projects that we expect to take 36 months to complete. We are both 32 years old and it’s time to get the next 8-10 years settled. This includes some estate planning, some changes to our personal balance sheet, and divesting anything beyond the core things on which we want to focus. I’m sure I’ll be writing about it in the coming years quite a lot so there’s little point in talking about the preliminaries.
We’re going to overhaul the technology platform the sporting goods business uses, which will take at least six months of non-stop work but should result in some fairly significant productivity gains. We’re thinking about expanding into certain adjacent fields, too, but that is going to be a capital allocation decision that I have to make given it will commit us to a certain course of action for several years. I’m undecided at the moment.
We have too many images to count that we could turn into finished testimonials. I’d like to get that done, too, especially for some of our bigger media clients in television and film.
One other side clean-up project: I promised last year to keep a Google spreadsheet of my reading so I could share it with you. Several months ago, when Dragon Age: Inquisition was released, I forgot to keep it updated. I’m going to try to go back through and get it in order sometime prior to spring so I can make the link public. That way, those of you who are interested in what I’m reading, and are kind of enough to share your reading list with me, can steal the best ideas off it based on your own interest.
The sad thing about us being behind in the schedule? Aaron and I are supposed to be at Walt Disney World with friends but are too busy to get away. Right now, I should be sitting down for Tonga Toast. Instead, I’m about to have a pizza as I read a book from 1988 by Nelson Aldrich about a world that is now long dead along with many of the people occupying it: Old Money. It’s a bizarre notion; that people once thought this way. I barely remember the older generation when I was a kid in the 1980s having reverence for certain families like the Kennedy’s but it is such a foreign thought that it’s almost like I dreamed it. He talks of the rise of Celebritocracy, replacing Old Money, and it seems that we are fully there. After all, would anyone want to have lunch with the great grandchildren of Steve Jobs? What will they have done to accomplish anything? No, most Americans would rather talk to new tech startup CEO in Silicon Valley or hear success stories of a construction worker who built an empire over 25 years; get a backstage pass to see Beyonce or have coffee with Elon Musk. Aldrich said it dooms a majority of society to feelings of inadequacy whereas under the old money system, they just felt unlucky and maybe resentful.
It’s hard to dispute. The average American doesn’t automatically respect someone for being born into the right family, anymore. You’re an umpteeth-generation DuPont? Okay. People who want some of your largesse might feign interest but it doesn’t stir the imagination. That emotional power now belongs to those who change the world.
Even today’s titans eschew old money. Bill Gates and Warren Buffett are gifting almost all of their fortunes to charity, to pay back society for the fruits that have been bestowed upon them. We’re not one for dynasties, anymore. Certainly not in the same way you see in parts of Asia. It’s another oddity of American culture. We are … culturally indoctrinated to have very different priorities. It shows up in such random places, too. American workers, by way of example, avoid taking roughly 51% of the paid vacation time to which they are entitled because they’d rather have the cash value despite boasting some of the highest discretionary incomes in the world. There are all these idiosyncrasies that make us, frankly, weird, compared to everyone else. It would be interesting to study them. I’m convinced, as has been discussed a few times in the past and brought up by some of you, part of this was the religious infusion of a strain of Protestantism in the 19th century that equated morality and good with effort and achievement. Americans several generations ago believed that God wanted us to be rich; God wanted us to be successful; prosperity was a gift bestowed upon a life well lived by God Himself, which was very different than some of the views on material wealth held in Europe in the centuries prior.
I’m rambling now. It’s time for pizza.
Reader Comments (31)
Comments are presented chronologically, with replies indented beneath the comments to which they respond.
Scott
January 19, 2015
Some of the disregard for families, is evidenced by Americas revolt against the British. Having a lack of respect for nobility, is something that makes us great. We are very much a "what have you done for me lately" culture.
Cheers,
Scott
Mike B.
January 19, 2015
Joshua, an off the topic question. I recall you had a book writing project a couple years back. Last I remember, you trying to decide if you would publish it yourself or not. What happened with that? Did you ever bring it to market? Thanks!
innerscorecard
January 20, 2015
Replying to Mike B.
I would be happy with a book that was just all the posts on this site and all the posts (including those that were inexplicably deleted) from About.com.
But even though that is exactly what many bloggers do (literally just copy and paste), I don't think that's going to happen here. Joshua seems to care too much about the actual quality of content. What an anachronistic relic! :p
Steve
January 23, 2015
Replying to Mike B.
When and if that book ever comes out, I will be the first to shout...
Steve
January 19, 2015
When you went into business with Mount Olympus Awards, was this an area that you were intensely passionate about or were you driven by the profit potential?
Put another way, is MOA to you like Apple was to Jobs or more Berkshire Hathaway (the original textile iteration) was to Buffett?
innerscorecard
January 19, 2015
Replying to Steve
Joshua has written about this before a few times. It was a combination of being an OK opportunity and a way to go into business in a complimentary way to what other family members were doing.
Steve
January 20, 2015
Replying to innerscorecard
Thanks for the clarification - while I've gone through so much of the archives, I guess I haven't read everything yet 🙂
innerscorecard
January 20, 2015
Replying to Steve
This only shows how much of a shameless addict I am. It's a good thing that Google search of the site also searches the comments section. Often I will be reading a book or a forum discussion elsewhere and I'll be curious if Joshua has covered the topic before. And often he has.
Anon
January 19, 2015
I recommend HTML5. All the content remains the same; it just looks slightly different depending on whether it's a desktop/laptop or phone. (I suspect you already know this, but just in case!)
I also hate mobile versions (because content isn't the same and I can't zoom in.)
Anon
January 19, 2015
Replying to Anon
e.g., http://themeforest.net/item/the-breaking-news-responsive-wordpress-theme/full_screen_preview/8725317
Anon
January 19, 2015
I wouldn't recommend a forum. It's like letting the students decide what the class will be about each day. As time goes by, you'll get more and more subjects not worthy of discussion that detract from everything else. You'll then have no choice but to shut it down.
innerscorecard
January 19, 2015
Replying to Anon
That's also the reason that many sites these days turn off the comments.
But I couldn't disagree more. That's one view of how to do things. This site has always been much more free-flowing and about a back-and-forth-exchange of ideas and topics. A forum (carefully moderated to prevent trolls and spam) would be fantastic.
innerscorecard
January 19, 2015
I feel that some of the reverence for old money remains in places like this (it's talking about the wealthy, not the generationally wealthy, but I think some of the same attitude is there, even if the subject is different):
http://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_insanely_wealthy_people_buy_that_ordinary/cnnmca8
Engineer7006
January 19, 2015
Joshua,
I'm in complete agreement with you regarding mobile sites. I absolutely hate them and get rather annoyed when they become the default website on a portable device. It appears that you already had considered the needs of mobile browsers given the width that you use for your content. I occasionally view your blog on a mobile device and have zero issues.
As for Disney, I have a bunch of friends there right now and nearly went myself. Would have been pretty interesting to run into you there. Looks like I will be going down there during the food and wine festival later this year.
dave ( nestle)
January 20, 2015
Replying to Engineer7006
Agree also about the mobile sites!
Also going to Disneyworld in April and June. (dont ask) Running into Joshua and company (although I probably wouldnt bother him out of respect?) would be better than being backstage at a Beyonce concert. Magical.
(So glad the measles outbreak is in California)
calegp
February 5, 2015
Replying to Engineer7006
The only area on CNN's website that is actually sane is their mobile website. It's the only way I can read any of their articles. Their main page is barely navigable anymore. I despise autoplaying videos.
Mike B.
January 20, 2015
Anybody else think that Joshua should disclose the type and toppings of the subway sandwich that is in the picture? It looks pretty good.
JB
January 20, 2015
Why not try a forum for a while and see how it goes? You can always turn it off later, right?
dave (nestle)
January 20, 2015
Please post pictures of the pizza.
Jordi
January 20, 2015
I would not say that American workers only take 51% of the paid vacation time because they’d rather have the cash value. Maybe it's due to tradition, peer/employer pressure or other reasons (I have no clue). What I know is that when they move to work to Europe they do take 4 weeks off and love it. I've worked in Europe with several Americans and seen this first hand. If they did it to cash the money they would keep doing it in Europe too.
Joshua Kennon
January 20, 2015
Replying to Jordi
Personally, I don't think they're mutually exclusive. Culture and expectation do seem to play a part.
The last study I saw on the topic, which came out in the back end of 2014, showed that the top reasons Americans cited for not using paid time off were not wanting to return to a pile of work when they came back and feeling like nobody else could competently do their job. A decent percentage of people felt lucky they had been unscathed by the Great Recession so they wanted to work as much as they could while they could since others were losing their jobs.
Much further down on the list, which could indicate your theory is correct for some people, was a fear that they'd be viewed as weak if they took time off, making them replaceable or something along those lines.
As for your experience: Wouldn't it make sense that the type of American willing to move to Europe is the type of person who would take time off to see the world? That's not indicative of most workers.
I'd love to see it change. Other first-world economies have adapted just fine, some with as high as 4 weeks paid vacation a year, with no significant dent in economic growth or corporate profitability. I'd go so far as to say it would be possible with productivity rises to change compensation laws and permit 4-day workweeks with the same pay. Automation would pick up most of the slack. The 40-hour system we have now is largely an anachronism. Every time scientists look at the data, they find that half of the time in the office for most people is wasted. You have a burst of productivity up through the first 3-4 hours and then it's just ... nothing. You'd be better off going home. The net-wide society costs in terms of happiness, electricity, resources ... they're huge. We're using a 19th and 20th century system that doesn't fit with the way middle and upper class work is performed today.
I think one of the reasons the science is ignored and you don't see a lot of innovation is because Congress has stupidly tied benefit laws to some imaginary "full time" hour line rather than pro-rating it like Australia. Does it really make sense if you work 29 hours you aren't entitled to a range of necessary compensation, yet that 1 extra hour alters everything? It's an idiotic way to run the civilization. If you work 29 hours, you should get 29/30ths of the maximum benefit of whatever it is.
Then again, Australia's retirement system is better than ours, too. And they offer offsetting dividend franking tax credits to make their companies more competitive. America used to have a habit of stealing everyone else's best ideas to implement them. I'd like to see another round of it.
Jordi
January 20, 2015
Replying to Joshua Kennon
I completely agree we should rethink the 40 hours system and the paid vacation time per year. The research you mention seems very interesting. I'll try to read more about it. We should use these type of research to redesign the system and stop following rules that stopped making sense a long time ago.
You're right that American workers that move to Europe are not really representative. However, I noticed that (the ones I met) for the first months/year after moving to Europe they would still only take a few days off and feel a bit guilty if they took more than 5 days in a row. After a while they would realize nobody judged them for doing it and adapt to what the rest of European colleagues did.
innerscorecard
January 20, 2015
Replying to Joshua Kennon
The sad thing is that this applies even more to those jobs that dwarf 40 hours per week in terms of the hours requirement. Large law firm jobs at 80 hours a week. Investment banking jobs at 100 hours a week. Medical resident jobs at whatever insane numbers of hours they work at. Hell, even things like management consulting and Big 4 accounting will give you a "lifestyle" job at 60 hours a week. And you're not getting more done for these requirements. And if you are in fact more efficient, you can't just go home earlier than everyone else. You have to put in "face time."
It's counterproductive, but that's "just the way it is."
Matt
January 20, 2015
Replying to innerscorecard
Another benefit of self-employment.
😀
dave (nestle)
January 21, 2015
'Older' money?
Toosie Roll CEO dead at 95.
He owns more than 50 percent of the float.
Look at this share price today! (I still dont own any and may not anytime soon unless I bite the bullet)
Mike B.
January 21, 2015
Replying to dave (nestle)
Dave, heard it on the radio. My first thought was the buzzards of Wall Street are going to be swooping in. Pick the bones in a bit of morbid humor you could say. All those fat investment fees to be made selling it off!
That said, think there is a fair chance Mrs. Gordon gets a phone call from Omaha. I hear there is a older Gentleman who owns a large stake in candy company. Has a lot of cash, and likes brand names. Just a thought.
dave (nestle)
January 22, 2015
Replying to Mike B.
Yes, might be interesting...
By the way...
TooTsie, TooTsie, TooTsie (freaking small keyed I-phone!!)
Mr.owenr
January 22, 2015
I would love a Google Spread Sheet of your reading. Personally I'm half way through a book titled "A Random Walk Down Wall Street: The Time Tested Strategy For Successful Investing."
Pablo
January 27, 2015
I am curious as to what you think the right tax rate should be. I am comfortable with the 15% to 17% effective income tax rate that I pay here in Canada as most of our dollars goes towards public health care and education rather than military spending or interest payments.
I do agree that entrepreneurs should be rich for contributing to society and for creating new ideas and products. On the other hand, entrepreneurs do rely on good governance, public infrastructure, and institutions to run their businesses.
I don't like arbitrary confiscation by the government. On the other hand, I think I do have a leg-up in a place like Canada where our taxes goes towards public schools, libraries, and health-care. Having these institutions in place allow me to take risks without having to worry about being bankrupted by a health-care crisis and/or free access to information that can help me to succeed.
TimMcAleenanJr
February 6, 2015
Do you think it's...less than noble of Buffett to structure most of his charitable contributions through death rather than during life? I understand the utilitarian argument that Buffett is an elite compounder and this maximizes the net good of the gift, but I also keep in mind Voltaire's argument that charitable gifts in a will are only the act of a man giving away what no longer belongs to him; charity as a personal sacrifice is diminished when that wealth remains a security blanket, never departing until the precise moment it can offer no personal value.
Bartlett Workplace
February 16, 2016
Hey Joshua... Good piece of research and information... You have put light on very sensitive issues which are mostly overlooked by people which are otherwise things that need to be given a serious thought..Keep posting such informative stuff more....