Rolling Billboards | US House of Representatives: History, Art & ArchivesIt started simply enough, a hundred years ago. Americans bought cars. Americans loved cars. And Americans loved politics. So, it seemed almost inevitable that automobiles became rolling billboards for their owners’ favorite candidates. Representatives cheerfully provided different auto accessories, which became a favorite method for taking the campaign on the road.DecalsEarly in automotive history, innovative politicos adapted campaign window decals. By the 1920s, drivers pasted them on the insides of windshields, protecting the paper label from rain and dirt. Plastering the windshields with paper was “so obviously unsafe,” said one observer, “that it is in disfavor with all but the most inveterate touring magpies.” Die-hard decal fans used them for years—Representative Jeannette Rankin of Montana gave them away during her 1940 campaign.License platesCars became even more popular as the decades rolled by, and sported even more ingenious (and weather-ready) congressional campaign ornaments. With the advent of license plates, drivers could accessorize them with bits of stamped-out metal printed with candidates’ slogans. Even better, in states that mandated only a rear plate, Representatives like Charlie Halleck of Illinois could hand out bright red and white tin placards, with holes ready-drilled, to his supporters.Bumper stickersNo one knows when the first political sign was attached to a car bumper, but the location stuck. The sturdy strip of metal was a perfect spot for a mini-poster. It put the sign in full view of the motoring public but didn't block anyone's view of the road. Early cardboard signs, waxed or varnished to weatherproof them, clung to rear bumpers with twine or wire. Swooping chrome car designs of the post-World War II era made it hard to worm a cord around the bumper, and drove the tied-on method into the ground. Materials innovation from the necessities of the war also brought a solution to this mundane problem: self-adhesive paper, fluorescent ink, vinyl, and silicone. Bumper sticker technology was battle-tested and ready to take to the highways.America’s post-war extension of federal highways and suburbs, and the subsequent love affair with the automobile, soon made the bumper sticker ubiquitous. Roadside attractions were the first adherents. Attendants at places like Luray Caverns worked the parking lots, slapping on advertisements while the tourists were deep in a cave. Congressional candidates soon got in on the act. For instance, Congressman Clarence Brown of Ohio used day-glo colors to make his Washington office a sightseers’ destination. There were good reasons to use them in a campaign, too. Bumper stickers were cheap but tough, and the electorate was crazy for them. Among other reasons, drivers could advertise their politics while preserving a bit of anonymity. In fact, they were so well-matched to a nation on wheels that they became many Americans’ likeliest means of political expression. In the modern social media era, bumper stickers survived, a tribute to Americans’ love of cars and desire to indulge in a little rear-end rhetoric on the road.Sources: Baker, Whitney. “Soapbox for the Automobile: Bumper Sticker History, Identification, and Preservation,” Collections: A Journal for Museum and Archives Professionals, Vol. 7, No. 3, Summer 2011; Roger A. Fischer, Tippecanoe and Trinkets Too: The Material Culture of American Presidential Campaigns, 1828-1984 (Chicago: University of Illinois Press, 1988); Schwab, Armand Jr., “Bumpers Tell Tourist’s Story,” New York Times, June 15, 1952; Edmund B. Sullivan, Collecting Political Americana (Hanover, MA: Christopher Publishing House, 1991); Mark Warda, 200 Years of Political Campaign Collectibles (Clearwater, FL: Galt Press, 2005).Follow @USHouseHistory
Lee Quiñones Says, “If These Walls Could Talk”“Shit man we were 15 years old,” Lee says while painting his train, “There was a bunch of us painting together, doing it solo, as a duo, or as a group.” Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) An NYC original whole-car graffiti writer and painter in the 1970s/80s, Mr. Quiñones is now prepping for his latest gallery show, a solo at Charlie James Gallery in LA’s Chinatown. 40 years after his first gallery show in Rome that many point to as groundbreaking for graffiti writers transitioning to contemporary art, Lee is easily time-travelling to those days while he is working on new canvasses that invariably include imagery from that era, even as his own style has continued to evolve and he has greatly expanded his visual repertoire. Lee Quiñones. 9 Lives (photo courtesy of the artist) Here in his Bushwick studio his focus gathers around his penciled paint strokes as he builds up the exterior of a train racing across canvas that will be called “Born From Many Apples”. “It all goes back to the old saying, ‘The apple doesn't fall far from the tree’ and I always remember that,” he says about a socially connected, universalist philosophy that has often appeared thematically in his work. “Born from many apples. We are part of all these things and people. “It was a pretty special time and place, he says of train writing in the late 70s, Obviously all good things come to an end, so I’m okay with that.” Not romantic about the conditions of the city during those years, he’s clear about the raw nature of painting and looking for adventure on train tracks in the terra incognita of a declining New York. Lee Quiñones. Counterfeit Entitlment Makes For A Brittle Society (photo courtesy of the artist) Growing up on the Lower East Side of Manhattan and studying the train lines for the best exposure for his rolling canvasses, Lee hustled for the opportunity to go large scale, to be “All City”, often drawing his trains in detail on paper before grabbing paint and staking out a spot. From the start, he took his craft seriously. The gritty megapolis of his childhood was in perpetual financial austerity. Many neighborhoods appeared lawless, even avoided by police. Social or sports programs for youth were threadbare if they existed at all. Yet somehow graffiti kids who broke into train yards to paint coalesced into an underground community. “The camaraderie was there.” Competition and verbal lore were part the game of course, but writers also shared their techniques and improved skills with each other, he says. He speaks about the bonds forged among the graff writers in the early days; How they would exchange tips for tool making, techniques and hitting trains. It has the markings of a tight community. “Dudes really respected each other and writers were happy to meet each other, he says. We all brought our black books and we asked each other to tag it, like ‘can you put my name down to see if I can do it better with your style?’ It was a lot of sharing going on.” Lee Quiñones drawing from 1980. (photo courtesy of the artist) His prolific activity, creative experimentation, and constant study of his craft scored him a shot at the gallery scene before he entered his 20s, even though it was on another continent entirely. “The first major European show of graffiti-based art opened at the galleria La Medusa in Rome, Italy, in 1979,” he says. “Fab 5 Freddy and I showcased our very first works on canvas in an attempt to bring it above.” Forty years later he opens “If These Walls Could Talk”, a bold show of new works - a series of framed “tablets”, says Charlie James. Here you’ll see “writings on slabs of drywall and wood paneling that once were the walls of Quiñones’s studio(s), which were painstakingly removed during recent years. Unlike the urban landscape largely hostile to his earliest artistic production, these walls have offered an inviting interiority for the artist to perform his spray bomb color tests that ultimately become the foundation of his paintings.” True to his origins, Lee says he has developed his practice by study and sharing perspectives. “You have to be able to talk to people about work, about other artists, do comparisons, do evaluations, critique it – it makes for great conversation.” Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) We talked with Mr. Quiñones about the new show and his perspectives on his evolving practice as an artist: BSA: Four decades into your work as a self-made artist, one of your paintings for this exhibition is titled “Karma”. What was the genesis of this and what role does Karma play in your life as an artist? Lee Quiñones: There are several pieces in the show that have ignited the idea of karma. I spend a lot of time in my studio having sit-ins with my work whether there are already formed or in theory, so I have many passages of time that come to mind and usually one thing reflects on another or as I say, rhymes with each other. Life is fulfilling and revealing like that if you look hard enough. On that same note, I review life and humanity in a sarcastic manner in my head over time, and that in turn spills out onto my work or onto works that are specifically worthy of sarcasm. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Given the nature of graffiti vandalism in train yards and on the street, and your own illegal car racing on the streets, you may have used up your metaphorical 9 lives that is assigned to curious cats. Can you talk about the painting you have created for this exhibition entitled, “9 Lives.” Lee Quiñones: I have over time studied people in challenging situations that hide certain emotions in the details and reveal eye candy for the rest of us that just simply look and not see. The study painting 9 lives centralizes around the segregation that unfolded its ugly head during the late fifties when students of color were finally allowed to attend certain schools throughout the nation. I was especially driven to the 1957 incidence at the Little Rock Central High School in Arkansas where nine freshman students of color were to be escorted by police and or national guardsmen to their respective classes of study. One of the nine students, Elizabeth Eckford came early that day to school and subsequently endured a gauntlet of hate chants from her future fellow students led by a very angry and vocal Hazel Bryan. The photograph that captured that moment etched that dark time in the history books. What I found in making this piece of which it is a study to a larger one in progress is that their emotions of hate and courage were so prominent in their hands. The juxtaposition of a hand clutching a rolled up newspaper in a authoritarian way fueled by hate and fear against a hand clutching books of study showing steadfast and courage was irrefutable. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: In studio we touched on the topic of how graffiti and street artists like to talk about “community” but often we have observed that there’s little support among the artists for each other in practice. You mentioned how in the old days of train painting you guys really supported each other shared techniques and exchanged your new style discoveries. What changed? Lee Quiñones: Manufactured entitlement. The air is thin in some places of success and artist have only artists to rely on as sound boards and for sound advise. That there is the oxygen needed to be authentic and poised for your moment when it comes rightfully so. What you do with that moment is embrace your hard work and to not be compelled to feel threatened by an associate. I keep my closes allies from back in the day on the front pages of my day planner and I'm always interviewing new souls. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: You are having your first solo exhibition in LA. What took you so long? Lee Quiñones: Funny, after discussing the show with Charlie James, whom I find to be one of the most open and enthusiastic people in the arts, I realized that this wasn't just another show with everyone under the umbrella. It is my first solo show in Los Angeles on the heels of quite a few group surveys and splashes. Those exhibitions have their place and time and what I have been preaching in silence for some time now is; that in order to see a movement for what it is worth and how it weathers throughout the passage of time is to look closer at its inner working parts individually I'd like to think that this is a prelude, my first shot across the bow of the left coast in what will be a gathering of works itching to spill out. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Most people are familiar with the path that NYC graffiti culture took in the 80s and 90s to Western and Eastern Europe – and you’ve had the opportunity to hang out with writers from around the world thanks to your pioneering work on trains. Would you say that there is a difference between the graffiti experience in NYC and in Europe? Lee Quiñones: Sure thing. I mean, while things are extremely close to you while they are developing, you can't possibly see it clearly, so in essence, you need to remove yourself for an incubator period in order to focus more vividly and perhaps compare notes with your line of experiences. Europe has an extremely vast history in the arts throughout the ages. Empires have come and gone and in the end, we begin to understand them through the art that survives. America is not of age just yet. It has acne, still wrestles with its growing pains and is hesitant to show its proper ID at the velvet ropes, so this particular movement which had no reference to art history in the first place is just cresting it's wave. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Not many artists can sustain a long career, especially true when it comes to graffiti writers. Challenging oneself to explore and take risks as an artist appears to be crucial to continuing to evolve creatively – particularly if you want to become professional. What’s your biggest challenge as an artist these days? Lee Quiñones: Ushering people out of the context of nostalgia and looking at the current state of affairs in the works of today. I mean, the subject of the trains and all its glory is for me to bring out on occasion with a twist, not for people to theoretically box me into it. I turn pages because I don't want to be defined on one page. Personally, my own challenges consists of navigating around my own self tripping wires. Some are booby-trapped and some are triggers for the lights at the end of the tunnel. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) Lee Quiñones. Inspirational words and thoughts scribbled on walls at his studio. December 13, 2018. (photo © Jaime Rojo)  
Lee Quiñones Says, “If These Walls Could Talk”“Shit man we were 15 years old,” Lee says while painting his train, “There was a bunch of us painting together, doing it solo, as a duo, or as a group.” Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) An NYC original whole-car graffiti writer and painter in the 1970s/80s, Mr. Quiñones is now prepping for his latest gallery show, a solo at Charlie James Gallery in LA’s Chinatown. 40 years after his first gallery show in Rome that many point to as groundbreaking for graffiti writers transitioning to contemporary art, Lee is easily time-travelling to those days while he is working on new canvasses that invariably include imagery from that era, even as his own style has continued to evolve and he has greatly expanded his visual repertoire. Lee Quiñones. 9 Lives (photo courtesy of the artist) Here in his Bushwick studio his focus gathers around his penciled paint strokes as he builds up the exterior of a train racing across canvas that will be called “Born From Many Apples”. “It all goes back to the old saying, ‘The apple doesn't fall far from the tree’ and I always remember that,” he says about a socially connected, universalist philosophy that has often appeared thematically in his work. “Born from many apples. We are part of all these things and people. “It was a pretty special time and place, he says of train writing in the late 70s, Obviously all good things come to an end, so I’m okay with that.” Not romantic about the conditions of the city during those years, he’s clear about the raw nature of painting and looking for adventure on train tracks in the terra incognita of a declining New York. Lee Quiñones. Counterfeit Entitlment Makes For A Brittle Society (photo courtesy of the artist) Growing up on the Lower East Side of Manhattan and studying the train lines for the best exposure for his rolling canvasses, Lee hustled for the opportunity to go large scale, to be “All City”, often drawing his trains in detail on paper before grabbing paint and staking out a spot. From the start, he took his craft seriously. The gritty megapolis of his childhood was in perpetual financial austerity. Many neighborhoods appeared lawless, even avoided by police. Social or sports programs for youth were threadbare if they existed at all. Yet somehow graffiti kids who broke into train yards to paint coalesced into an underground community. “The camaraderie was there.” Competition and verbal lore were part the game of course, but writers also shared their techniques and improved skills with each other, he says. He speaks about the bonds forged among the graff writers in the early days; How they would exchange tips for tool making, techniques and hitting trains. It has the markings of a tight community. “Dudes really respected each other and writers were happy to meet each other, he says. We all brought our black books and we asked each other to tag it, like ‘can you put my name down to see if I can do it better with your style?’ It was a lot of sharing going on.” Lee Quiñones drawing from 1980. (photo courtesy of the artist) His prolific activity, creative experimentation, and constant study of his craft scored him a shot at the gallery scene before he entered his 20s, even though it was on another continent entirely. “The first major European show of graffiti-based art opened at the galleria La Medusa in Rome, Italy, in 1979,” he says. “Fab 5 Freddy and I showcased our very first works on canvas in an attempt to bring it above.” Forty years later he opens “If These Walls Could Talk”, a bold show of new works - a series of framed “tablets”, says Charlie James. Here you’ll see “writings on slabs of drywall and wood paneling that once were the walls of Quiñones’s studio(s), which were painstakingly removed during recent years. Unlike the urban landscape largely hostile to his earliest artistic production, these walls have offered an inviting interiority for the artist to perform his spray bomb color tests that ultimately become the foundation of his paintings.” True to his origins, Lee says he has developed his practice by study and sharing perspectives. “You have to be able to talk to people about work, about other artists, do comparisons, do evaluations, critique it – it makes for great conversation.” Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) We talked with Mr. Quiñones about the new show and his perspectives on his evolving practice as an artist: BSA: Four decades into your work as a self-made artist, one of your paintings for this exhibition is titled “Karma”. What was the genesis of this and what role does Karma play in your life as an artist? Lee Quiñones: There are several pieces in the show that have ignited the idea of karma. I spend a lot of time in my studio having sit-ins with my work whether there are already formed or in theory, so I have many passages of time that come to mind and usually one thing reflects on another or as I say, rhymes with each other. Life is fulfilling and revealing like that if you look hard enough. On that same note, I review life and humanity in a sarcastic manner in my head over time, and that in turn spills out onto my work or onto works that are specifically worthy of sarcasm. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Given the nature of graffiti vandalism in train yards and on the street, and your own illegal car racing on the streets, you may have used up your metaphorical 9 lives that is assigned to curious cats. Can you talk about the painting you have created for this exhibition entitled, “9 Lives.” Lee Quiñones: I have over time studied people in challenging situations that hide certain emotions in the details and reveal eye candy for the rest of us that just simply look and not see. The study painting 9 lives centralizes around the segregation that unfolded its ugly head during the late fifties when students of color were finally allowed to attend certain schools throughout the nation. I was especially driven to the 1957 incidence at the Little Rock Central High School in Arkansas where nine freshman students of color were to be escorted by police and or national guardsmen to their respective classes of study. One of the nine students, Elizabeth Eckford came early that day to school and subsequently endured a gauntlet of hate chants from her future fellow students led by a very angry and vocal Hazel Bryan. The photograph that captured that moment etched that dark time in the history books. What I found in making this piece of which it is a study to a larger one in progress is that their emotions of hate and courage were so prominent in their hands. The juxtaposition of a hand clutching a rolled up newspaper in a authoritarian way fueled by hate and fear against a hand clutching books of study showing steadfast and courage was irrefutable. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: In studio we touched on the topic of how graffiti and street artists like to talk about “community” but often we have observed that there’s little support among the artists for each other in practice. You mentioned how in the old days of train painting you guys really supported each other shared techniques and exchanged your new style discoveries. What changed? Lee Quiñones: Manufactured entitlement. The air is thin in some places of success and artist have only artists to rely on as sound boards and for sound advise. That there is the oxygen needed to be authentic and poised for your moment when it comes rightfully so. What you do with that moment is embrace your hard work and to not be compelled to feel threatened by an associate. I keep my closes allies from back in the day on the front pages of my day planner and I'm always interviewing new souls. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: You are having your first solo exhibition in LA. What took you so long? Lee Quiñones: Funny, after discussing the show with Charlie James, whom I find to be one of the most open and enthusiastic people in the arts, I realized that this wasn't just another show with everyone under the umbrella. It is my first solo show in Los Angeles on the heels of quite a few group surveys and splashes. Those exhibitions have their place and time and what I have been preaching in silence for some time now is; that in order to see a movement for what it is worth and how it weathers throughout the passage of time is to look closer at its inner working parts individually I'd like to think that this is a prelude, my first shot across the bow of the left coast in what will be a gathering of works itching to spill out. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Most people are familiar with the path that NYC graffiti culture took in the 80s and 90s to Western and Eastern Europe – and you’ve had the opportunity to hang out with writers from around the world thanks to your pioneering work on trains. Would you say that there is a difference between the graffiti experience in NYC and in Europe? Lee Quiñones: Sure thing. I mean, while things are extremely close to you while they are developing, you can't possibly see it clearly, so in essence, you need to remove yourself for an incubator period in order to focus more vividly and perhaps compare notes with your line of experiences. Europe has an extremely vast history in the arts throughout the ages. Empires have come and gone and in the end, we begin to understand them through the art that survives. America is not of age just yet. It has acne, still wrestles with its growing pains and is hesitant to show its proper ID at the velvet ropes, so this particular movement which had no reference to art history in the first place is just cresting it's wave. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) BSA: Not many artists can sustain a long career, especially true when it comes to graffiti writers. Challenging oneself to explore and take risks as an artist appears to be crucial to continuing to evolve creatively – particularly if you want to become professional. What’s your biggest challenge as an artist these days? Lee Quiñones: Ushering people out of the context of nostalgia and looking at the current state of affairs in the works of today. I mean, the subject of the trains and all its glory is for me to bring out on occasion with a twist, not for people to theoretically box me into it. I turn pages because I don't want to be defined on one page. Personally, my own challenges consists of navigating around my own self tripping wires. Some are booby-trapped and some are triggers for the lights at the end of the tunnel. Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) Lee Quiñones at work on Born From Many Apples. December 13, 2018. (photo © Jaime Rojo) Lee Quiñones. Inspirational words and thoughts scribbled on walls at his studio. December 13, 2018. (photo © Jaime Rojo)  
BSA Images Of The Week: 01.06.19 – Selections From Wynwood Walls MiamiTomokazu Matsuyama and Deih killed it this year in Wynwood, no doubt and curator Alan Ket slayed with the solo show by Vhils at the primary gallery on the compound. Art Basel brings the crowds to Miami traditionally but there is no doubt that the magnet of Wynwood’s kid-friendly murals and Street Art as selfie backgrounds wins the day. Everywhere you look you see the families, influencers-in-training, tour guides and gobsmacked gaggles of teens creating pedestrian traffic jams inside Wynwood Walls. These artists and this art may have risen from an outsider marginalised and criminalised culture of illegal vandalism but these crowds are simply enjoying the art and each other. That foot traffic inside replicates the car and heavy truck traffic jams throughout the neighborhood as new multi-story construction continues apace and the gentrification cycle rapidly courses through the real estate / street culture corpus. Right now this romance between development and art-in-the-streets is still in the heavy petting stage, and there is a lot of star gazing. How long can this tryst continue, you ask? It's impossible to say what benchmark to measure, but watch for the moment when the sales of mezcal slushies and Moscow Mules are eclipsed by Acai bowls and kale smoothies. So here's our first weekly interview with the street, this time directly from Miami, featuring AShop Crew, Audrey Kawasaki, Bordallo II, Deih, Joe Iurato, JonOne, Martin Watson, Tavar Zawacki, Tomokazu Matsuyama, and Vhils. AShop Crew. Wynwood Walls Miami 2018. (photo © Jaime Rojo) AShop Crew. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Martin Whatson. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Vhils. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Vhils. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Bordalo II. Wynwood Walls Miami 2017. (photo © Jaime Rojo) Audrey Kawasaki. Wynwood Walls Miami 2017. (photo © Jaime Rojo) Joe Iurato. Wynwood Walls Miami 2017. (photo © Jaime Rojo) Joe Iurato. Wynwood Walls Miami 2017. (photo © Jaime Rojo) Deih. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Deih. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Tavar Zawacki. Wynwood Walls Miami 2017. (photo © Jaime Rojo) JonOne. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Tomokazu Matsuyama. Wynwood Walls Miami 2018. (photo © Jaime Rojo) Tomokazu Matsuyama . Wynwood Walls Miami 2018. (photo © Jaime Rojo) Untitled. December 2018 (photo © Jaime Rojo)
The Psychology of MoneyLet me tell you the story of two investors, neither of whom knew each other, but whose paths crossed in an interesting way. Grace Groner was orphaned at age 12. She never married. She never had kids. She never drove a car. She lived most of her life alone in a one-bedroom house and worked her whole career as a secretary. She was, by all accounts, a lovely lady. But she lived a humble and quiet life. That made the $7 million she left to charity after her death in 2010 at age 100 all the more confusing. People who knew her asked: Where did Grace get all that money? But there was no secret. There was no inheritance. Grace took humble savings from a meager salary and enjoyed eighty years of hands-off compounding in the stock market. That was it. Weeks after Grace died, an unrelated investing story hit the news. Richard Fuscone, former vice chairman of Merrill Lynch’s Latin America division, declared personal bankruptcy, fighting off foreclosure on two homes, one of which was nearly 20,000 square feet and had a $66,000 a month mortgage. Fuscone was the opposite of Grace Groner; educated at Harvard and University of Chicago, he became so successful in the investment industry that he retired in his 40s to “pursue personal and charitable interests.” But heavy borrowing and illiquid investments did him in. The same year Grace Goner left a veritable fortune to charity, Richard stood before a bankruptcy judge and declared: “I have been devastated by the financial crisis … The only source of liquidity is whatever my wife is able to sell in terms of personal furnishings.” The purpose of these stories is not to say you should be like Grace and avoid being like Richard. It’s to point out that there is no other field where these stories are even possible. In what other field does someone with no education, no relevant experience, no resources, and no connections vastly outperform someone with the best education, the most relevant experiences, the best resources and the best connections? There will never be a story of a Grace Groner performing heart surgery better than a Harvard-trained cardiologist. Or building a faster chip than Apple’s engineers. Unthinkable. But these stories happen in investing. That’s because investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves. Grace and Richard show that managing money isn’t necessarily about what you know; it’s how you behave. But that’s not how finance is typically taught or discussed. The finance industry talks too much about what to do, and not enough about what happens in your head when you try to do it. This report describes 20 flaws, biases, and causes of bad behavior I’ve seen pop up often when people deal with money. 1. Earned success and deserved failure fallacy: A tendency to underestimate the role of luck and risk, and a failure to recognize that luck and risk are different sides of the same coin. I like to ask people, “What do you want to know about investing that we can’t know?” It’s not a practical question. So few people ask it. But it forces anyone you ask to think about what they intuitively think is true but don’t spend much time trying to answer because it’s futile. Years ago I asked economist Robert Shiller the question. He answered, “The exact role of luck in successful outcomes.” I love that, because no one thinks luck doesn’t play a role in financial success. But since it’s hard to quantify luck, and rude to suggest people’s success is owed to luck, the default stance is often to implicitly ignore luck as a factor. If I say, “There are a billion investors in the world. By sheer chance, would you expect 100 of them to become billionaires predominately off luck?” You would reply, “Of course.” But then if I ask you to name those investors – to their face – you will back down. That’s the problem. The same goes for failure. Did failed businesses not try hard enough? Were bad investments not thought through well enough? Are wayward careers the product of laziness? In some parts, yes. Of course. But how much? It’s so hard to know. And when it’s hard to know we default to the extremes of assuming failures are predominantly caused by mistakes. Which itself is a mistake. People’s lives are a reflection of the experiences they’ve had and the people they’ve met, a lot of which are driven by luck, accident, and chance. The line between bold and reckless is thinner than people think, and you cannot believe in risk without believing in luck, because they are two sides of the same coin. They are both the simple idea that sometimes things happen that influence outcomes more than effort alone can achieve. After my son was born I wrote him a letter: Some people are born into families that encourage education; others are against it. Some are born into flourishing economies encouraging of entrepreneurship; others are born into war and destitution. I want you to be successful, and I want you to earn it. But realize that not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself. 2. Cost avoidance syndrome: A failure to identify the true costs of a situation, with too much emphasis on financial costs while ignoring the emotional price that must be paid to win a reward. Say you want a new car. It costs $30,000. You have a few options: 1) Pay $30,000 for it. 2) Buy a used one for less than $30,000. 3) Or steal it. In this case, 99% of people avoid the third option, because the consequences of stealing a car outweigh the upside. This is obvious. But say you want to earn a 10% annual return over the next 50 years. Does this reward come free? Of course not. Why would the world give you something amazing for free? Like the car, there’s a price that has to be paid. The price, in this case, is volatility and uncertainty. And like the car, you have a few options: You can pay it, accepting volatility and uncertainty. You can find an asset with less uncertainty and a lower payoff, the equivalent of a used car. Or you can attempt the equivalent of grand theft auto: Take the return while trying to avoid the volatility that comes along with it. Many people in this case choose the third option. Like a car thief – though well-meaning and law-abiding – they form tricks and strategies to get the return without paying the price. Trades. Rotations. Hedges. Arbitrages. Leverage. But the Money Gods do not look highly upon those who seek a reward without paying the price. Some car thieves will get away with it. Many more will be caught with their pants down. Same thing with money. This is obvious with the car and less obvious with investing because the true cost of investing – or anything with money – is rarely the financial fee that is easy to see and measure. It’s the emotional and physical price demanded by markets that are pretty efficient. Monster Beverage stock rose 211,000% from 1995 to 2016. But it lost more than half its value on five separate occasions during that time. That is an enormous psychological price to pay. Buffett made $90 billion. But he did it by reading SEC filings 12 hours a day for 70 years, often at the expense of paying attention to his family. Here too, a hidden cost. Every money reward has a price beyond the financial fee you can see and count. Accepting that is critical. Scott Adams once wrote: “One of the best pieces of advice I’ve ever heard goes something like this: If you want success, figure out the price, then pay it. It sounds trivial and obvious, but if you unpack the idea it has extraordinary power.” Wonderful money advice. 3. Rich man in the car paradox. When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think. The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth solely as a benchmark for their own desire to be liked and admired. This stuff isn’t subtle. It is prevalent at every income and wealth level. There is a growing business of people renting private jets on the tarmac for 10 minutes to take a selfie inside the jet for Instagram. The people taking these selfies think they’re going to be loved without realizing that they probably don’t care about the person who actually owns the jet beyond the fact that they provided a jet to be photographed in. The point isn’t to abandon the pursuit of wealth, of course. Or even fancy cars – I like both. It’s recognizing that people generally aspire to be respected by others, and humility, graciousness, intelligence, and empathy tend to generate more respect than fast cars. 4. A tendency to adjust to current circumstances in a way that makes forecasting your future desires and actions difficult, resulting in the inability to capture long-term compounding rewards that come from current decisions. Every five-year-old boy wants to drive a tractor when they grow up. Then you grow up and realize that driving a tractor maybe isn’t the best career. So as a teenager you dream of being a lawyer. Then you realize that lawyers work so hard they rarely see their families. So then you become a stay-at-home parent. Then at age 70 you realize you should have saved more money for retirement. Things change. And it’s hard to make long-term decisions when your view of what you’ll want in the future is so liable to shift. This gets back to the first rule of compounding: Never interrupt it unnecessarily. But how do you not interrupt a money plan – careers, investments, spending, budgeting, whatever – when your life plans change? It’s hard. Part of the reason people like Grace Groner and Warren Buffett become so successful is because they kept doing the same thing for decades on end, letting compounding run wild. But many of us evolve so much over a lifetime that we don’t want to keep doing the same thing for decades on end. Or anything close to it. So rather than one 80-something-year lifespan, our money has perhaps four distinct 20-year blocks. Compounding doesn’t work as well in that situation. There is no solution to this. But one thing I’ve learned that may help is coming back to balance and room for error. Too much devotion to one goal, one path, one outcome, is asking for regret when you’re so susceptible to change. 5. Anchored-to-your-own-history bias: Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works. If you were born in 1970 the stock market went up 10-fold adjusted for inflation in your teens and 20s – your young impressionable years when you were learning baseline knowledge about how investing and the economy work. If you were born in 1950, the same market went exactly nowhere in your teens and 20s: There are so many ways to cut this idea. Someone who grew up in Flint, Michigan got a very different view of the importance of manufacturing jobs than someone who grew up in Washington D.C. Coming of age during the Great Depression, or in war-ravaged 1940s Europe, set you on a path of beliefs, goals, and priorities that most people reading this, including myself, can’t fathom. The Great Depression scared a generation for the rest of their lives. Most of them, at least. In 1959 John F. Kennedy was asked by a reporter what he remembered from the depression, and answered: I have no first-hand knowledge of the depression. My family had one of the great fortunes of the world and it was worth more than ever then. We had bigger houses, more servants, we traveled more. About the only thing that I saw directly was when my father hired some extra gardeners just to give them a job so they could eat. I really did not learn about the depression until I read about it at Harvard. Since no amount of studying or open-mindedness can genuinely recreate the power of fear and uncertainty, people go through life with totally different views on how the economy works, what it’s capable of doing, how much we should protect other people, and what should and shouldn’t be valued. The problem is that everyone needs a clear explanation of how the world works to keep their sanity. It’s hard to be optimistic if you wake up in the morning and say, “I don’t know why most people think the way they do,” because people like the feeling of predictability and clean narratives. So they use the lessons of their own life experiences to create models of how they think the world should work – particularly for things like luck, risk, effort, and values. And that’s a problem. When everyone has experienced a fraction of what’s out there but uses those experiences to explain everything they expect to happen, a lot of people eventually become disappointed, confused, or dumbfounded at others’ decisions. A team of economists once crunched the data on a century’s worth of people’s investing habits and concluded: “Current [investment] beliefs depend on the realizations experienced in the past.” Keep that quote in mind when debating people’s investing views. Or when you’re confused about their desire to hoard or blow money, their fear or greed in certain situations, or whenever else you can’t understand why people do what they do with money. Things will make more sense. 6. Historians are Prophets fallacy: Not seeing the irony that history is the study of surprises and changes while using it as a guide to the future. An overreliance on past data as a signal to future conditions in a field where innovation and change is the lifeblood of progress. Geologists can look at a billion years of historical data and form models of how the earth behaves. So can meteorologists. And doctors – kidneys operate the same way in 2018 as they did in 1018. The idea that the past offers concrete directions about the future is tantalizing. It promotes the idea that the path of the future is buried within the data. Historians – or anyone analyzing the past as a way to indicate the future – are some of the most important members of many fields. I don’t think finance is one of them. At least not as much as we’d like to think. The cornerstone of economics is that things change over time, because the invisible hand hates anything staying too good or too bad indefinitely. Bill Bonner once described how Mr. Market works: “He’s got a ‘Capitalism at Work’ T-shirt on and a sledgehammer in his hand.” Few things stay the same for very long, which makes historians something far less useful than prophets. Consider a few big ones. The 401(K) is 39 years old – barely old enough to run for president. The Roth IRA isn’t old enough to drink. So personal financial advice and analysis about how Americans save for retirement today is not directly comparable to what made sense just a generation ago. Things changed. The venture capital industry barely existed 25 years ago. There are single funds today that are larger than the entire industry was a generation ago. Phil Knight wrote about his early days after starting Nike: “There was no such thing as venture capital. An aspiring young entrepreneur had very few places to turn, and those places were all guarded by risk-averse gatekeepers with zero imagination. In other words, bankers.” So our knowledge of backing entrepreneurs, investment cycles, and failure rates, is not something we have a deep base of history to learn from. Things changed. Or take public markets. The S&P 500 did not include financial stocks until 1976; today, financials make up 16% of the index. Technology stocks were virtually nonexistent 50 years ago. Today, they’re more than a fifth of the index. Accounting rules have changed over time. So have disclosures, auditing, and market liquidity. Things changed. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services. Those things don’t tend to sit still. They change with culture and generation. And they’ll keep changing. The mental trick we play on ourselves here is an over-admiration of people who have been there, done that, when it comes to money. Experiencing specific events does not necessarily qualify you to know what will happen next. In fact it rarely does, because experience leads to more overconfidence than prophetic ability. That doesn’t mean we should ignore history when thinking about money. But there’s an important nuance: The further back in history you look, the more general your takeaways should be. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tends to be stable in time. The history of money is useful for that kind of stuff. But specific trends, specific trades, specific sectors, and specific causal relationships are always a showcase of evolution in progress. 7. The seduction of pessimism in a world where optimism is the most reasonable stance. Historian Deirdre McCloskey says, “For reasons I have never understood, people like to hear that the world is going to hell.” This isn’t new. John Stuart Mill wrote in the 1840s: “I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.” Part of this is natural. We’ve evolved to treat threats as more urgent than opportunities. Buffett says, “In order to succeed, you must first survive.” But pessimism about money takes a different level of allure. Say there’s going to be a recession and you will get retweeted. Say we’ll have a big recession and newspapers will call you. Say we’re nearing the next Great Depression and you’ll get on TV. But mention that good times are ahead, or markets have room to run, or that a company has huge potential, and a common reaction from commentators and spectators alike is that you are either a salesman or comically aloof of risks. A few things are going on here. One is that money is ubiquitous, so something bad happening tends to affect everyone, albeit in different ways. That isn’t true of, say, weather. A hurricane barreling down on Florida poses no direct risk to 92% of Americans. But a recession barreling down on the economy could impact every single person – including you, so pay attention. This goes for something as specific as the stock market: More than half of all households directly own stocks. Another is that pessimism requires action – Move! Get out! Run! Sell! Hide! Optimism is mostly a call to stay the course and enjoy the ride. So it’s not nearly as urgent. A third is that there is a lot of money to be made in the finance industry, which – despite regulations – has attracted armies of scammers, hucksters, and truth-benders promising the moon. A big enough bonus can convince even honest, law-abiding finance workers selling garbage products that they’re doing good for their customers. Enough people have been bamboozled by the finance industry that a sense of, “If it sounds too good to be true, it probably is” has enveloped even rational promotions of optimism. Most promotions of optimism, by the way, are rational. Not all, of course. But we need to understand what optimism is. Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way. The simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism. It’s not complicated. It’s not guaranteed, either. It’s just the most reasonable bet for most people. The late statistician Hans Rosling put it differently: “I am not an optimist. I am a very serious possibilist.” 8. Underappreciating the power of compounding, driven by the tendency to intuitively think about exponential growth in linear terms. IBM made a 3.5 megabyte hard drive in the 1950s. By the 1960s things were moving into a few dozen megabytes. By the 1970s, IBM’s Winchester drive held 70 megabytes. Then drives got exponentially smaller in size with more storage. A typical PC in the early 1990s held 200-500 megabytes. And then … wham. Things exploded. 1999 – Apple’s iMac comes with a 6 gigabyte hard drive. 2003 – 120 gigs on the Power Mac. 2006 – 250 gigs on the new iMac. 2011 – first 4 terabyte hard drive. 2017 – 60 terabyte hard drives. Now put it together. From 1950 to 1990 we gained 296 megabytes. From 1990 through today we gained 60 million megabytes. The punchline of compounding is never that it’s just big. It’s always – no matter how many times you study it – so big that you can barely wrap your head around it. In 2004 Bill Gates criticized the new Gmail, wondering why anyone would need a gig of storage. Author Steven Levy wrote, “Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved.” You never get accustomed to how quickly things can grow. I have heard many people say the first time they saw a compound interest table – or one of those stories about how much more you’d have for retirement if you began saving in your 20s vs. your 30s – changed their life. But it probably didn’t. What it likely did was surprise them, because the results intuitively didn’t seem right. Linear thinking is so much more intuitive than exponential thinking. Michael Batnick once explained it. If I ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, you can do it in a few seconds (it’s 72). If I ask you to calculate 8x8x8x8x8x8x8x8x8, your head will explode (it’s 134,217,728). The danger here is that when compounding isn’t intuitive, we often ignore its potential and focus on solving problems through other means. Not because we’re overthinking, but because we rarely stop to consider compounding potential. There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.” But we know that’s the key to the majority of his success; it’s just hard to wrap your head around that math because it’s not intuitive. There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called “Shut Up And Wait.” It’s just one page with a long-term chart of economic growth. Physicist Albert Bartlett put it: “The greatest shortcoming of the human race is our inability to understand the exponential function.” The counterintuitiveness of compounding is responsible for the majority of disappointing trades, bad strategies, and successful investing attempts. Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that kill your confidence when they end. It’s about earning pretty good returns that you can stick with for a long period of time. That’s when compounding runs wild. 9. Attachment to social proof in a field that demands contrarian thinking to achieve above-average results. The Berkshire Hathaway annual meeting in Omaha attracts 40,000 people, all of whom consider themselves contrarians. People show up at 4 am to wait in line with thousands of other people to tell each other about their lifelong commitment to not following the crowd. Few see the irony. Anything worthwhile with money has high stakes. High stakes entail risks of being wrong and losing money. Losing money is emotional. And the desire to avoid being wrong is best countered by surrounding yourself with people who agree with you. Social proof is powerful. Someone else agreeing with you is like evidence of being right that doesn’t have to prove itself with facts. Most people’s views have holes and gaps in them, if only subconsciously. Crowds and social proof help fill those gaps, reducing doubt that you could be wrong. The problem with viewing crowds as evidence of accuracy when dealing with money is that opportunity is almost always inversely correlated with popularity. What really drives outsized returns over time is an increase in valuation multiples, and increasing valuation multiples relies on an investment getting more popular in the future – something that is always anchored by current popularity. Here’s the thing: Most attempts at contrarianism is just irrational cynicism in disguise – and cynicism can be popular and draw crowds. Real contrarianism is when your views are so uncomfortable and belittled that they cause you to second guess whether they’re right. Very few people can do that. But of course that’s the case. Most people can’t be contrarian, by definition. Embrace with both hands that, statistically, you are one of those people. 10. An appeal to academia in a field that is governed not by clean rules but loose and unpredictable trends. Harry Markowitz won the Nobel Prize in economics for creating formulas that tell you exactly how much of your portfolio should be in stocks vs. bonds depending on your ideal level of risk. A few years ago the Wall Street Journal asked him how, given his work, he invests his own money. He replied: I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimize my future regret. So I split my contributions 50/50 between bonds and equities. There are many things in academic finance that are technically right but fail to describe how people actually act in the real world. Plenty of academic finance work is useful and has pushed the industry in the right direction. But its main purpose is often intellectual stimulation and to impress other academics. I don’t blame them for this or look down upon them for it. We should just recognize it for what it is. One study I remember showed that young investors should use 2x leverage in the stock market, because – statistically – even if you get wiped out you’re still likely to earn superior returns over time, as long as you dust yourself off and keep investing after a wipeout. Which, in the real world, no one would actually do. They’d swear off investing for life. What works on a spreadsheet and what works at the kitchen table are ten miles apart. The disconnect here is that academics typically desire very precise rules and formulas. But real-world people use it as a crutch to try to make sense of a messy and confusing world that, by its nature, eschews precision. Those are opposite things. You cannot explain randomness and emotion with precision and reason. People are also attracted to the titles and degrees of academics because finance is not a credential-sanctioned field like, say, medicine is. So the appearance of a Ph.D stands out. And that creates an intense appeal to academia when making arguments and justifying beliefs – “According to this Harvard study …” or “As Nobel Prize winner so and so showed …” It carries so much weight when other people cite, “Some guy on CNBC from an eponymous firm with a tie and a smile.” A hard reality is that what often matters most in finance will never win a Nobel Prize: Humility and room for error. 11. The social utility of money coming at the direct expense of growing money; wealth is what you don’t see. I used to park cars at a hotel. This was in the mid-2000s in Los Angeles, when real estate money flowed. I assumed that a customer driving a Ferrari was rich. Many were. But as I got to know some of these people, I realized they weren’t that successful. At least not nearly what I assumed. Many were mediocre successes who spent most of their money on a car. If you see someone driving a $200,000 car, the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car. Or they’re leasing the car, which truly offers no indication of wealth. We tend to judge wealth by what we see. We can’t see people’s bank accounts or brokerage statements. So we rely on outward appearances to gauge financial success. Cars. Homes. Vacations. Instagram photos. But this is America, and one of our cherished industries is helping people fake it until they make it. Wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see. But that’s not how we think about wealth, because you can’t contextualize what you can’t see. Singer Rihanna nearly went broke after overspending and sued her financial advisor. The advisor responded: “Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?” You can laugh. But the truth is, yes, people need to be told that. When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people. A key use of wealth is using it to control your time and providing you with options. Financial assets on a balance sheet offer that. But they come at the direct expense of showing people how much wealth you have with material stuff. 12. A tendency toward action in a field where the first rule of compounding is to never interrupt it unnecessarily. If your sink breaks, you grab a wrench and fix it. If your arm breaks, you put it in a cast. What do you do when your financial plan breaks? The first question – and this goes for personal finance, business finance, and investing plans – is how do you know when it’s broken? A broken sink is obvious. But a broken investment plan is open to interpretation. Maybe it’s just temporarily out of favor? Maybe you’re experiencing normal volatility? Maybe you had a bunch of one-off expenses this quarter but your savings rate is still adequate? It’s hard to know. When it’s hard to distinguish broken from temporarily out of favor, the tendency is to default to the former, and spring into action. You start fiddling with the knobs to find a fix. This seems like the responsible thing to do, because when virtually everything else in your life is broken, the correct action is to fix it. There are times when money plans need to be fixed. Oh, are there ever. But there is also no such thing as a long-term money plan that isn’t susceptible to volatility. Occasional upheaval is usually part of a standard plan. When volatility is guaranteed and normal, but is often treated as something that needs to be fixed, people take actions that ultimately just interrupts the execution of a good plan. “Don’t do anything,” are the most powerful words in finance. But they are both hard for individuals to accept and hard for professionals to charge a fee for. So, we fiddle. Far too much. 13. Underestimating the need for room for error, not just financially but mentally and physically. Ben Graham once said, “The purpose of the margin of safety is to render the forecast unnecessary.” There is so much wisdom in this quote. But the most common response, even if subconsciously, is, “Thanks Ben. But I’m good at forecasting.” People underestimate the need for room for error in almost everything they do that involves money. Two things cause this: One is the idea that your view of the future is right, driven by the uncomfortable feeling that comes from admitting the opposite. The second is that you’re therefore doing yourself economic harm by not taking actions that exploit your view of the future coming true. But room for error is underappreciated and misunderstood. It’s often viewed as a conservative hedge, used by those who don’t want to take much risk or aren’t confident in their views. But when used appropriately it’s the opposite. Room for error lets you endure, and endurance lets you stick around long enough to let the odds of benefiting from a low-probability outcome fall in your favor. The biggest gains occur infrequently, either because they don’t happen often or because they take time to compound. So the person with enough room for error in part of their strategy to let them endure hardship in the other part of their strategy has an edge over the person who gets wiped out, game over, insert more tokens, when they’re wrong. There are also multiple sides to room for error. Can you survive your assets declining by 30%? On a spreadsheet, maybe yes – in terms of actually paying your bills and staying cash-flow positive. But what about mentally? It is easy to underestimate what a 30% decline does to your psyche. Your confidence may become shot at the very moment opportunity is at its highest. You – or your spouse – may decide it’s time for a new plan, or new career. I know several investors who quit after losses because they were exhausted. Physically exhausted. Spreadsheets can model the historic frequency of big declines. But they cannot model the feeling of coming home, looking at your kids, and wondering if you’ve made a huge mistake that will impact their lives. 14. A tendency to be influenced by the actions of other people who are playing a different financial game than you are. Cisco stock went up three-fold in 1999. Why? Probably not because people actually thought the company was worth $600 billion. Burton Malkiel once pointed out that Cisco’s implied growth rate at that valuation meant it would become larger than the entire U.S. economy within 20 years. Its stock price was going up because short-term traders thought it would keep going up. And they were right, for a long time. That was the game they were playing – “this stock is trading for $60 and I think it’ll be worth $65 before tomorrow.” But if you were a long-term investor in 1999, $60 was the only price available to buy. So you may have looked around and said to yourself, “Wow, maybe others know something I don’t.” And you went along with it. You even felt smart about it. But then the traders stopped playing their game, and you – and your game – was annihilated. What you don’t realize is that the traders moving the marginal price are playing a totally different game than you are. And if you start taking cues from people playing a different game than you are, you are bound to be fooled and eventually become lost, since different games have different rules and different goals. Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games. This goes beyond investing. How you save, how you spend, what your business strategy is, how you think about money, when you retire, and how you think about risk may all be influenced by the actions and behaviors of people who are playing different games than you are. Personal finance is deeply personal, and one of the hardest parts is learning from others while realizing that their goals and actions might be miles removed from what’s relevant to your own life. 15. An attachment to financial entertainment due to the fact that money is emotional, and emotions are revved up by argument, extreme views, flashing lights, and threats to your wellbeing. If the average American’s blood pressure went up by 3%, my guess is a few newspapers would cover it on page 16, nothing would change, and we’d move on. But if the stock market falls 3%, well, no need to guess how we might respond. This is from 2015: “President Barack Obama has been briefed on Monday’s choppy global market movement.” Why does financial news of seemingly low importance overwhelm news that is objectively more important? Because finance is entertaining in a way other things – orthodontics, gardening, marine biology – are not. Money has competition, rules, upsets, wins, losses, heroes, villains, teams, and fans that makes it tantalizingly close to a sporting event. But it’s even an addiction level up from that, because money is like a sporting event where you’re both the fan and the player, with outcomes affecting you both emotionally and directly. Which is dangerous. It helps, I’ve found, when making money decisions to constantly remind yourself that the purpose of investing is to maximize returns, not minimize boredom. Boring is perfectly fine. Boring is good. If you want to frame this as a strategy, remind yourself: opportunity lives where others aren’t, and others tend to stay away from what’s boring. 16. Optimism bias in risk-taking, or “Russian Roulette should statistically work” syndrome: An over attachment to favorable odds when the downside is unacceptable in any circumstance. Nassim Taleb says, “You can be risk loving and yet completely averse to ruin.” The idea is that you have to take risk to get ahead, but no risk that could wipe you out is ever worth taking. The odds are in your favor when playing Russian Roulette. But the downside is never worth the potential upside. The odds of something can be in your favor – real estate prices go up most years, and most years you’ll get a paycheck every other week – but if something has 95% odds of being right, then 5% odds of being wrong means you will almost certainly experience the downside at some point in your life. And if the cost of the downside is ruin, the upside the other 95% of the time likely isn’t worth the risk, no matter how appealing it looks. Leverage is the devil here. It pushes routine risks into something capable of producing ruin. The danger is that rational optimism most of the time masks the odds of ruin some of the time in a way that lets us systematically underestimate risk. Housing prices fell 30% last decade. A few companies defaulted on their debt. This is capitalism – it happens. But those with leverage had a double wipeout: Not only were they left broke, but being wiped out erased every opportunity to get back in the game at the very moment opportunity was ripe. A homeowner wiped out in 2009 had no chance of taking advantage of cheap mortgage rates in 2010. Lehman Brothers had no chance of investing in cheap debt in 2009. My own money is barbelled. I take risks with one portion and am a terrified turtle with the other. This is not inconsistent, but the psychology of money would lead you to believe that it is. I just want to ensure I can remain standing long enough for my risks to pay off. Again, you have to survive to succeed. A key point here is that few things in money are as valuable as options. The ability to do what you want, when you want, with who you want, and why you want, has infinite ROI. 17. A preference for skills in a field where skills don’t matter if they aren’t matched with the right behavior. This is where Grace and Richard come back in. There is a hierarchy of investor needs, and each topic here has to be mastered before the one above it matters: Richard was very skilled at the top of this pyramid, but he failed the bottom blocks, so none of it mattered. Grace mastered the bottom blocks so well that the top blocks were hardly necessary. 18. Denial of inconsistencies between how you think the world should work and how the world actually works, driven by a desire to form a clean narrative of cause and effect despite the inherent complexities of everything involving money. Someone once described Donald Trump as “Unable to distinguish between what happened and what he thinks should have happened.” Politics aside, I think everyone does this. There are three parts to this: You see a lot of information in the world. You can’t process all of it. So you have to filter. You only filter in the information that meshes with the way you think the world should work. Since everyone wants to explain what they see and how the world works with clean narratives, inconsistencies between what we think should happen and what actually happens are buried. An example. Higher taxes should slow economic growth – that’s a common sense narrative. But the correlation between tax rates and growth rates is hard to spot. So, if you hold onto the narrative between taxes and growth, you say there must be something wrong with the data. And you may be right! But if you come across someone else pushing aside data to back up their narrative – say, arguing that hedge funds have to generate alpha, otherwise no one would invest in them – you spot what you consider a bias. There are a thousand other examples. Everyone just believes what they want to believe, even when the evidence shows something else. Stories over statistics. Accepting that everything involving money is driven by illogical emotions and has more moving parts than anyone can grasp is a good start to remembering that history is the study of things happening that people didn’t think would or could happen. This is especially true with money. 19. Political beliefs driving financial decisions, influenced by economics being a misbehaved cousin of politics. I once attended a conference where a well known investor began his talk by saying, “You know when President Obama talks about clinging to guns and bibles? That is me, folks. And I’m going to tell you today about how his reckless policies are impacting the economy.” I don’t care what your politics are, there is no possible way you can make rational investment decisions with that kind of thinking. But it’s fairly common. Look at what happens in 2016 on this chart. The rate of GDP growth, jobs growth, stock market growth, interest rates – go down the list – did not materially change. Only the president did: Years ago I published a bunch of economic performance numbers by president. And it drove people crazy, because the data often didn’t mesh with how they thought it should based on their political beliefs. Soon after a journalist asked me to comment on a story detailing how, statistically, Democrats preside over stronger economies than Republicans. I said you couldn’t make that argument because the sample size is way too small. But he pushed and pushed, and wrote a piece that made readers either cheer or sweat, depending on their beliefs. The point is not that politics don’t influence the economy. But the reason this is such a sensitive topic is because the data often surprises the heck out of people, which itself is a reason to realize that the correlation between politics and economics isn’t as clear as you’d like to think it is. 20. The three-month bubble: Extrapolating the recent past into the near future, and then overestimating the extent to which whatever you anticipate will happen in the near future will impact your future. News headlines in the month after 9/11 are interesting. Few entertain the idea that the attack was a one-off; the next massive terrorist attack was certain to be around the corner. “Another catastrophic terrorist attack is inevitable and only a matter of time,” one defense analyst said in 2002. “A top counterterrorism official says it’s ‘a question of when, not if,” wrote another headline. Beyond the anticipation that another attack was imminent was a belief that it would affect people the same way. The Today Show ran a segment pitching parachutes for office workers to keep under their desks in case they needed to jump out of a skyscraper. Believing that what just happened will keep happening shows up constantly in psychology. We like patterns and have short memories. The added feeling that a repeat of what just happened will keep affecting you the same way is an offshoot. And when you’re dealing with money it can be a torment. Every big financial win or loss is followed by mass expectations of more wins and losses. With it comes a level of obsession over the effects of those events repeating that can be wildly disconnected from your long-term goals. Example: The stock market falling 40% in 2008 was followed, uninterrupted for years, with forecasts of another impending plunge. Expecting what just happened to happen soon again is one thing, and an error in itself. But not realizing that your long-term investing goals could remain intact, unharmed, even if we have another big plunge, is the dangerous byproduct of recency bias. “Markets tend to recover over time and make new highs” was not a popular takeaway from the financial crisis; “Markets can crash and crashes suck,” was, despite the former being so much more practical than the latter. Most of the time, something big happening doesn’t increase the odds of it happening again. It’s the opposite, as mean reversion is a merciless law of finance. But even when something does happen again, most of the time it doesn’t – or shouldn’t – impact your actions in the way you’re tempted to think, because most extrapolations are short term while most goals are long term. A stable strategy designed to endure change is almost always superior to one that attempts to guard against whatever just happened happening again. If there’s a common denominator in these, it’s a preference for humility, adaptability, long time horizons, and skepticism of popularity around anything involving money. Which can be summed up as: Be prepared to roll with the punches. Jiddu Krishnamurti spent years giving spiritual talks. He became more candid as he got older. In one famous talk, he asked the audience if they’d like to know his secret. He whispered, “You see, I don’t mind what happens.” That might be the best trick when dealing with the psychology of money.
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How This All HappenedThis is a short story about what happened to the U.S. economy since the end of World War II. That’s a lot to unpack in 5,000 words, but the short story of what happened over the last 73 years is simple: Things were very uncertain, then they were very good, then pretty bad, then really good, then really bad, and now here we are. And there is, I think, a narrative that links all those events together. Not a detailed account. But a story of how the details fit together. Since this is an attempt to link the big events together, it leaves out all kinds of detail of what happened during this period. I’m likely to agree with anyone who points out what I’ve missed. My goal isn’t to describe every play; it’s to look at how one game influenced the next. If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago. Here’s how this all happened. 1. August, 1945. World War II ends. Japan surrendering was “The Happiest Day in American History,” the New York Times wrote. But there’s the saying, “History is just one damn thing after another.” The joy of the war ending was quickly met with the question, “What happens now?” Sixteen million Americans – 11% of the population – served in the war. About eight million were overseas at the end. Their average age was 23. Within 18 months all but 1.5 million of them would be home and out of uniform. And then what? What were they going to do next? Where were they going to work? Where were they going to live? Those were the most important questions of the day, for two reasons. One, no one knew the answers. Two, if it couldn’t be answered quickly, the most likely scenario – in the eyes of many economists – was that the economy would slip back into the depths of the Great Depression. Three forces had built up during the war: Housing construction ground to a halt, as virtually all production capacity was shifted to building war supplies. Fewer than 12,000 homes per month were built in 1943, equivalent to less than one new home per American city. Returning soldiers faced a severe housing shortage. The specific jobs created during the war – building ships, tanks, bullets, planes – were very suddenly not necessary after it, stopping with a speed and magnitude rarely seen in private business. It was unclear where soldiers could work. The marriage rate spiked during and immediately after the war. Soldiers didn’t want to return to their mother’s basement. They wanted to start a family, in their own home, with a good job, right away. This worried policymakers, especially since the Great Depression was still a recent memory, having ended just five years prior. In 1946 the Council of Economic Advisors delivered a report to President Truman warning of “a full-scale depression some time in the next one to four years.” They wrote in a separate 1947 memo, summarizing a meeting with Truman: We might be in some sort of recession period where we should have to be very sure of our ground as to whether recessionary forces might be in danger of getting out of hand … There is a substantial prospect which should not be overlooked that a further decline may increase the danger of a downward spiral into depression conditions. This fear was exacerbated by the fact that exports couldn’t be immediately relied upon for growth, as two of the largest economies – Europe and Japan – sat in ruins dealing with humanitarian crises. And America itself was buried in more debt than ever before, limiting direct government stimulus. 2. So we did something about it: Low interest rates and the intentional birth of the American consumer. The first thing we did to keep the economy afloat after the war was keep interest rates low. This wasn’t an easy decision, because a burst of inflation when soldiers came home to a shortage of everything from clothes to cars temporarily sent inflation into double digits: The Federal Reserve was not politically independent before 1951. The president and the Fed could coordinate policy. In 1942 the Fed announced it would keep short-term rates at 0.38% to help finance the war. Rates didn’t budge a single basis point for the next seven years. Three-month Treasury yields stayed below 2% until the mid-1950s. The explicit reason for keeping rates down was to keep the cost of financing the equivalent of the $6 trillion we spent on the war low. But low rates also did something else for all the returning GIs. It made borrowing to buy homes, cars, gadgets, and toys really cheap. Which, from a paranoid policymakers’ perspective, was great. Consumption became an explicit economic strategy in the years after World War II. An era of encouraging thrift and saving to fund the war quickly turned into an era of actively promoting spending. Princeton historian Sheldon Garon writes: After 1945, America again diverged from patterns of savings promotion in Europe and East Asia … Politicians, businessmen and labor leaders all encouraged Americans to spend to foster economic growth. Two things fueled this push. One was the GI Bill, which offered unprecedented mortgage opportunities. Sixteen million veterans could buy a home often with no money down, no interest in the first year, and fixed rates so low that monthly mortgage payments could be lower than a rental. The second was an explosion of consumer credit, enabled by the loosening of Depression-era regulations. The first credit card was introduced in 1950. Store credit, installment credit, personal loans, payday loans – everything took off. And interest on all debt, including credit cards, was tax deductible at the time. It tasted delicious. So we ate a lot of it. A simple story in a simple table: Household debt in the 1950s grew 1.5 times faster than it did during the 2000s debt splurge. 3. Pent-up demand for stuff fed by a credit boom and a hidden 1930s productivity boom led to an economic boom. The 1930s were the hardest economic decade in American history. But there was a silver lining that took two decades to notice: By necessity, the Great Depression had supercharged resourcefulness, productivity, and innovation. We didn’t pay that much attention to the productivity boom in the ‘30s, because everyone was focused on how bad the economy was. We didn’t pay attention to it in the ‘40s, because everyone was focused on the war. Then the 1950s came around and we suddenly realized, “Wow, we have some amazing new inventions. And we’re really good at making them.” Appliances, cars, phones, air conditioning, electricity. It was nearly impossible to buy many household goods during the war, because factories were converted to make guns and ships. That created pent-up demand from GIs for stuff after the war ended. Married, eager to get on with life, and emboldened with new cheap consumer credit, they went on a buying spree like the country had never seen. Frederick Lewis Allan writes in his book The Big Change: During these postwar years the farmer bought a new tractor, a corn picker, an electric milking machine; in fact he and his neighbors, between them, assembled a formidable array of farm machinery for their joint use. The farmer’s wife got the shining white electric refrigerator she had always longed for and never during the Great Depression had been able to afford, and an up-to-date washing machine, and a deep-freeze unit. The suburban family installed a dishwashing machine and invested in a power lawnmower. The city family became customers of a laundromat and acquired a television set for the living room. The husband’s office was air-conditioned. And so on endlessly. It’s hard to overstate how big this surge was. Commercial car and truck manufacturing virtually ceased from 1942 to 1945. Then 21.4 million cars were sold from 1945 to 1949. Another 37 million were sold by 1955. 1.9 million homes were built from 1940 to 1945. Then 7 million were built from 1945 to 1950. Another 8 million were built by 1955. Pent-up demand for stuff, and our newfound ability to make stuff, created the jobs that put returning GIs back to work. And they were good jobs, too. Mix that with consumer credit, and America’s capacity for spending exploded. The Federal Reserve wrote to President Truman in 1951: “By 1950, total consumer expenditures, together with residential construction, amounted to about 203 billion dollars, or in the neighborhood of 40 percent above the 1944 level.” The answer to the question, “What are all these GIs going to do after the war?” was now obvious. They were going to buy stuff, with money earned from their jobs making new stuff, helped by cheap borrowed money to buy even more stuff. 4. Gains are shared more equally than ever before. The defining characteristic of economics in the 1950s is that the country got rich by making the poor less poor. Average wages doubled from 1940 to 1948, then doubled again by 1963. And those gains focused on those who had been left behind for decades before. The gap between rich and poor narrowed by an extraordinary amount. Lewis Allan wrote in 1955: The enormous lead of the well-to-do in the economic race has been considerably reduced. It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more. As for the top one percent, the really well-to-do and the rich, whom we might classify very roughly indeed as the $16,000-and-over group, their share of the total national income, after taxes, had come down by 1945 from 13 percent to 7 percent. This was not a short-term trend. Real income for the bottom 20% of wage-earners grew by a nearly identical amount as the top 5% from 1950 to 1980. The equality went beyond wages. Women held jobs outside the home in record numbers. Their labor force participation rate went from 31% after the war to 37% by 1955, and to 40% by 1965. Minorities gained, too. After the 1945 inauguration Eleanor Roosevelt wrote about an African American reporter who told her: Do you realize what twelve years have done? If at the 1933 reception a number of colored people had gone down the line and mixed with everyone else in the way they did today, every paper in the country would have reported it. We do not even think it is news and none of us will mention it. Women and minority rights were still a fraction of what they are today. But the progress toward equality in the late ‘40s and ‘50s was extraordinary. The leveling out of classes meant a leveling out of lifestyles. Normal people drove Chevys. Rich people drove Cadillacs. TV and radio equalized the entertainment and culture people enjoyed regardless of class. Mail-order catalogs equalized the clothes people wore and the goods they bought regardless of where they lived. Harper’s Magazine noted in 1957: The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely. The differences between his automobile and the poor man’s are minor. Essentially they have similar engines, similar fittings. In the early years of the century there was a hierarchy of automobiles. Paul Graham wrote in 2016 about what something as simple as there only being three TV stations did to equalize culture: It’s difficult to imagine now, but every night tens of millions of families would sit down together in front of their TV set watching the same show, at the same time, as their next door neighbors. What happens now with the Super Bowl used to happen every night. We were literally in sync. This was important. People measure their well being against their peers. And for most of the 1945-1980 period, people had a lot of what looked like peers to compare themselves to. Many people – most people – lived lives that were either equal or at least fathomable to those around them. The idea that people’s lives equalized as much as their incomes is an important point of this story we’ll come back to. 5. Debt rose tremendously. But so did incomes, so the impact wasn’t a big deal. Household debt increased 5-fold from 1947 to 1957 due to the combination of the new consumption culture, new debt products, and interest rates subsidized by government programs and held low by the Federal Reserve. But income growth was so strong during this period that the impact on households wasn’t severe. And household debt was so low to begin with after the war. The Great Depression wiped out a lot of it, and household spending was so curtailed during the war that debt accumulation was restricted – that the growth in household debt-to-income was manageable. Household debt to income today is just over 100%. Even after rising in the 1950s, 1960s, and 1970s, it stayed below 60%: Driving a lot of this debt boom was a surge in home ownership. The homeownership rate in 1900 was 46.5%. It stayed right about there for the next four decades. Then it took off, hitting 53% by 1945 and 62% by 1970. A substantial portion of the population was now in debt that, in previous generations, would not – could not – use it. And they were mostly OK with it. David Halberstam writes in his book The Fifties: They were confident in themselves and their futures in a way that [those] growing up in harder times found striking. They did not fear debt as their parents had … They differed from their parents not just in how much they made and what they owned but in their belief that the future had already arrived. As the first homeowners in their families, they brought a new excitement and pride with them to the store as they bought furniture or appliances — in other times young couples might have exhibited such feelings as they bought clothes for their first baby. It was as if the very accomplishment of owning a home reflected such an immense breakthrough that nothing was too good to buy for it. Now’s a good time to connect a few things, as they’ll become increasingly important: America is booming. It’s booming together like never before. It’s booming with debt that isn’t a big deal at the time because it’s still low relative to income and there’s a cultural acceptance that debt isn’t a scary thing. 6. Things start cracking. 1973 was the first year where it became clear the economy was walking down a new path. The recession that began that year brought unemployment to the highest it had been since the 1930s Inflation surged. But unlike the post-war spikes, it stayed high. Short-term interest rates hit 8% in 1973, up from 2.5% a decade earlier. And you have to put all of that in the context of how much fear there was between Vietnam, riots, and the assassinations of Martin Luther King, John and Bobby Kennedy. It got bleak. America dominated the world economy in the two decades after the war. Many of the largest countries had their manufacturing capacity bombed into rubble. But as the 1970s emerged, that changed. Japan was booming. China’s economy was opening up. The Middle East was flexing its oil muscles. A combination of lucky economic advantages and a culture shared by the Greatest Generation shared – hardened by the Depression and anchored in systematic cooperation from the war – shifted when Baby Boomers began coming of age. A new generation that had a different view of what’s normal and expected hit at the same time a lot of the economic tailwinds of the previous two decades ended. Everything in finance is data within the context of expectations. One of the biggest shifts of the last century happened when the economic winds began blowing in a different, uneven direction, but people’s expectations were still rooted in a post-war culture of equality. Not necessarily equality of income, although there was that. But equality in lifestyle and consumption expectations; the idea that someone earning a 50th percentile income shouldn’t live a life dramatically different than someone in the 80th or 90th percentile. And that someone in the 99th percentile lived a better life, but still a life that someone in the 50th percentile could comprehend. That’s how America worked for most of the 1945-1980 period. It doesn’t matter whether you think that’s morally right or wrong. It just matters that it happened. Expectations always move slower than facts. And the economic facts of the years between the early 1970s through the early 2000s were that growth continued, but became more uneven, yet people’s expectations of how their lifestyle should compare to their peers did not change. 7. The boom resumes, but it’s different than before. Ronald Reagan’s 1984 Morning in America ad declared: It’s morning again in America. Today more men and women will go to work than ever before in our country’s history. With interest rates at about half the record highs of 1980, nearly 2,000 families today will buy new homes, more than at any time in the past four years. This afternoon 6,500 young men and women will be married, and with inflation at less than half of what it was just four years ago, they can look forward with confidence to the future. That wasn’t hyperbole. GDP growth was the highest it had been since the 1950s. By 1989 there were 6 million fewer unemployed Americans than there were seven years before. The S&P 500 rose almost four-fold between 1982 and 1990. Total real GDP growth in the 1990s was roughly equal to that of the 1950s – 40% vs. 42%. President Clinton boasted in his 2000 State of the Union speech: We begin the new century with over 20 million new jobs; the fastest economic growth in more than 30 years; the lowest unemployment rates in 30 years; the lowest poverty rates in 20 years; the lowest African-American and Hispanic unemployment rates on record; the first back-to-back surpluses in 42 years; and next month, America will achieve the longest period of economic growth in our entire history. We have built a new economy. His last sentence was important. It was a new economy. The biggest difference between the economy of the 1945-1973 period and that of the 1982-2000 period was that the same amount of growth found its way into totally different pockets. You’ve probably heard these numbers but they’re worth rehashing. The Atlantic writes: Between 1993 and 2012, the top 1 percent saw their incomes grow 86.1 percent, while the bottom 99 percent saw just 6.6 percent growth. Joseph Stiglitz in 2011: While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. It was nearly the opposite of the flattening that occurred after that war. Why this happened is one of the nastiest debates in economics, topped only by the debate over what we should do about it. Lucky for this article neither matters. All that matters is that sharp inequality became a force over the last 35 years, and it happened during a period where, culturally, Americans held onto two ideas rooted in the post-WW2 economy: That you should live a lifestyle similar to most other Americans, and that taking on debt to finance that lifestyle is acceptable. 8. The Big Stretch Rising incomes among a small group of Americans led to that group breaking away in lifestyle. They bought bigger homes, nicer cars, went to expensive schools, and took fancy vacations. And everyone else was watching – fueled by Madison Avenue in the ‘80s and ‘90s, and the internet after that. The lifestyles of a small portion of legitimately rich Americans inflated the aspirations of the majority of Americans, whose incomes weren’t rising. A culture of equality and Togetherness that came out of the 1950s-1970s innocently morphs into a Keeping Up With The Joneses effect. Now you can see the problem. Joe, an investment banker making $900,000 a year, buys a 4,000 square foot house with two Mercedes and sends three of his kids to Pepperdine. He can afford it. Peter, a bank branch manager making $80,000 a year, sees Joe and feels a subconscious sense of entitlement to live a similar lifestyle, because Peter’s parents believed – and instilled in him – that Americans’ lifestyles weren’t that different even if they had different jobs. His parents were right during their era, because incomes fell into a tight distribution. But that was then. Peter lives in a different world. But his expectations haven’t changed much from his parents, even if the facts have. So what does Peter do? He takes out a huge mortgage. He has $45,000 of credit card debt. He leases two cars. His kids will graduate with heavy student loans. He can’t afford the stuff Joe can, but he’s pushed to stretch for the same lifestyle. It is a big stretch. This would have seemed preposterous to someone in the 1930s. But we’ve spent a half-century since the end of the war fostering a cultural acceptance of household debt. During a time when median wages were flat, the median new American home grew 50% larger: The average new American home now has more bathrooms than occupants. Nearly half have four or more bedrooms, up from 18% in 1983. The average car loan adjusted for inflation more than doubled between 1975 and 2003, from $12,300 to $27,900. And you know what happened to college costs and student loans. Household debt-to-income stayed about flat from 1963 to 1973. Then it climbed, and climbed, and climbed: Even as interest rates plunged, the percentage of income going to debt service payments rose. And it skewed toward lower-income groups. The share of income going toward debt and lease payments is just over 8% for the highest income groups – those with the biggest income gains – but over 21% for those below the 50th percentile. The difference between this climb and the debt increase that took place during the 1950s and ‘60s is that the recent jump started from a high base. Economist Hyman Minsky described the beginning of debt crises: The moment when people take on more debt than they can service. It’s an ugly, painful moment. It’s like Wile E. Coyote looking down, realizing he’s screwed, and falling precipitously. Which, of course, is what happened in 2008. 9. Once a paradigm is in place it is very hard to turn it around. A lot of debt was shed after 2008. And then interest rates plunged. Household debt payments as a percentage of income are now at the lowest levels in 35 years. But the response to 2008, necessary as it may have been, perpetuated some of the trends that got us here. Quantitative easing both prevented economic collapse and boosted asset prices, a boon for those who owned them – mostly rich people. The Fed backstopped corporate debt in 2008. That helped those who owned their debt – mostly rich people. Tax cuts over the last 20 years have predominantly gone to those with higher incomes. People with higher incomes send their kids to the best colleges. Those kids can go on to earn higher incomes and invest in corporate debt that will be backstopped by the Fed, own stocks that will be supported by various government policies, and so on. Economist Bhashkar Mazumder has shown that incomes among brothers are more correlated than height or weight. If you are rich and tall, your brother is more likely to also be rich than he is tall. None of these things are problems in and of themselves, which is why they stay in place. But they’re symptomatic of the bigger thing that’s happened since the early 1980s: The economy works better for some people than others. Success isn’t as meritocratic as it used to be and, when success is granted, is rewarded with higher gains than in previous eras. You don’t have to think that’s morally right or wrong. And, again, in this story it doesn’t matter why it happened. It just matters that it did happen, and it caused the economy to shift away from people’s expectations that were set after the war: That there’s a broad middle class without systematic inequality, where your neighbors next door and a few miles down the road live a life that’s pretty similar to yours. Part of the reason these expectations have stuck around for 35 years after they shifted away from reality is because they felt so good for so many people when they were valid. Something that good – or at least the impression that it was that good – isn’t easy to let go of. So people haven’t let go of it. They want it back. 10. The Tea Party, Occupy Wall Street, Brexit, and the rise of Donald Trump each represents a group shouting, “Stop the ride, I want off.” The details of their shouting are different, but they’re all shouting – at least in part – because stuff isn’t working for them within the context of the post-war expectation that stuff should work roughly the same for roughly everyone. You can scoff at linking the rise of Trump to income inequality alone. And you should. These things are always layers of complexity deep. But it’s a key part of what drives people to think, “I don’t live in the world I expected. That pisses me off. So screw this. And screw you! I’m going to fight for something totally different, because this – whatever it is – isn’t working.” Take that mentality and raise it to the power of Facebook, Instagram, and cable news – where people are more keenly aware of how other people live than ever before. It’s gasoline on a flame. Benedict Evans says, “The more the Internet exposes people to new points of view, the angrier people get that different views exist.” That’s a big shift from the post-war economy where the range of economic opinions were smaller, both because the actual range of outcomes was lower and because it wasn’t as easy to see and learn what other people thought and how they lived. I’m not pessimistic. Economics is the story of cycles. Things come, things go. The unemployment rate is now the lowest it’s been in decades. Wages are now actually growing faster for low-income workers than the rich. College costs by and large stopped growing once grants are factored in. If everyone studied advances in healthcare, communication, transportation, and civil rights since the Glorious 1950s, my guess is most wouldn’t want to go back. But a central theme of this story is that expectations move slower than reality on the ground. That was true when people clung to 1950s expectations as the economy changed over the next 35 years. And even if a middle-class boom began today, expectations that the odds are stacked against everyone but those at the top may stick around. So the era of “This isnt working” may stick around. And the era of “We need something radically new, right now, whatever it is” may stick around. Which, in a way, is part of what starts events that led to things like World War II, where this story began. History is just one damn thing after another.
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Amber Heard: I Spoke Up Against Sexual Violence and Faced Our Culture's WrathThis piece was originally published in the Washington Post.I was exposed to abuse at a very young age. I knew certain things early on, without ever having to be told. I knew that men have the power — physically, socially and financially — and that a lot of institutions support that arrangement. I knew this long before I had the words to articulate it, and I bet you learned it young, too.Like many women, I had been harassed and sexually assaulted by the time I was of college age. But I kept quiet — I did not expect filing complaints to bring justice. And I didn’t see myself as a victim.Then two years ago, I became a public figure representing domestic abuse, and I felt the full force of our culture’s wrath for women who speak out.Friends and advisers told me I would never again work as an actress — that I would be blacklisted. A movie I was attached to recast my role. I had just shot a two-year campaign as the face of a global fashion brand, and the company dropped me. Questions arose as to whether I would be able to keep my role of Mera in the movies “Justice League” and “Aquaman.”I had the rare vantage point of seeing, in real time, how institutions protect men accused of abuse.Imagine a powerful man as a ship, like the Titanic. That ship is a huge enterprise. When it strikes an iceberg, there are a lot of people on board desperate to patch up holes — not because they believe in or even care about the ship, but because their own fates depend on the enterprise.In recent years, the #MeToo movement has taught us about how power like this works, not just in Hollywood but in all kinds of institutions — workplaces, places of worship or simply in particular communities. In every walk of life, women are confronting these men who are buoyed by social, economic and cultural power. And these institutions are beginning to change.We are in a transformative political moment. The president of our country has been accused by more than a dozen women of sexual misconduct, including assault and harassment. Outrage over his statements and behavior has energized a female-led opposition. #MeToo started a conversation about just how profoundly sexual violence affects women in every area of our lives. And last month, more women were elected to Congress than ever in our history, with a mandate to take women’s issues seriously. Women’s rage and determination to end sexual violence are turning into a political force.We have an opening now to bolster and build institutions protective of women. For starters, Congress can reauthorize and strengthen the Violence Against Women Act. First passed in 1994, the act is one of the most effective pieces of legislation enacted to fight domestic violence and sexual assault. It creates support systems for people who report abuse, and provides funding for rape crisis centers, legal assistance programs and other critical services. It improves responses by law enforcement, and it prohibits discrimination against LGBTQ survivors. Funding for the act expired in September and has only been temporarily extended.We should continue to fight sexual assault on college campuses, while simultaneously insisting on fair processes for adjudicating complaints. Last month, Education Secretary Betsy DeVos proposed changes to Title IX rules governing the treatment of sexual harassment and assault in schools. While some changes would make the process for handling complaints more fair, others would weaken protections for sexual assault survivors. For example, the new rules would require schools to investigate only the most extreme complaints, and then only when they are made to designated officials. Women on campuses already have trouble coming forward about sexual violence — why would we allow institutions to scale back supports?I write this as a woman who had to change my phone number weekly because I was getting death threats. For months, I rarely left my apartment, and when I did, I was pursued by camera drones and photographers on foot, on motorcycles and in cars. Tabloid outlets that posted pictures of me spun them in a negative light. I felt as though I was on trial in the court of public opinion — and my life and livelihood depended on myriad judgments far beyond my control.I want to ensure that women who come forward to talk about violence receive more support. We are electing representatives who know how deeply we care about these issues. We can work together to demand changes to laws and rules and social norms — and to right the imbalances that have shaped our lives.
14 beautiful points when traveling to SapaTravel to sapa you will have a great experience. This place contains many wonders from the natural landscape. The natural landscape of Sapa is a combination of human creativity and hilly terrain. The green of the forest, as the picture is arranged in harmony layout creates an area with many attractive romantic scenery. Travel to sapa should go? Travel to Sapa will be conquered Mount Fansipan Indochina or a village to hide in the mist. Mountain scenery along with hundreds of flowers blooming, “Clouds hugging mountain, mountain hugging clouds” certainly rage on visitors when this place. HAM RONG MOUNTAIN Standing on top of Ham Rong Mountain, you can see Ta Phin, Muong Hoa valley and Sapa panorama hidden in smoke. At the top of Ham Rong Mountain, tourists like to go to the place of bồng lai, bright flowers on the ground, cloud cover themselves. SAPA STONE CHURCH Since 1895 Sapa stone church was built, this place is considered as a stamp of ancient architecture integrity of the French left. This place has been embellished and preserved, becoming an indispensable image when referring to the misty Sapa town. TA PHIN VILLAGE This place has many beautiful scenery, cultural characteristics of the ethnic identity with brocade of the Red Dao. In Ta Phin village, you can visit the nearby Ta Phin Cave. Ta Phin cave has many interesting stalactites, dancing fields, glittering forest, unicorn sitting … CAT CAT VILLAGE A traditional H’mong house, where traditional handicrafts such as weaving, cotton, linen are preserved. At present, Cat Cat has been built as a tourist resort.   TA VAN VILLAGE Here, visitors will learn more lifestyle, style of Ta van Giay. The two sides of the road to Ta Van Giay village are the terraced fields are adorned with blue of young rice and corn. SIN CHAI VILLAGE This is not the “travel” should still retain the original wild beauty. This is a black Mongolian people of about 1400 people. In addition to planting hybrid maize and upland rice, Sin Chai villagers also plant cardamom on mountain ranges. A relatively high income source between this ancient valley. MUONG HOA VALLEY – SAPA ANCIENT ROCKS Travel to sapa you will be exploring the ancient stone carvings with various shapes in Muong Hoa valley.. Interposed between the terraced fields of ethnic minorities and herbs. Hundreds of ancient sandstone carvings have carved characters, strange shapes so far have not identified the meaning and origin. This ancient carvings were ranked as national monuments. Ancient rock is a unique legacy of the ancient Vietnamese that many archaeologists and historians interested. There is also a beautiful stream stretching about 15 km. Flowing through the villages of Ta Ho, Ta Van, Lao Chai, Hao. TIEN CAVE From the center of Bao Nhai commune (Bac Ha district), 6 km from the Chay river. The boat runs through ancient citadel with many legends. The river flowing here to create a deep stream, gentle, wool between two walls wall standing. Tien cave is a small Ha Long. Associated with the shrine of the Ba Tong Pagoda. Many tourists come to bathe in streams, soaking in the sunshine in the morning. FANSIPAN CONQUER THE MOUNTAIN Fansipan is the highest mountain of the Indochinese Peninsula (3,143 m), located in the heart of Hoang Lien Son Range. You can go by tour companies or organize themselves with the guidance of local people Mong people, Dao. On the way to the top of the mountain, visitors will discover the fauna and flora of nature. There are many Hoang Lien, a precious medicine, precious woods, birds such as chicken, bears, monkeys, chamois, birds … Or you can choose cable car. Fansipan cable car to go into operation in early 2016, has helped tens of thousands of visitors, set foot to Fansipan peak admire, explore. This is also the Guinness cable car that has certified two Guinness World Record for Sapphire Fansipan Cable Car: Three-wire cable with the difference between the world’s largest travel and gas station: 1410m and the world’s longest cable: 6292.5m. The time to admire Fansipan peak is now shortened from 2 days to only 15 minutes. SILVER WATERFALL – WATERFALL LOVE From Sapa town, go west about 11 km on the way to Lai Chau. You will meet Silver Falls flowing from a height of over 100 m into the stream below the O Quy Ho valley. Make impressive mountain sounds. In the dry season, you should consider when visiting Waterfall because the water is very low. Go for another 3 km from Silver Falls to Heaven Gate to see down the valley of Lai Chau and Fansipan peak. If you like walking, you can stop at Tram Ton and head to Hoang Lien National Park, about 1 km to discover the Love Waterfall. SKY GATE Road to the winding sky winding winding mid-mountain over the same message. This passage is called Tram Ton, crept between majestic Hoang Lien Son range. And the gate of heaven is the top of this pass. Standing in the middle of Sapa’s sky, you can see the broad valley below with green fields, the car road, the far distance is Silver Falls. COC SAN CAVE This is a system of waterfalls and caves of different sizes. The beauty of Coc San is completely natural nature, wild. There is a very special thing in almost every bend of a waterfall, after the water poured down from above, there is a cave. Coc San landscape is harmonious and comprehensive. Everybody here comes to feel the miraculous excitement from the waterfalls, stone tissue and caves. HOANG A TUONG PALACE The architectural style of Hoang A Tuong combines Asian style, harmony, rectangular layout is closed. This is a beautiful architecture bearing high marks. BAC HA MARKET Travel to Sapa you should go to Bac Ha Market is the largest market in the border region high. The meeting is held weekly. This is where people around shopping, playing. This is still the place of …
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