Rose Bowl Memories


This year’s Rose Bowl features a couple of teams from geographies chock full of Manifest Investing participants. And in our house, a special place for a Michigan State grad creates more than a little bias.

If you’ve ever been to the pageant and gala, you know what I mean. It’s a wonderful day and when the weather cooperates, it’s spectacular.

But my favorite memory involves the Fighting Illini and the USC Trojans. My friend, Kelly Mace, and I spent several hours meandering the grounds before the game. There are party tents, tail gates, sponsor and alumni gatherings … all blended on the grounds of park and golf course surrounding the stadium.

But the moment is priceless. A group of Trojan fans dumped a cooler of beverages and ice as they made their way to their celebration location. After a prolonged moment of standing there gnashing teeth, etc. a couple of University of Illinois students approached them.

“Step back.” “We got this.” “We have a whole lot more experience handling this icy stuff than any of you do.”

“You’re welcome.” “Enjoy the game.” “The probability that you will enjoy the game more than us is not something we’re all that comfortable with …”

Kelly and I smiled as we watched these good Samaritans save the moment, restoring the beverages and coolant — and heading off to their own celebration.

“We never had a chance to thank them … and they were gone.”

And they were right about the game … for Illinois fans.

When Squirrels Get Hot Feet


In honor of that huge geographical electrical outage ten years ago this weekend, here’s a throw back to a Better Investing column I wrote at the time.

“Water, water, everywhere and not a drop to drink.”

Alex, our 13-year-old, and I were returning from a couple of days of camping and canoeing in northern Michigan. About 90 minutes from home, I decided to check in with my spouse. “All circuits are busy. Please try your call again later.” For me,“later” is approximately five seconds whenever I encounter that message. So I tried again. “All circuits are busy.” It became obvious that something was amiss because I continued to redial every 5 to 10 minutes for nearly two hours. “All circuits are busy.”

“All circuits are busy.”

We rolled into town to find all the traffic lights out of service, with the expected gridlock. A five-minute spin across town turned into a one-hour start-and-stop marathon. It was nearly 100 degrees outside. People really like their air conditioners when the temperature exceeds two digits. In fact, people were liking their air conditioners — a whole lot — from Indiana to Maine.

All Circuits Are Busy

As of a few days later, the cause is yet unknown. We do know that a power plant on the shores of Lake Erie tripped, much like the circuit breakers in your house — removing several hundred megawatts of electricity from the supply. In an instant, power was rerouted along an alternate conduit.

As it turned out, the telephone circuits weren’t the only ones that were real busy. The additional power did the same thing that your spouse or teenagers do to a home circuit when they plug a hair dryer, a CD player, the toaster oven and their cell phone recharger into the same outlet. It got hot. Birds and squirrels got hot feet and a really big circuit breaker did exactly what it was supposed to.

It said, “No.”

At the same time, a power plant on the shores of Lake Michigan decided to misbehave. Slumbering gremlins all over this electrical grid decided to hold a party and wreak some havoc. They wreaked well. The power plants in the eastern Midwest could no longer keep up.

An automatic appeal from the wires and power plants in Ohio and Michigan requested more power from plants in New York and Maine. Other wires got hot. The gremlins were ecstatic at the amount of trouble they had started. Factories, businesses and residences from Michigan to New York were plunged into darkness.

Hot Dogs!

I turned on the radio. I once had a job where the map of the North American Electric Reliability Council hung on my wall. The map displayed every wire and power plant in North America. I explained what was happening to Alex. He listened carefully as the man on the radio confirmed that we’d probably be without power for three or four days. How did Alex assess the situation? “Cool.”

Alex was probably the only one using that characterization at the time. We diverted our attention from the traffic jam and steered into the parking lot of our local Home Depot. A stack of batteries, three new flashlights, a couple of propane tanks, some charcoal and several hot dogs later (yes, Home Depot sells hot dogs, too,) I was beginning to understand “cool.”

The lower level of our home became an extended campout and the scene of a number of Axis and Allies board game battles. We barbequed nearly everything in the freezer and had a feast.

But we had water at the campsite in northern Michigan.

We learned that our local water supply is quite dependent on electricity, too. No matter how hard we turned the faucet,we had no water. Living without electricity is a challenge and can even be “cool” for a while. Living without water is not.

Please do try this at home. Throw the main breaker. Turn the valve and shut off the water supply to your home. See how long you can last. I believe you’ll pine for the water before the “juice.” You’ll probably be reminded to establish some jugs of water in your basement. We were.

Alex was despondent when the lights came back on. We promised each other that we’d leave the television off for one more day. When Internet service returned, I spent some time learning about infrastructure and water supplies. I refreshed my memory about electricity reserve margins and reliability. I’ve added a backup power supply for our local municipal water pumps to my list for Santa. We need to think about whether we have enough power plants and wires. Where will we get tomorrow’s water?

The development of electricity, water and waste water projects — at home and abroad — is vital for growth and probably represents opportunity for strategic investors.

Alex always defeats me at Axis and Allies when my infrastructure breaks down.

Growing Chasm: Wealth Inequality in America

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The Growing Chasm

I think the problem/challenge/opportunity is at least one quantum order larger than the national debt we face. (Yes, you read that right … and I’m serious.)

The following five minute video illustrates the deep distribution imbalance of wealth in as powerful a delivery as I’ve seen in some time.

Wealth Inequality In America

Wealth re-distribution by confiscation is a flawed mechanism, particularly when it is fueled by envy and dipped in a Robin Hood aura.

Looking at the accompanying graphic and fully absorbing the video, we’re getting further and further from a long-term program of education and equity participation in this country, a campaign that would hold/deliver many long-term solutions to clear and present challenges and opportunity for a better future.

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Sadly, over the last several years, the chasm has widened.  If we’re going to turn the tide, a prolonged educational effort is essential.

The Learning Never Stops

The Learning Never Stops

One of your all-time favorite cover stories dealt with the combination of well-placed skepticism and the conscious decision to “leave the couch” as a long-term investor. In a nutshell, we asked, “Can investing really be this simple?” The answer is wrapped in over seven decades of experience and deployed regularly with measured courage. At the same time, we recognize that the learning quest is a never-ending road. We believe in Occam’s Razor. You could say that our cornerstone is trend reversion centered on imagination and long-term time horizons. This month we visit some letters, questions and commentary … celebrating your curiosity and achievements. Can old dogs learn new tricks? What about young dogs?

We share the following blog post and some subscriber correspondence. Names are withheld, but you know who you are out there … and some have been paraphrased to combine multiple letters and comments into digest form.

As a kid, they were among the moments I dreaded most. The “choosing of sides” on the playground or the sandlot were gut-wrenching moments because I often didn’t merit selection as a draft choice. “What about him?” “Oh yeah … he can be on your team if you want.”

Things are not always what they seem.

I had pretty good hands and was pretty good at catching a football. When it came to basketball, there were times when I heard, “Wow, the ‘fat kid’ can really shoot.” Funny, but if I close my eyes and listen, I can still hear those words.

Fast forward a few decades. We were on a mission trip in West Virginia taking up residence in a Scout camp in the mountains. We decided to play a pickup game of basketball. My friend Don and I smiled at each other as the muscle-bound high school seniors and college freshman in the group loaded up their rosters with their colleagues. We were left standing on the sidelines. Make no mistake. It’s still pretty gut-wrenching to endure this rite of passage as an “old man” but we suspected that we had the unknowing youngsters in our crosshairs. Don and I ended up on the same team. Amusement transformed into amazement as the “old men” taught the punks a thing or two. I think Don made about ten closely guarded shots in a row. Me too.

Our message is simple. Whether you’re talking about old books or old dogs, be careful about the judgments you make based on the cover. In some cases, maturity is just what you need and it can prevail over youthful exuberance.

Another Year: 9-for-9

This year — thanks to a somewhat lazy lay up procedure a few months ago, I figured Dad’s streak was in total jeopardy.  But the mower started on the first pull for the ninth year in a row.

Lessons From Fathers & Simple Things, Solid Results

Originally published — April 9, 2012

On this day of days, when the stock market is doing its latest rendition of “you’re the grass and I’ll be the lawn mower.” The Great Humiliator is not happy about the latest jobs report coming in far under expectations on Good Friday and that combines with Chinese concerns, Euro sluggishness and Spanish indigestion to form a quagmire.

Years of investing and watching the masters has taught me to listen … listen well … and reach for patience and discipline. Sometimes it’s the little things and little reminders that make all the difference in the world.

The balmy March-April that we’ve enjoyed in southeastern Michigan means that the yard is well on its way to jungle status. This weekend it was time. Time to retrieve the mower from careful storage and slumber. A trip to the gas station and it was time to yank that cord for the first time this year. I have seven straight years of starting on the first pull. I wondered if merely wondering about eight-in-a-row would provide enough jinx for a sputter, stutter and stall this year?

It wasn’t always this way.

Years ago, I faced inevitable replacement of spark plugs and various other tinkering to restore a stubborn non-starter to working condition. This would often include a trip to Dr. Mower and a pricey restoration.

Then one day my Dad asked me if I ran the mower dry on its last usage in late October or early November every year. Really, Dad? That’ll make a difference?

It makes a difference.

Eight for eight. Thanks, Dad!

With the stock market in full lawn mower mode, we’ll simply remind that the median forecast is not near historical lows and unless earnings falter, the current palpitations will probably pass. Patience. Discipline. Seek high-quality and mow anything non-core that needs trimming. Do the little things that you know work and leave the pricey restorations to the panic-stricken herds.

Friends Make Marathons Achievable

Photo Credit: wallyg via Compfight cc

by Laurie Frederiksen,

A marathon is a fitting metaphor for a lot of hard things we do in our lives.

A marathon runner trains by getting up every morning without fail and putting one foot in front of the other, day after day after day.

That is what leads to success. Not good luck. Success is starting the race and crossing the finish line. It’s not measured relative to anyone but the runner themselves.

Investing is a marathon. Some days it’s hard to keep going, but progress is only made by hanging in there, moving forward one step at a time and not giving up.

Horrific acts can demoralize us all. They sap our strength and make us feel like there’s no point in moving forward. But that is when we have the marathon runners to remind us. Keep putting one foot in front of the other and you’ll make it to where you are going.

Our hearts go out to those who were hurt yesterday. They will be a constant reminder that sometimes the going gets really tough. But success will come to us all as we endure. The senseless acts to demoralize only make us stronger as we collectively share in the outpouring of compassion and resolve that rushes in to combat the horror.

Our thoughts and prayers are with all of you in Boston. Thank you for reminding us again that sometimes just to keep moving forward is a big accomplishment.

Laurie Frederiksen
Invest with your friends!

Forward Your Shamrocks to Cyprus

Banking in Cyprus … a different need for gun control?

Cyprus? Many people rolled out of bed this morning and unless they’ve been on a Mediterranean Cruise, may have had to remind themselves about this island nation of 1,000,000 people not far off the coasts of Turkey and Israel.

“There is no room…to believe that increasing debt has anything to do with long-term growth.” — Jeremy Grantham (GMO)

Grantham is talking about the period from 1982-Present, where the federal debt has tripled during a period when overall growth has materially slowed. (As he says, granted, there are other factors, BUT …)

This is a must-view interview with Jeremy and Charlie Rose.

It links with this weekend’s events in Cyprus. Keeping interest rates low is harmful — mostly to our senior citizens who need fixed-income alternatives that actually have a rate of return … and as Grantham points out, low interest rates are the engine for wealth transfer from the less wealthy to the most wealthy.

The real tragedy is that we’re painted into a corner … because increasing interest rates would slaughter the federal budget (and most likely do very damaging things to our muddle-through economic recovery.) President Clinton mentioned this briefly during the recent presidential election, an honest moment that seemed to be hushed as quickly as it was uttered. I don’t think our elected representatives WANT the general population to understand what dangerous challenges are presented by this condition. (And it’s not easy to decipher from any of the budget concepts distributed by any and all of the current party leaders)

Enter Cyprus. In a nutshell, imagine how you’d feel if you woke up to discover that FDIC insurance didn’t “hold up”, that you couldn’t withdraw your deposits … and that your total assets on deposit were about to be subjected to a special tax — with the amount based on the size of your account.

It’s not a pretty picture. You might want to hang on to a shamrock or two …