A Love Letter to the American Press


Mushrooms

Dear American Press,

You have always been an important part of my life.  From a young age I remember sitting at the breakfast bar in our house, reading through the local newspaper.  When I was younger still, I remember that they brightly colored Sunday comics were always anticipated and savored each week.  Through my teens I watched the local and national news each night.  Your anchors and reporters became uncles and aunts to me who would visit each night to tell about things happening around town, around the nation, and around the world.  I particularly remember being impressed by the local weather man, Stu Tracy, who would throw up the suns and rain symbols that would magnetically stick to the map.  I never understood how he would remember just where each symbol would go and was disappointed when he stopped creating the map real-time, instead having it setup before the forecast.

In college I made the decision to spend an hour each day in a particular chair in the student union and pour through the Wall Street Journal, cover-to-cover, as well as Barrons on the day it came out.  I also remember the start of CNN and ’round-the-clock coverage during the first Gulf War.  How amazing it was to be able to be there in Baghdad as the American bombs were falling.  I remember the chill in the air as Saddam Hussein fired scuds at American troops and Israeli cities that could be filled with chemical agents, never knowing where one might land.

              

Yes, I have loved you for all of my life.  But to truly love someone also means to be truthful when that person is making bad decisions that are hurting her.  To act like things were just fine when someone you love it tearing herself apart is not love, but enabling.  Having someone speak up may bring about anger and resentment, sometimes causing an irreconcilable split in the relationship.  It would be far easier to stay silent and not bring up difficult issues, but that would not be love.  God says to treat others as we would like to be treated; that should go doubly for someone we love.  If I were destroying my life, I would want someone to tell me.  So here goes….

Your reporting is full of incomplete and biased information – even some flat-out lies at times – and that is causing people to not trust you anymore.

OK – there it is.  Right out on-the-table.  I know that you think that people are generally ignorant and even dull, such that they would not know that you were trying to manipulate them through the facts you tell and the ones you leave out, the words you choose, and even the stories you choose to cover and those you don’t.  But they are seeing right through you and it is causing them to turn away.   They don’t want to be around you because you’re trying to get them to believe an alternative reality and then to act accordingly.  You want them to think that nationalized health care is a great thing, while they see the premiums rise and their doctor networks shrink.  You want them to believe that higher taxes, government programs, and strong regulations are the road to happiness for the middle and poverty class, but they have seen jobs disappear, wages stagnate or decline, and poverty increase as these things have come to pass.

Bottom line:  They no longer feel like they can trust you.

          

Need a little Honesty?  It’s such a lonely word.

And you see, trust is everything for you.  People don’t buy your papers or watch your newscasts because they like your witty writing and snappy graphics.  They don’t give a couple of hours of their valuable time each day to watch the evening news and read the morning paper because they want to be told what they should think, particularly when there are such clear holes in that thinking.  They do so because they have a need to know the truth about things for which they can not discover the facts themselves.  They cannot go to Iraq or Afghanistan and see the conditions and the interaction between the local people and American troops.  They cannot spend all day in Washington D.C. and see if their representatives are passing laws with which they agree and spending the people’s money wisely.  They cannot go to the police stations across the country and see if laws are being enforced fairly and effectively, if certain cities are safe or dangerous, and if government agencies are being run efficiently.  The desperately need someone to do this for them so that they then have the information that they need to make the right decisions.  

You are supposed to be the one who finds out the truth for them.

This is why your prevarication, equivocation, replacement of opponent viewpoints with straw man arguments, and manipulation of the facts is so damaging in your relationship with them.  If your product is truth, “All the news that is fit to print,” as one of your publications says, then damaging that trust is the worst possible thing that you could do to them.  They can tolerate mistakes, but they cannot tolerate lies and distortion.  There are plenty of more interesting things they could watch on TV for entertainment or tabloids they could find in the checkout line if they want to read great fictional stories.  They go to you for the truth, but you have let them down time and again, and they know it. 

                   

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Right now, I see that you are shaking your head.  You say that you may stretch things from time-to-time, but your overall purpose is to guide people to a bigger truth and the way you see the world, so changing things around once in a while or selectively leaving some things out that would just confuse people is justifiable.  And that is a big part of the problem.

You lack so much diversity of thought, since all of your employees coming from places where only one point-of-view was allowed, that you don’t even know that you are seeing the world through terribly distorting lenses.

People – evil people who want to seize control in America by centralizing power in a large government – have gone into the universities, then even the high school and grade schools, and filled them with people who all have the mindset that big government is good and socialism (and even communism) are better than free enterprise and capitalism.  The education you received did not include all of the facts, plus it included a lot of unverified conjectures.  If anyone questioned what was presented as facts, they were chastised and humiliated by the teacher and their peers.  People who initially didn’t believe in socialism either dropped out of the major or were made to change their minds.  They may have seen the inconsistencies, but they felt it was for the greater good that they just go along.  And so they came out of the classrooms and went into the newsrooms unable to objectively examine the facts.  They were sent with a mission to convince the readers and viewers that the orthodoxy they were taught in their schools is the right one.  

They became propagandists rather than journalists, even if they did not realize it.

Even once your journalists enter their careers, they continue to shelter themselves from other opinions.  Your newsrooms are echo chambers where everyone agrees with what they say, and your employees live in cities where everyone feels the same.  They are so sheltered that they come to think that their opinions are those of the average American.  They also think that they are far smarter than most people.  That everyone else has the intellect of a child compared to them.  Smart people think the way they do – anyone else is either ignorant or trying to take advantage of the foolish.  Hmm….  They are so convinced that they know better that even when they are proven wrong, such as in the last election when they were sure which candidate would win and the other did, they think there must be some sort of mistake.  Or some boogeyman like the Russians changed things.

          

And another thing….

Referring to the land occupying 90% of the United States as “fly over country” and thinking that those who live there are unimportant isn’t a good way to keep readers and viewers.

Now before you say that they watched and they read and they listened just fine before the internet came along and took their attention, let me counter.  You are right that fewer people are reading your newspapers and watching your evening news casts because of the internet, but it is not because the internet is more exciting or convenient.  If that were the case, people would be flocking to your online content as they stopped getting a daily paper.  But they aren’t, are they?  And no, it isn’t because of right-wing propaganda from talk radio and Fox News either, although both of those sources are part of your problem. 

Alternative news sources like the internet, Fox news, and talk radio are providing the facts that you are leaving out.

They are also providing alternative viewpoints and explanations.  They are giving different reasons why things may happen as they do.  They give different predictions about the effects of policies and government actions.  They also provide logical explanations for their predictions and assessments, rather than just focusing on people’s emotions or dictating how people should feel and what they should do.  They don’t just provide conjecture, using a snooty voice to make their listeners think they need to think the same way or they are stupid.  “Obviously, trickle down economics don’t work.”  “Even a fool should know that raising tax rates brings in more money for the government.”    The alternative news sources are resonating with the hearts of people because those who have worked a real job, built something, or had the real experience of trying to raise a family can tell logical explanations and ideas from, well, what they’re stepping in sometimes in fly over country.

So, it is with great sadness that I now need to tell you that I’m leaving. I no longer want you to show up on my doorstep in the morning.  I won’t be there with you before dinner or at night before going to bed.  I won’t waste my time listening to what you have to say, because I cannot trust what you are telling me and I have better things to do.  I also will not be telling you what I have to say, by writing letters to your editors, since doing so only helps you continue on your destructive course and gives you hope that continuing along the same path will eventual lead you to a better place.

No, it is better to step away and let you hit rock bottom, for it is often only by hitting rock bottom that people decide that they need to change.  I wish you best of luck.

Take care of yourself, because I won’t be there until you change your ways.

With great sadness, love,

SI

Got a comment?  Please use the form below to let me know what you think.  Please also leave a comment or contact me via vtsioriginal@yahoo.com if you’ve got an investing question you’d like to see featured.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Could You Become a Billionaire like Trump?


jehericotopfalls

Funny thing.  Pretty much since I started working a real job, paid off my car, and decided that I would never have a car payment again (or a credit card interest payment, ever), I started projecting how much our net worth would be at different stages of our lives.  I had always assumed that I would work until I was about 70, and that long work career, combined with regular investing and living a comfortable but financially responsible lifestyle that grew with time but always allowed a substantial majority of the income from our investments to compound, caused me to project that we would have no issues with money by the time we retired.  Despite a terrible ten years or so in the stock market after I first made those projections (right before the dot-com bubble burst, the housing bubble burst, and then the multiple years of slow growth ensued), we are tracking well with my original projections.  Depending on the rate of return I assume over the next 25 years, I think we’ll end up somewhere between maybe four times and fifteen times what I would consider the bare minimum needed for our minimum income needs in retirement.  Probably closer to the former, but if the stock market does great and we see returns at the top of the possible range, the latter.

But then I started playing around on the Vanguard website the other night.  They have a neat tool that runs a whole series of Monte Carlo simulations for you.  (In a Monte Carlo simulation, you run a whole series of calculations to determine the range of possibilities of where you could end up.)  These simulations take a mix of cash, stocks, and bonds and run simulations based on random but historically accurate returns for each of these categories and project where you’ll be twenty, thirty, or forty years out after retirement under different market conditions.  The purpose of the simulator is to show how much income you’ll be able to spend and have a good chance of making it all the way through retirement without running out.  For example, if you expect to have $1 M at retirement and pick a portfolio of 50% bonds, 40% stocks, and 10% cash, you may find that you’ll make it through a retirement of 30 years without running out of money maybe 70% of the time.  It is also meant to show the advantages of adding bonds and cash to your portfolio since your risk of running out of money will generally go way up if you stay in all stocks and spend a healthy amount of cash each year if you start with a modest nest egg at retirement.

If you start with substantially more than you need, and plan to spend an amount that is very modest compared with the size of the portfolio (less than 1% per year, for example), a funny thing happens.  Even in the all stock portfolio, your chances of making it all the way through a 30 year retirement without running out of money can become almost certain.  Even in the worst of circumstances where the stock market does terrible a lot of the time, you can still expect to die with a few hundred thousand dollars net worth because you started out so far ahead of the game.

                       

What is really odd, however, are the best scenarios – the ones where the economy does really well, like it did back in the 1980’s and 1990’s, and everything just works out really well.  In that case, because you’re entirely invested in stocks, you can see your net worth grow from the simply comfortably wealthy into the leagues of unreal wealth – $100 M, $300 M, even the ultimate level, a billion dollars!   Imagine joining that elite circle with Warren Buffett, Donald Trump, and Bill Gates.  OK – so I still wouldn’t be quite at their level, and they still wouldn’t return my calls.  And they would be like trillionaires by then.  And they’d all be dead by then.  And I’d be the next day.  But still!

Standing where I am today, that hardly seems possible.  But then again, starting out with a couple of thousand dollars in an emergency fund when we were in our twenties, I could not image being where I am twenty years later even though the math said it would happen if the economy continued to perform as it had for the last couple of hundred years.  The power of compounding at stock market returns, which can average anywhere between about ten and twenty percent annualized over a given fifteen-year period, does not stop just because you’re retired.  That thirty year period between retirement and death is no different from the one between twenty-five and fifty-five, provided you don’t withdraw funds too rapidly and allow your investments to continue to grow.

So will we die as billionaires in fifty-five years?  Probably not.  But we’ll probably leave a significant inheritance and make a sizable donation to some cause unless the markets do really badly between now and then.  Historically badly.  Still, it shows the advantage of working to retire with more than just the bare minimum, since then you can let your money continue to grow in the stock market rather than needing to convert it all to cash and bonds, or worse – give it to some insurance company to get an annuity.  So here’s to all the potential future billionaires out there who just look like middle-class workers with older cars right now.

Got a question or comment about personal finance or investing?  Please leave a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

How Many Shares Should a Beginner Buy?


Ocean

OK, so you’ve been interested in individual stock buying for a while, have saved up some money, and are looking to buy your first shares.  Or maybe you are just starting to save money and wonder how much you need to save to be ready.  Today we’ll talk about how much is needed to get started in stock investing, and how many shares you should plan to buy starting out.

First, make sure you are actually ready to start investing in individual stocks and that you have the right expectations.  To be ready to invest in individual stocks you should:

  1.  Have your credit cards all paid off.  There is no reason to be investing while you’re paying credit cards 12% interest or more.  Pay off you high interest debts, then think about investing.
  2. Have an emergency fund of at least $9,000.  If you don’t have a good emergency fund, you’ll have just bought your first shares, then need to sell them to pay for something that breaks.  Or worse, you’ll pull out the credit card to pay the bill, starting you into debt.  Note this does not apply if you’re under 18 since you have your parents to pay the bills – and this is a great time to first start investing.
  3. Be putting at least 10% of your pay into a retirement fund,  This could be a 401k, 403B, or even an IRA.  This money should be invested almost exclusively in a diversified set of low-cost mutual funds.  You still want to be able to retire even if you’re a bad stock picker.
  4. Be ready to leave your money alone for at least 5-10 years.  Stock investing, particularly individual stock investing, is a long-term game.  Investing for anything less than five years is just gambling.
  5. Have money you can afford to lose.  Individual company stocks can and do go bankrupt.  You should allow the possibility of losing ever dime you invest.

                     

If you pass the criteria above, you might be ready to start individual stock investing.  While you can buy any number of shares, if you’re investing to make money, you’ll probably want to try to buy at least 100 shares, or what is called a “round lot.”  Invest less than this, and the amount you’re paying in commissions will start to make it really difficult to succeed.  You’ll also want to pick a stock in the $10-$30 range, which will mean you’ll need about $1100-$3100, when you include commissions.

If you’re not really investing to make money, but instead just want the fun of holding a few shares, you can buy around 10 shares.  We bought 10 shares of Home Depot for $300 for my son when he was born, and now (15 years later), his holdings are worth about $1200.  Even better , he gets a dividend every three months which has been steadily increasing.

Finally, if you really are serious about single stock investing, and you can afford to take the loss if something goes wrong, you should try to buy in increments of 500-1000 shares.  At this level you will really profit if you are right and the company does well.  If you hold 100 shares of company XYZ and they go from $20 to $60, you’ve only made $4,000.  This is nice, but really not that substantial in your life.  If you have 1000 shares, you’ll have made $40,000.  That’s enough for a year in college, a good down-payment on a house, or a couple of high quality, late model used cars.

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Getting to 1000 shares may take a while and require some build-up.  In fact, it is probably better to buy in increments of 200-300 shares a few times rather than buying 1000 shares all at once since then you can pick up more shares on dips and get a better price.  In fact, to reduce your risk, you should probably pick up 200-300 shares of stock A, then 200-300 shares of stock B, then 200-300 shares of stock C.  Then, buy more of whichever company’s shares are the best bargain when you’re ready to buy more.  Of course, sometimes a stock will take right off after your first purchase and never look back, so you never know.

Have a burning investing question you’d like answered?  Please send to vtsioriginal@yahoo.com or leave in a comment.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.