Buy the coffee...................

 

It's the cliche that refuses to die: Personal finance nag Suze Orman warned investors that if they "waste money on coffee, it's like peeing $1 million down the drain.

     I disagree.  If the difference between success and failure is the cost of a cup of coffee, you have much bigger financial problems.  A daily $5 latte does not amount to much in the grand scheme of life. . . .

     Here is what really gets me annoyed: Orman tells her audience that "Your Daily Coffee Habit is Costing You $1 Million," with this calculation:   Let's say you spent around $100 on coffee each month.  If you were to put that $100 into a Roth IRA instead, after 40 years the money would have grown to around $1 million with a 12% rate of return.

     Nope.  This calculation is nonsense, and worse, it is intellectually dishonest.  The actual real numbers are almost 75% less. . . . So, 12% annual returns for 40 years?  That's 50% better than the markets give you.  I literally have $5 billion for anyone who can get my clients fat 12% returns annually for the next 40 years.

-Barry Ritholtz,  How Not To Invest: The Ideas, Numbers, and Behaviors That Destroy Wealth—And How To Avoid Them

Apparently........................

 

............................this is our 23,326th post.  Apologies for littering all over the Intertunnel floor.

The wonder of accounting..............

 Washington DC continues to spend much more than it gets in revenue.  In the Calendar Year of 2023, the federal government spent $6.3 trillion, but only collected $4.5 trillion in taxes.  This $1.8 trillion gap drove the national debt to $34 trillion in December 2023.  And it is only going higher.

One problem with these budget numbers is that government accountants, rightly or wrongly, lowered spending in 2023 by about $300 billion after the Supreme Court struck down a large part of President Biden’s proposal to forgive student loans.  That legal decision didn’t change the government’s cash flow last year in any significant way, but it did let the Department of Education “write up” the value of its loan portfolio by about $300 billion.  This, they counted as “negative spending,” which then reduced the official budget deficit.  So, while the reported deficit in 2023 was $1.8 trillion, the Treasury needed to borrow more than $2 trillion to make ends meet.

The high levels of borrowing are causing some investors to fear some sort of imminent and unprecedented snowballing of federal debt.  Continual borrowing will lead to skyrocketing interest rates (and higher interest payments), which will lead to severe problems in the financial system.

-as extracted from here

Miracles happen, or fun with numbers........

 There are about eight billion people on this planet. So if an event has a 1-in-a-million chance of occurring every day, it should happen to 8,000 people a day, or 2.9 million times a year, and maybe a quarter of a billion times during your lifetime. Even a 1-in-a-billion event will become the fate of hundreds of thousands of people during your lifetime. And given the media’s desire to promote shocking headlines, you will hear their names and see their faces.

-Morgan Housel, from here

The difficult part is finding the "good"...........

 Of course, we shouldn't be credulous, but the antidote to credulity isn't to believe nothing, but to have the confidence to assess information with curiosity and a healthy scepticism.

     Good statistics are not a trick, although they are a kind of magic.  Good statistics are not smoke and mirrors; in fact, they help us see more clearly.  Good statistics are like a telescope for an astronomer, a microscope for a bacteriologist, or an X-ray for a radiologist.  If we are willing to let them, good statistics help us see things about the world around us and about ourselves — both large and small — that we would not be able to see in any other way.

-Tim Harford, How to Make the World Add Up:  Ten Rules for Thinking Differently About Numbers

Fun with numbers...........................

 NPR’s “Weekend Edition” tried to illustrate the US national debt by saying, “If you stack up 14.3 trillion dollar bills, the pile would stretch to the moon and back twice.”

That does not help. Indeed, it is triply unhelpful, since most of us lack an intuitive grasp either of how far away the moon is or of how many dollar bills there are to the yard, and even if we had both we would still be stuck with the question of whether $14.3tn was a worryingly large debt or not.

More useful is to think of the debt as a sum per person. At the end of 2019, US federal debt was nearly $23tn, which is about $70,000 per US resident. I don’t know whether that is more or less alarming than trying to measure it out in trips to the moon but it is certainly vastly more informative.

-Tim Harford, as lifted from here

It's a free country......................................

 

It's likely fallen off the cliff here of late, but......

The Gross Domestic Product.  So, what is it really?  Well, that's easy you say:  the GDP is the sum of all goods and services that a country produces, corrected for seasonal fluctuations, inflation, and perhaps purchasing power.
     To which Bastiat would respond:  You've overlooked a huge part of the picture.  Community service, clean air, free refills on the house — not of these things make the GDP an iota bigger.  If a businesswoman marries her cleaner, the GDP dips when her hubby trades his job for unpaid housework.  Or take Wikipedia.  Supported by investments of time rather than money, it has left the old Encyclopedia Britannica in the dust — and taken the GDP down a few notches in the process.

-Rutger Bregman,  Utopia For Realists:  How We Can Build The Idea World

Fun with science and statistics............

No one can ever be wrong using statistics. Pick a common food and studies can show it helps and harms you.

enlargeable graph and back story is here.

via

More fun with charts..................

You may have seen this chart used as in indictment on our current economic situation, and maybe it is.  But  before going overboard, consider this:

     "Incomes have not improved for the bottom 80% of Americans 
     over the last decade.  Before I go on, recognize that the income 
    distribution is not static.  The same people are not in each 
    decile today, as were in 2006."

The chart comes from this David Merkel post, wherein he lists a host of causes for mobility between the "deciles."  Read it yourself, but my take-away is that technology driven change has driven a significant amount of our "income inequality."   Here is another wee excerpt:

    "...many feel that the comfortable life that was theirs has been 

     denied to them by forces beyond their control. They think that 

     shadowy elites want to turn previously well-off people into 

     modern serfs.   It’s a tempting thought, because most of us 

     don’t like to blame ourselves."

Fortunately, we are all above average....

"Averages almost always hide insights instead of exposing them."

Seth Godin disparages the practice of using "averages" to gain meaningful insights - here.

Fun with statistics...............................

A statistical analysis, properly conducted, is a delicate dissection of uncertainties, a surgery of suppositions.  
-M.J. Moroney

Statistics can be made to prove anything - even the truth.  
-Author Unknown

There are two kinds of statistics, the kind you look up and the kind you make up.  
-Rex Stout, 

Facts are stubborn things, but statistics are more pliable.  
-Author Unknown

Torture numbers, and they'll confess to anything.  
-Gregg Easterbrook

I always find that statistics are hard to swallow and impossible to digest.  The only one I can ever remember is that if all the people who go to sleep in church were laid end to end they would be a lot more comfortable.  
-Mrs. Robert A. Taft

cartoon via

May I remind you we have some................

.....................................fabulous building lots available?

At long last, housing starts are back to where they were in 1991 (which was a very good year for us, thank you).   May the trend continue.

Chart from here

Recognizing that feeling........................

"I am in much dismay at having gotten so amazing a quagmire and botheration with these Numbers that I cannot possibly get things done today ... I am in a charming state of confusion."

-Ada, Countess of Lovelace, as extracted from here

That's some catch.............................

.........................................................................that Catch-22.

Fun with numbers..................................

From the investing world, Barry Ritholtz offers this:

Average Returns, Rarer Than You Think

Hmmm.   Full story is here.

via

Happy National Pi Day.........................

Once in a lifetime:  3.14.15.............................................

3.141592653589793238462643383279502884197169399375105820974944592307816406286208998628034825342117067982148086513282306647093844609550582231725359408128481117450284102701938521105559644622948954930381964428810975665933446128475648233786783165271201909145648566923460348610454326648213393607260249141273724587006606315588174881520920962829254091715364367892590360011330530548820466521384146951941511609433057270365759591953092186117381932611793105118548074462379962749567351885752724891227938183011949129833673362440656643086021394946395224737190702179860943702770539217176293176752384674818467669405132000568127145263560827785771342757789609173637178721468440901224953430146549585371050792279689258923542019956112129021960864034418159813629774771309960518707211349999998372978049951059731732816096318595 and so on and so forth.

Studies have shown....................................

Fun with numbers...............................

34.   In a poll of 1,000 American adults, asked, "How many millions are in a trillion?"    79% gave an incorrect answer or didn't know. Keep this in mind when debating large financial problems.

I'm sort of impressed that 21% could answer the question.  I will confess that this history major reached for a pad and pencil.  You can figure it for yourself, but here are the basics:

One million =  1,000,000
One billion  =  1,000,000,000
One trillion  =  1,000,000,000,000

From this list of 122 Things ...