Healthy, Wealthy, and Wise #2

 

 

Health

One of the keys to long-term success is to avoid mistakes, unforced errors. 

This summary traces the efforts of David Sinclair of Harvard, to slow or reverse aging and other age-related realities. He says, "Aging can be slowed or reversed, and we are about to figure out how." 

According to a Wall Street Journal article, he has founded the following companies. None of them have gained traction.

• Animal Biosciences. Reversed aging in dogs.
• Calico Life Sciences. Launched by Google.
• New Limit. A cell re-programming company.
• Altos Labs. Cell rejuvenation.
• Sirtris Pharmaceuticals. Red wine and resveratrol.
• OvaScience. Helping "older" women become pregnant.
• CohBar. Treatments for obesity and fatty liver disease.
• Life Biosciences. Genetic reprogramming for vision loss.
• Metro International Biotech. Seeking to develop a formulation to treat age-related conditions such as Alzheimer’s disease. Being marketed to consumers as a longevity-promoting supplement.
• Fully Aligned. A consumer wellness company featuring Serena Poon, celebrity chef.
• Tally Health. Developing a cheek-swab test to tell people their biological age.

Sinclair admits that “Developing medicines that safely and effectively target aging is a difficult endeavor that has turned out to take longer than I expected.”

The Food and Drug Administration, where approval for longevity drugs is administered, doesn’t consider aging a disease.

The holy grail of longer lives continues to be elusive. Don't make an unforced error in its pursuit.

Wealth 

Here are two wildly diverse strategies for investing at the edges.

At the hard money edge is owning a core of U.S. Treasury securities. They pay reasonable rates and are fully guaranteed by the full faith and credit of the United States government. 

At the easy money edge is to own some kind of cryptocurrency like Bitcoin. Despite friendlier tones being expressed by the incoming administration, our view remains that cryptocurrencies don't meet the standards of an investment. No earnings, no cash flow, no dividends, no interest, no use case.They are a pure speculation.  

At the end of the day, the lure of "Easy Money" requires parting with your hard earned cash to earn even more. "Hard Money" takes years to build and doesn't depend on a gimmick, popularity, or single investment. We're sticking with Hard Money. You're welcome. 

💥IMPORTANT! This is not specific investment advice! If either of these possibilities appeal to you, please contact us before you do anything. There are important details that must be covered.

 

Wisdom

         Willem Arondéus, "December" (ca. 1929), Rijksmuseum

             The caption reads, "The Year Reclines to Rest in a Cloak of Cold."

In Nature, this is the season of darkness, rest, silence. Silent Night, Holy Night. Visions of sugar plums. This poem seems to strike the right notes.

Let the eyes sparkle with joy,
The mind be filled with possibility,
The heart strong with courage
And your only boundary is joy.

Go. Believe.

You can do anything. It is all possible.
Allow yourself to breath-in the openness of possibility.
Release all barriers of the mind.
Let the soul rise with love and passion.
Allow yourself to dream.
You're too precious to not.

Erica Valentine, Just Breathe

Blessings for this Holiday Season and Best Wishes for a Fulfilling New Year.

James Cosgrove, CFP, Plano, TX jim.cosgrove@verizon.net 972-489-0262
Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315

Evidence-based. Rules-driven. Policy-focused.

 

 

 

 

 

What We're Thinking: Inspiration Struck

    

It was 2:56am this morning. I had just read some updated information on stroke prevention. Get good sleep was a part of it! The phrase, "healthy, wealthy, and wise" ran through my head. I texted the article to the family. 

Then I got to thinking about all the other people I know. People like you. Would they find commentary on health, wealth, and wisdom useful?

Then I realized that these Considerations have been focused on the wealth part. I thought we might make it better by including health and wisdom. So, starting here and now, each issue will include something on Health, Wealth, and Wisdom.

Let's roll.

Health

I mentioned the updated stroke prevention information. The emphasis is on regular screening for stroke risk factors like high blood pressure, high cholesterol, diabetes, and obesity. The guidelines also include lifestyle changes such as eating a nutritious diet, staying physically active, and getting healthy sleep.

If you're younger and the possibility of a stroke is not on your screen, it's still not too early to establish a healthy lifestyle. Small actions taken consistently over long periods of time can produce amazing results. It's like saving a little bit each payday. In 20 years you'll be astonished.

You can read the full article here.

Wealth

Goldman Sachs recently published a 37-page research piece suggesting that US stock market returns for the next 10 years are expected to be a paltry 3%. That's far below both recent and historical returns. They cite market concentration and high valuations as the main culprits.

Ben Carlson and Barry Ritholtz, both of Ritholtz Wealth Management, countered that 3% would imply a financial debacle of some kind. Like the stock market crash at the front end of the Great Depression, the stagflation of the 1970's, or the Great Financial Collapse (GFC) of 2007-08.

They contend (here and here) that while a financial debacle is always possible, the probability is low, and such a debacle is impossible to forecast ahead of time anyway.

We align with Ben and Barry on this.

Wisdom

Morgan Housel is one of our favorite up and coming writers. His two books, The Psychology of Money: Timeless lessons on wealth, greed, and happiness (2020), and Same as Ever: A guide to what never changes (2023), will have long and useful lives. He also publishes in a blog at the Collaborative Fund.

In a recent post, he wrote of a Russian proverb that goes, “The past is more unpredictable than the future.” 

It’s common for our memories of the past to become disconnected from how we actually felt at the time. Hence, there are "the good old days."

But we sanitize the past because we now know how the story ends. In retrospect, we think nothing was uncertain and there was nothing to worry about. In fact, our past selves had no idea how things would end up and we had a lot to worry about. Uncertainty dictates nearly everything in the current moment, but looking back we pretend it never existed.

The current moment that might feel risky and uncertain is often bursting with opportunity. The past isn't as good as you remember. The present isn’t as bad as you think. The future will be better than you anticipate.

Today happens to be election day. We'll begin remembering more of the past, assessing the present, and gauging the future. 

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There you are. Feedback is the breakfast of champions (wisdom). Let us know what you think. Is this a good direction for us to take? Or should we just stick to wealth? If you like, feel free to forward this to your family and friends. And as usual, if there's something you'd like to talk about, here's our contact information.

James Cosgrove, CFP, Plano, TX jim.cosgrove@verizon.net 972-489-0262
Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315

Evidence-based. Rules-driven. Policy-focused.

 

What We're Thinking: Interest Rates Are Falling-- What Should You Do?

 

The worst bear (down) market ever, in fixed income (bonds), unfolded from August, 2020, to October, 2023. You lived through it. Maybe you didn't even know it happened. During that time, bond investments like what most of us own in our IRA's and 401k's, fell by about 24%. This gave rise to hand-wringing and worrisome chatter about the usefulness of the classic 60/40 portfolio, where bonds occupy the 40 part.

But like a bear market in stocks, the worse things get, the better the outlook becomes for patient, long-term investors like us. For the past year, bonds have risen by about 17%. Money market fund yields have risen from near zero to over 5%. What's not to like?

What's not to like is the probability that 5ish money market yields could shrink into the 4's over the next year. The chart below shows current expectations for the Fed Funds Rate. By the way, that's the only rate the Fed controls. All other rates, like for loans and other credits, are the result of global bond trading, most of which is done by computers.

Relax. This is nowhere near apocalyptic. Bonds in long-term portfolios should do just fine. The current yield of a bond is a good indicator for its future return. The current yield on widely-held bonds is around 4%. With inflation headed toward 3%, bonds are offering decent compensation.

So, let's net this out for most portfolios.

👉If you have a reserve, an emergency fund, or money earmarked to buy something within the next 3-5 years, holding it in a money market fund, CDs, or a short-term bond fund will be fine. Just expect the rates to gradually work lower.

👉If you have bond funds in retirement plans like an IRA, 401k, or in taxable accounts, chances are they are part of an intentional asset allocation strategy. There's no reason to abandon that. Stay the course.

Everyone's situation is a little different. Your life path is not like anyone else's. If you'd like to have a conversation about this, here's how to reach us:

James Cosgrove, CFP, Plano, TX jim.cosgrove@verizon.net 972-489-0262
Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315

Evidence-based. Rules-driven. Policy-focused.

What We're Thinking: Cryptocurrency and Blockchain Update

 

In October of 2021, we posted comments on “Cryptocurrencies and Blockchain.” It began with a 1994 quote from Peter Lynch, the legendary manager of Fidelity Magellan Fund. He said, “If you can’t explain to a 10-year-old in two minutes or less why you own a stock, you shouldn’t own it.”

This is an update to that post.

First, if you’re suffering from periodic bouts of FOMO (fear of missing out), relax. When the 2021 post was written, Bitcoin was trading at about $61,000. About a month later it peaked at about $64,000. From there, it fell to about $17,000 by the end of 2022. That was a 73% loss. If that was the Dow-Jones Average, we'd be talking about a 29,000-point loss!

The good news is that the price has recovered to about $62,000. So, net net, holders are about even in nearly three years. In the meantime, your money market fund has served you well. Like I said, if FOMO tugs at you, relax.

But there's more to this story. An important change has occurred since 2021. Government regulators have approved the creation of cryptocurrency ETFs (exchange traded funds). This made it easier and safer for anyone with a brokerage account to own a crypto security. This is what the big asset management companies like Blackrock, Fidelity, and Schwab have been arguing for. And they have quickly followed up by offering a wide range of crypto products.

Vanguard is not playing. Their view is that "Crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products. With stocks, you own a share of a company that produces goods or services, and may also pay dividends. With bonds, you get a stream of interest payments. Crypto is an immature asset class with no inherent economic value, no cash flow, and extreme price volatility.”

Let’s be clear. We’re not morally opposed to betting, speculation, or lotteries. They’re fun. Entertaining. There’s a remote chance of a big payoff. Want to speculate? Fine. It’s your money. Just don’t kid yourself about it being an investment.

Blockchain
Blockchain is the database technology that enables decentralized management, anonymity, authentication, forgery resistance, record-keeping, and verified exchange of assets among mutually suspicious individuals. Now we’re talking. There are a lot of mutually suspicious people walking around.

Blockchain is the underlying technology that supports the creation of cryptocurrencies like Bitcoin. But it has many other applications. It's already being used in contracts, medicine, finance, real estate, travel, insurance, entertainment, supply chain management, and AI (artificial intelligence) applications.

No one owns blockchain. It’s like no one owns the 'https' in a browser address. But anyone can use it. Again, from Vanguard, “We have a lot of interest in blockchain. We believe its application will make capital markets more efficient, and we’ve been actively involved in research to use it."

Summary
Cryptocurrencies are a high-risk, speculative game. That has not changed in three years. But we’ll continue to monitor it.

Blockchain is about building more complex and efficient databases, some of which support the creation of cryptocurrencies. In the meantime, Apple processes 285 million transactions every day on its blockchain. JP Morgan has launched its own blockchain called Onyx. Nvidia is a supplier of chips that help build blockchains. And there's an obvious link to AI tools.

So, if you hold a total stock market index fund, the S&P 500, or an international stock index fund, you already have an ownership stake in the creation and use of blockchain technology. Banish FOMO.

This is great news for people of any age who just want to save and invest for future goals. You don’t need to do anything except save aggressively, invest in low cost, broadly-diversified global index funds, and stay the course. 

That can be explained to a 10-year-old in less than two minutes. You’re not 10. We have more than two minutes. We’re here. All-in. Let’s talk.

 

 James Cosgrove, CFP, Plano, TX jim.cosgrove@verizon.net 972-489-0262

 Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315

Evidence-based. Rules-driven. Policy-focused.