What I've learned since moving to D.C. (some of which should be obvious): 0113

5601.  Apparently, Aruba is off the coast of Venezuela and, on a clear day, you can see it;

5602.  The casinos in Aruba are (pretty) small;

5603.  When (you’re) snorkeling, don’t put your mask completely horizontal/flat in the water . . . angle it slightly up(ward) (i.e., it’ll help keep the snorkel out of the water);

5604.  You may have been taught that strength is measured by how “hard” you are in your thinking or how inflexible you are in your opinions.  You may have been told that weakness is associated with those who bend.  But when confronted with any stressful situation, keep in mind that being stiff won’t get you very far, whereas being flexible will carry you through;

5605.  Change the way you think about strength.  Aren’t the physically and mentally strong those who can bend and adapt to life especially as we age?  The more you think in rigid ways and refrain from considering other points of view, the more you’re liable to break.  Our minds and our bodies need flexibility to thrive.  When we see ourselves as flexible and supple, we are able to bend in harmony with our source;

5606.  The Asian pear salad (with baby arugula, Belgian endive, walnuts & cider vinaigrette) at Bobby Van’s Steakhouse (BobbyVans.com) is tasty;

5607.  Actively creating the conditions and cultivating the habits that reduce and temper our fear response and promote internal peace are the very things that open the door for more abundance to show up in our lives;

5608.  Apparently, your shower valve can affect the hot water in the rest of your place;

5609.  Lost Rhino Root Beer (LostRhino.com) is dangerous.  You can’t taste the alcohol at all;

5610.  Strength does not come from physical capacity.  It comes from an indomitable will;

5611.  A coward is incapable of exhibiting love; it is the prerogative of the brave;

5612.  To create change in every aspect of your life, you must continually push the bar.  But the truth is, the standards you set for yourself and everyone around you determine the difference between acceptable results and extraordinary results – the chasm between good and great.  Surround yourself with people who are striving for life at the next level.  Together, you can challenge, support and push each other;

5613.  The corona of the National Museum of African American History & Culture is at the same angle as the pyramidion atop the Washington Monument (i.e., 17.4 degrees);

5614.  $300 million of the (over) $500 million it cost to build the National Museum of African American History & Culture was raised through private donations;

5615.  In the U.S., there’s only about 300 female, African America architects;

5616.  Kristy loves “Thin Mints;”

5617.  Kristy likes camels;

5618.  Anger is often what pain looks like when it shows itself in public;

5619.  It would be absurd for anyone of us to say that you should be grateful for everything that happens to you, but you can be grateful in every moment;

5620.  Just discussing a goal or idea you have socially will actually trigger a reward mechanism in your brain.  Meaning that just talking about your goals or ideas to a group of friends will make you feel like you’ve actually done something worthwhile.  This tricks us into thinking we are making progress when in fact we are doing nothing and allows us to continue living in a fantasy land full of our own progress;

5621.  Ideas mean nothing.  The greatest idea in the world will never put money on the table or impact the world.  The only thing that matters is execution and actually creating the world you want to live in;

5622.  Coming up with a good idea takes a few seconds.  Turning that idea into something in the real world takes years;

5623.  Audacious plans require an audacious work ethic;

5624.  You build a new belief by brainwashing yourself each and every day.  The same way that you have to exercise daily to get the body you want, you have to exercise daily to get the mind that you want.  You need to start focusing on what you have done, who you are and what you will do rather than the opposite.  Each and every single day, you need to write out with a pen and paper why you should believe in yourself, why you should be confident and why you should be grateful for yourself.  Sometimes it might take you 5 minutes to come up with an answer, but just keep trying.  Eventually, you notice you start feeling better 1 day out of 3.  Focus on that one day, focus on the bright spots and eventually that one day will become 2 out of 3 and then eventually 3 out of 3.  It just takes doing the work;

5625.  Whether you are a business owner or an employee, you can see how your company’s 401(k) plan stacks up by using the “Fee Checker” tool at ShowMeTheFees.com;

5626.  In reality, all financial advisors fall into just one of three categories: 1.  A broker; 2.  An independent advisor; or 3.  A dually registered advisor;

5627.  About 90% of all financial advisors in America are brokers.  They’re paid a fee or commission for selling products.  Many of them work for enormous Wall Street banks, brokerage houses and insurance companies;

5628.  Brokers don’t have to recommend the best product for you.  All they’re obliged to do is follow what’s known as the “suitability” standard.  That means they must simply believe that any recommendations they make are “suitable” for their clients.  Suitability is an extremely low bar to clear;

5629.  Brokers and their employers earn more by recommending certain products.  For example, an actively managed fund with high expenses will be far more lucrative for the broker and the brokerage house than a low-cost index fund, which will be far more lucrative for you and your family;

5630.  The United Kingdom has a fiduciary standard, which means that all financial advisors are required by law to act in their clients’ best interests.  Australia also has a fiduciary standard;

5631.  No matter how much you may like your broker, your broker is not your friend;

5632.  Of 308,937 financial advisors in the United States, only 31,000 – approximately 10% – are registered investment advisors (also known as RIAs or independent advisors).  Like doctors and lawyers, they have a fiduciary duty and a legal obligation to act in their clients’ best interests at all times;

5633.  How come there are so few RIAs, if this is such a superior model?  The most obvious reason is that brokers tend to earn a lot more money.  All those fat fees from selling financial products can be extremely lucrative.  By contrast, RIAs don’t accept sales commissions.  Instead, they typically charge a flat fee for financial advice or a percentage of their clients’ assets under management;

5634.  The vast majority of independent advisors are registered as both fiduciaries and brokers.  In fact, as many as 26,000 out of 31,000 RIAs operate in this gray area where they have one foot in both camps.  Only 5,000 of the nation’s 310,000 financial advisors are pure fiduciaries.  That’s a measly 1.6%;

5635.  Conflicts of interest can arise even when you’re working with an independent advisor – typically involving clever, but legal schemes to make additional money off you while you’re looking the other way;

5636.  You should watch out for: 1.  Proprietary funds – Brokers routinely sell proprietary funds created by the their own firm.  It’s a not-so-subtle strategy for keeping fees in the family.  Most clients aren’t even aware that they’re buying funds owned by the same firm.  That’s because the fund arm and the advisory arm typically operate under different brand names; 2.  An additional fee for doing nothing – You pay an advisor a fee to manage your money – let’s say, 1% of your assets.  The advisor recommends a “model portfolio”, which has its own additional fee – let’s say, .25% of your assets.  This fee is over and above the cost of the underlying investments in your portfolio.  But nothing additional is being done for you: the “model portfolio” consists of various investments the advisor has assembled, which is what you paid him to do in the first place.  If an advisor charges a money management fee for selecting investments, that should be it.  End of story; and 3.  A consulting fee – Some independent advisors make private deals with investment firms that enable the advisor to earn commissions without you knowing it.  Your advisor recommends the funds of a specific mutual fund company.  The advisor can’t do anything as tawdry as receiving a backdoor commission from the fund company in return for recommending its products.  So the advisor approaches the fund company and asks instead for a “consulting fee;”

5637.  How can you tell if a particular fiduciary has the right skills and experience for you: 1.  Check out the advisor’s credentials – If you’re looking for planning help, make sure the advisor has a certified financial planner (CFP) on the team.  If you’re looking for legal help, make sure there are estate planning attorneys on the team.  Looking for tax advice?  Make sure there are CPAs on the team; 2.  Ideally, if you’re using an advisor, you should be getting more than just someone to design your investment strategy – What you really need is someone who can help you as the years go by to grow your overall wealth by showing you how to save money on your mortgage, insurance, taxes and so – someone who can also help you to design and protect your legacy.  It’s important to have this breadth of expertise since taxes alone can make a difference of 30% to 50% in what you retain from your investments today; 3.  You want to make sure your advisor has experience in working with people just like you – Does s/he have the track record to prove s/he’s performed well for clients in your position with your needs?; 4.  It’s also important to make sure that you and your advisor are aligned philosophically – For example, does s/he believe s/he can beat the market over the long run by picking individual stocks or actively managed funds?  Or does s/he recognize that the odds of beating the market are low, leading her/him to focus on selecting a well-diversified portfolio of index funds?; and 5.  It’s important to find an advisor you can relate to on a personal level – A good advisor will be a partner and ally for many years, guiding you on a long-distance financial journey.  It’s a professional relationship, but isn’t money also a deeply personal subject for you?  It’s tied up with our hopes and dreams, our desire to take care of the next generation, to have a charitable impact and to live an extraordinary life on our own terms.  It helps if you can have these conversations with an advisor you connect with, trust and like;

5638.  Seven key questions to ask any advisor: 1.  Are you a registered investment advisor?  If the answer is no, this advisor is a broker.  If the answer is yes, s/he is required by law to be a fiduciary; 2.  Are you (or your firm) affiliated with a broker-dealer?  If the answer is yes, you’re dealing with someone who can act as a broker and usually has an incentive to steer you to specific investments.  One easy way to figure this out is to glance at the bottom of the advisor’s website or business cards and see if there’s a sentence like “Securities offered through [advisor’s company name], member FINRA and SIPC.”  If you see these words, it means s/he can act as a broker; 3.  Does your firm offer proprietary mutual funds or separately managed accounts?  You want the answer to be an emphatic no; 4.  Do you or your firm receive any third-party compensation for recommending particular investments?; 5.  What’s your philosophy when it comes to investing?  This will help you to understand whether or not the advisor believes that s/he can beat the market by picking individual stocks or actively managed funds; 6.  What financial planning services do you offer beyond investment strategy and portfolio management?  Ideally you want an advisor who can bring tools for tax efficiency in all aspects of your planning from your investment planning to your business planning to your estate planning; and 7.  Where will my money be held?  A fiduciary advisor should always use a third-party custodian to hold your funds.  You sign a limited power of attorney that gives the advisory the right to manage the money, but never to make withdrawals;

5639.  Core (investing) principle 1: Don’t lose – The first question that every great investor asks constantly is “How can I avoid losing money?”

5640.  The more money you lose, the harder it is to get back to where you started;

5641.  The most successful investors recognize that none of us can consistently predict what the future holds.  With that in mind, they always guard against the risk of unexpected events – and the risk that they themselves can be wrong, regardless of how smart they are;

5642.  We have to design an asset allocation that ensure that we’ll “still be okay,” even when we’re wrong;

5643.  Asset allocation is simply a matter of establishing the right mix of different types of investments, diversifying among them in such a way that you reduce your risks and maximize your rewards;

5644.  Core (investing) principle 2: Asymmetric risk/reward – According to conventional wisdom, you need to take big risks to achieve big returns.  The best investors don’t fall for the high-risk, high-reward myth.  Instead, they hunt for investment opportunities that offer what they call asymmetric risk/rewards: a fancy way of saying that the rewards should vastly outweigh the risks.  In other words, these winning investors always seek to risk as little as possible to make as much as possible;

5645.  Five-to-one is Paul Tudor Jones’s ideal investment.  He obviously can’t find that ratio every time.  In some cases, the ratio of three-to-one is his target;

5646.  Four important ways to diversify effectively: 1.  Diversify across different asset classes (i.e., real estate, stocks, bonds or any single investment class); 2.  Diversify within asset classes (i.e., don’t put all your money in a favorite stock such as Apple, a single M.L.P. or one piece of waterfront real estate that could be washed away in a storm); 3.  Diversify across markets, countries and currencies around the world; and 4.  Diversify across time (i.e., dollar-cost averaging);

5647.  Beyond Meat’s (BeyondMeat.com) “The Beyond Burger” tastes (pretty) good.  It (actually) tastes like meat, but it does have a funny, lingering aftertaste;

5648.  I can say I’ve weeded with Barry Trotz (the head coach of the Washington Capitals);

5649.  Hard choices easy life.  Easy choices hard life;

5650.  Miley Cyrus has a lot of (inner) arm tattoos;

What I've learned since moving to D.C. (some of which should be obvious): 0112

5551.  Most people spend their life searching for something big neglecting something small that they already have;

5552.  Many people chase a dream just because they think it is an easy route to success.  This means the real reason they enter a career is because of their desire to be successful and not because of the passion for pursuing it;

5553.  If you change the way you look at things, the things you look at change;

5554.  Execution trumps knowledge every day of the week;

5555.  History is but a lantern on the stern, which shines only on the waves behind us and not on where we are headed.  The past is not necessarily prologue to the future;

5556.  Waste no more time arguing about what a good man should be.  Be one;

5557.  Money is only a tool.  It will take you wherever you wish, but it will not replace you as the driver;

5558.  When any market falls by at least 10% from its peak, it’s called a correction;

5559.  When a market falls by at least 20% from its peak, it’s called a bear market;

5560.  On average, there’s been a market correction every year since 1900;

5561.  You’ll experience the same number of corrections as birthdays;

5562.  Historically, the average correction has lasted only 54 days – less than two months;

5563.  In the average correction over the last 100 years, the market has fallen only 13.5%;

5564.  From 1980 through the end of 2015, the average drop was 14.2%;

5565.  Fewer than one in five corrections escalate to the point where they become a bear market;

5566.  There were 35 bear markets in the 115 years between 1900 and 2015.  On average, they happened nearly once every three years;

5567.  More recently, bear markets have occurred slightly less often: in the 70 years since 1946, there have been 14 of them.  That’s a rate of one bear market every five years;

5568.  In more than a third of bear markets, the index plunged by more than 40%;

5569.  Bear markets vary widely in duration from a month and a half (i.e., 45 days) to nearly 2 years (i.e., 694 days).  On average, they lasted about a year;

5570.  The stock market isn’t looking at today.  The market always looks to tomorrow.  What matters most isn’t where the economy is right now, but where it’s headed;

5571.  When everything seems terrible, the pendulum eventually swings in the other direction;

5572.  Every single bear market in the U.S. history has been followed by a bull market without exception;

5573.  The U.S. market hits an all-time high on approximately 5% of all trading days.  On average, that’s once a month;

5574.  From 1996 through 2015, the S&P 500 returned an average of 8.2% a year.  But if you missed out on the top 10 trading days during those 20 years, your returns dwindled to just 4.5% a year;

5575.  Aruba is really windy;

5576.  The water in Aruba is very blue;

5577.  There aren’t many locals/natives in Aruba;

5578.  The McCrioyo Sausage (i.e., sausage, egg, tomato, lettuce, ketchup & mayonnaise on Aruban bread) at McDonald’s (in Aruba) is pretty tasty;

5579.  Groceries are expensive in Aruba;

5580.  They take U.S. dollars in Aruba;

5581.  “Doei” (i.e., do-e) is “bye” in Dutch;

5582.  Apparently, Aruba is Dutch;

5583.  In Aruba, it’s pretty much between 80 and 84 degrees every day in May;

5584.  A study by JPMorgan found that 6 of the 10 best days in the market over the last 20 years occurred within two weeks of the 10 worst days;

5585.  If you lose money in the market, it’s because of a decision you made.  The market is going to do whatever it’s going to do, but you determine whether you’ll win or lose.  You’re in charge;

5586.  Let’s assume the stock market gives a 7% return over 50 years.  At that rate, because of the power of compounding, each dollar goes up to 30 dollars.  But the average fund charges you about 2% per year in costs, which drops your average annual return to 5%.  At that rate, you get 10 dollars;

5587.  Professional fund managers aren’t really any better at predicting the future than the rest of us;

5588.  Investing is a zero-sum game.  When two people trade a stock, one must win and one must lose.  If the stock goes up after you buy it, you win.  But you’ve got to win by a big enough margin to cover those transaction costs;

5589.  If your stock goes up, you’ll also have to pay taxes on your profits when you sell the stock;

5590.  An exhaustive study by Nobel laureate economist William Sharpe showed that a market-timing investor must be right 69% to 91% of the time to outperform the market;

5591.  When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there’s almost no chance that you end up beating the index fund;

5592.  If a mutual fund is held in a nontaxable account like a 401(k), you’re looking at total costs of 3.17% a year.  If it’s in a taxable account, the total costs amount to a staggering 4.17% a year;

5593.  An actively managed fund that charges you 3% a year is 60 times more expensive than an index fund that charges .05%.  Imagine going to Starbucks with a friend.  She orders a venti caffé latte and pays $4.15.  But you decide that you’re happy to pay 60 times more.  Your price: $249;

5594.  Robert Arnott, the founder of Research Affiliates, studied all 203 actively managed mutual funds with at least $100 million in assets, tracking their returns for the 15 years from 1984 through 1998.  Only 8 of these 203 funds actually beat the S&P 500 index.  That’s less than 4%.  To put it another way, 96% of these actively managed funds to add any value at all over 15 years;

5595.  Of the 248 mutual stock funds with five-star ratings at the start of 1999, just four still kept that rank after 10 years;

5596.  71% of people enrolled in 401(k)s think there are no fees and 92% admit that they have no clue what they are.  But the truth is, the vast majority of plans are characterized by huge broker commissions, expensive actively managed funds and layer after layer of additional, and often hidden, charges;

5597.  The sun is brutal in Aruba;

5598.  Brazilians like to party;

5599.  Apparently, “puseta” means “pussy” in Portuguese;
5600.  Apparently, Aruba is by the equator;