What We’re Thinking

This past Sunday, family and friends of Victor Levinson gathered in New York City to remember Vic and reflect on his life, work, and relationships. Reflections were shared by several of Vic’s lifelong friends; three of his grandchildren; and his three adult children (Nick, Lynn, and Tom).

Each of the reflections offered a special window onto Vic. Nick’s reflections, in particular, shined a light on the ways that Vic’s core values were, and are, embodied in Park Piedmont Advisors’ work.

What follows is a portion of Nick’s remarks. We hope you enjoy them.

• • •

I think the best way to describe Vic, both personally and professionally, is that he was always his own man, comfortable in his own skin. He was unconventional, often argumentative, contrarian to the core.There’s no better example of this than his early embrace of indexed investing. Vic had this figured out in the 1980s, when very few others had even heard of indexing. It’s now a dominant approach in the investment world.

In the everyday reporting about the ups and downs of markets, there is a frequent ambiguity that’s highly important, though easy to overlook.

Take this lead story from the front page of this past weekend’s Wall Street Journal.

“U.S. stocks slid Friday after a relatively strong jobs report, capping a roller-coaster week in which investors built up hopes for easier monetary policy—only to then give them up again …

“Stocks soared Monday and Tuesday, with the S&P 500 and Dow Jones Industrial Average logging their best two-day stretch since 2020 [but] weak data on the manufacturing sector and job openings led investors to bet that the Fed might slow its pace of interest-rate increases in the coming months.” (Emphasis added.)

The article uses the term “investors” several times, though the described behavior – making day-to-day, or even minute-to-minute, gambles on market movement – is that of traders. This is an important distinction.

What are the primary differences?

Investors make investments. Traders make trades. While the same securities markets are used for both of these activities, that doesn’t mean they’re interchangeable.

The crucial difference is the time period over which an outcome is achieved. Successful investing is a long-term process, measured over periods of years. In those timeframes, investors will experience significant up and down periods. By contrast, trading outcomes are known in a matter of moments, or minutes (think the role of the dice, or a horse race, or whether somebody makes a putt).

Long-term investors are interested in participating in the long-term economic growth of the world’s economies. This growth does not come in even amounts and may not come at all for some period of time.

However, to the extent investors have a positive view on the prospects for long-term economic growth, they can be willing to allocate at least some of their investment portfolios to risky asset classes, particularly stocks. At Park Piedmont Advisors (PPA), we manage investment portfolios only for clients who seek to achieve some long-term investment objectives.

We are investors, not traders.

The investment industry is populated by vast numbers of people and institutions who seek short-term profits from trading the very same marketable securities that investors own as investments. What characterizes this activity is that the long-term prospects for a company, or market sector, or the general economy, plays virtually no role in the trader’s decision-making, which instead is focused on whether the trade can be completed at a gain, before it turns into a loss.

In recent market movement – both intraday and day-to-day – we have seen significant volatility. This is largely the product of traders. From the perspective of investors, trading turns financial markets into a casino. Trading disregards any notion of underlying value represented by market prices. As a result, it can undermine the confidence of investors in the financial markets themselves.

So when you read, hear, or see reports in the media about the ups and downs of markets, ask yourself: is this the work of investors, or traders?

When you think of your most valuable assets, how much thought goes into your time?

For many of us – myself included – there is an automatic quality to time, an assumption that the rhythms of our life will, going forward, look and feel much the way they have.

September contributes to this. We live close to a college campus, and while the pandemic tinted the past two Septembers, the current back-to-school – unmasked students walking across campus in the crisp air and changing light – is familiar.

Of course, as the old song goes, it ain’t necessarily so. Our time may seem like it’s moving in predictable cycles, but that’s an illusion. Our time is finite, and precious – an extraordinarily valuable asset.

So – how best to spend it?

A wide body of social scientific research suggests that paying attention to time can help us spend that time better. And the better we spend our time, the greater a return we can get from that investment. In other words: time, like money, is an asset whose value can appreciate over time – if we spend it wisely.

Some takeaways from the research:

• Pay attention to spending time with family, friends, and people you enjoy: research indicates that “socially connecting activities … comprise the happiest parts of the day.”
• Having spare time, along with the perception of some control on how to spend it, “has been shown to have a strong and consistent effect on life satisfaction and happiness, even controlling for the actual amount of free time one has.” The research points to a benefit in increasing “discretionary time,” even if you have to pay some money to do so. Interestingly, though, research also points to a diminishing return on spare time: some is good; too much isn’t. Note how this may have implications for the traditional model of retirement.
• Think about how valuable your next hour or two might be, and how the value can extend beyond that hour: so-called “prosocial” behavior, like volunteering, tends to make people happy. Research has also found, somewhat counterintuitively, that giving away time, as with volunteering, can actually help people feel they have more time. “Focusing more on time (vs. money) seems to make individuals more self-reflective, compelling them towards behaviors that are highly aligned with their ideal self.”
• Simply being reflective about time seems to contribute to people’s happiness. That may have something to do with a recognition of time’s limited nature. “Awareness that one’s overall time in life is limited improves subjective well-being by encouraging people to find greater enjoyment in life’s ordinary pleasures and close relationships.”

I (Tom) found myself reflecting more on time a few weeks ago, in the stretch leading up to the Jewish “Days of Awe,” the period from Rosh Hashanah, the Jewish new year, through Yom Kippur, the Jewish “Day of Atonement.”

It turns out this 10-day stretch (we’re in it now) is a 3,000-year-old cognitive reframing technique. During that time span Jewish people take a break from work, gather as a community, and consider time with one another.

These “High Holidays” ask: What have you done this past year? And what can you do to improve your life, and that of others, in the year to come?

As the contemporary research emphasizes, simply considering the question can have a positive, even a transformative, impact. If time is a precious, finite asset, how will you use it?

We’ve been sending you our new Life with Money column for several weeks now. Although I (Nick) have written a few of the market updates, this is my first time contributing a more personal essay.

Some of what we’ve written has touched on religious and spiritual traditions and their approach to money. While I don’t have any organized religious practice, a walk in the woods is spiritual for me in the sense of lifting and filling my soul.

To that end, I was fortunate enough to go on a five-day backpacking trip on the Tahoe Rim Trail (TRT) this summer. (I wrote about it for our local online news site, the Piedmont Exedra.) Unfortunately, my wife Julie developed elevation sickness and had to leave the trail before completing the 50+ mile hike. She convinced me that I should continue, but I definitely felt lonely and sad without her. (We completed a different section of the TRT together in 2021.)

In this slightly melancholy state of mind, I turned at the end of each day’s hike to a short (and light, since the pack already weighed 35 pounds) book called The Dictionary of Obscure Sorrows. I heard the author, John Koenig, interviewed on NPR recently, and knew I needed to pick it up for moments like these. If you’re looking for an easy read that might make you cry and could also inspire laughter, but will definitely make you think about life, I highly recommend it.

As Koenig writes in the introduction, “This is not a book about sadness – at least, not in the modern sense of the word. The word sadness originally meant fullness, from the same Latin root … that also gave us sated and satisfaction … When we speak of sadness these days, most of the time what we really mean is despair, which is literally defined as the absence of hope. But true sadness is actually the opposite, an exuberant upwelling that reminds you how fleeting and mysterious and open-ended life can be” (page xii).

With that mindset, I devoured the definitions, all of which Koenig invented. Some have clear resonance with PPA’s work, and some are more loosely connected — and still relevant, such as:

Hubilance (page 115) – the quiet poignance of your own responsibility for someone, with a mix of pride and fear and love and responsibility—feeling a baby fall asleep on your chest, or driving at night surrounded by loved ones fast asleep, who trust you implicitly with their lives—a responsibility that wasn’t talked about or assigned to you, it was assumed to be yours without question. (From hub, the central part of the wheel that bears the weight, + jubilance.)

I think any parent, spouse, or pet owner for that matter, will share this sentiment.

Thrapt (page 116) – awed at the impact someone has had on your life, feeling intimidated by how profoundly they helped shape your identity, having served as a ghostwriter of a work that nevertheless only appears under your name. (From thrapped, drawn tight, as with nautical ropes, + rapt, carried away with emotion.)

This one of course made me think of Victor, and his enormous influence on my life and on PPA.

Sonder (page 123) – the awareness that everyone has a story … You are the main character. The protagonist. The start at the center of your unfolding story. You’re surrounded by your supporting cast: friends and family hanging in your immediate orbit. Scattered a little further out, a network of acquaintances who drift in and out of contact over the years. But there in the background, faint and out of focus, are the extras. The random passersby. Each living a life as vivid and complex as your own … When your life moves on to the next scene, there’s flickers in place, wrapped in a cloud of backstory and inside jokes and characters strung together with countless other stories you’ll never be able to see. That you’ll never know exist. In which you might appear only once. As an extra … in the background. As a blur of traffic passing on the highway. As a lighted window at dusk. (From sonder, to plumb the depths.)

Koenig has said that this one is the best known of any of his definitions, and he has heard it used by others who have not read the book.

Other definitions are relevant to work, both for our clients pursuing their life goals and for our team at PPA, offering help in that process:

Elosy (page 215) – the fear of major life changes, even ones you’ve been anticipating for years; the dread of leaving behind the bright and ordinary world you know, stepping out into that liminal space before the next stage of life begins, like the dark and rattling void between adjoining metro cars. (From the Malagasy lelosy, or snail, which is a creature that carries many twists and turns wherever it goes, trying in vain to outrun them.)

This definition of course relates to retirement, buying a house, getting married, or having children. We strive to help clients define these goals and plan to accomplish them in a way that makes them seem less scary and insurmountable. The retirement illustrations we customize for each client are a prime example of this collaborative work.

Addleworth (page 71) – unable to settle the question of whether you’re doing okay in life; feeling torn between conflicting value systems and moveable goalposts, which makes you long for someone to come along and score your progress in discrete and measurable units—points, dollars, friends, followers, or a grade point average—which may not clear up where you’re going but would at least reassure you that you’re one step closer to getting there. (From addled, muddled or unclear, + worth.)

This one raises the perennial question of worth and how each person defines it. We encourage clients to understand their values first, the basic way they want to be in the world. Out of that conversation, we help identify short, medium, and long-term goals that reflect those values. These include the life stages mentioned above, but can also focus on philanthropy, or helping a family member with special needs, or world travel. We then assess whether these goals are achievable, and if so make an investment plan that maximizes the likelihood of achieving them. We consider this a more meaningful way to plan than an arbitrary scorecard, which in many ways focuses on other people rather than you.

Achenia (page 226) – the maddening sense that the world is too complex to even begin to understand, that whenever you try to answer even the most trivial question, it quickly tangles into a thicket of complications and melts into a quicksand of nuance, leaving you flailing for something solid to hold on to, struggling to come up with anything you could say that is definitely 100% true. (From achene, the fruit that contains the seed of a flowering plant, which is often confused for the seed itself.)

This feeling relates to all aspects of human life, but has great relevance to financial matters and the advice PPA provides. The stock and bond markets, interest rates, inflation, insurance, estate planning – these and related topics can be very difficult to put into context and determine how they affect your life.

It can be very humbling to consider the enormity of these subjects, and we try to bring a sense of humility to all of the work we do with clients. This includes client education, which we tailor to each of your levels of knowledge and interest. Another core part of our approach is the realization that no one knows everything about any of these topics, and no one can predict what will happen in the future.

That understanding drives our advice to invest to accomplish your goals, as opposed to aiming for a specific dollar amount or rate of return. It also directs our focus on indexed investing, which emphasizes exposure to broad parts of the financial markets, since we don’t know which ones will outperform or underperform in any short timeframe.

I enjoyed contemplating Koenig’s words and ideas, and they turned out to be great company on my walk in the woods. Please let us know if you have a favorite obscure sorrow, whether it comes from the book or you made it up on your own.

—

Read “New Words for Familiar Feelings” in the Piedmont Exedra.

“Fewer fruits and vegetables, more carbs and cheese.”

That was the recommendation our pediatrician gave us a few weeks ago for our one-year-old daughter. It was enviable. Sign me up for that diet.

The next day I dutifully added “block of fresh mozzarella” to our grocery list. When my husband returned from the grocery store, he dropped the heavy cheese log onto the counter and said, “These aren’t cheap.”

“How much?” I asked.

“$11.49.”

I wouldn’t have bought it if I had been the one shopping. But I wasn’t—and he wasn’t the one who created the list.

Not knowing whether a backup cheese would’ve been acceptable, it was his turn to dutifully do as he had been told. He balked at the price—but then bought the mozzarella anyway.

As I recently heard on NPR’s Planet Money podcast, “Groceries are really where everybody feels the pinch of inflation, unless you’re one of those people who doesn’t eat food.”

I am not one of those people. I would assume you are not either.

It turns out, though, that the pinch of inflation feels more painful when you do the grocery shopping for your household. After all, you’re the one witnessing firsthand the fluctuation in grocery prices from week to week.

Being in tune with those price changes—and directly feeling that pinch—also impacts your expectation of rising grocery prices. That’s called inflation expectation.

According to Planet Money, historical data have shown that women tend to feel more pessimistic than men about future inflation.

“All sorts of hypotheses have been proposed for that: ‘Oh, women have less financial literacy, less education. Or maybe women are innately more pessimistic about the future of the economy,’” says Ulrike Malmendier.

Malmendier is a professor of economics and finance at University of California, Berkeley, who recently studied how supermarket prices affect inflation expectations.

As she and her colleagues dug into their research, they considered more deeply those gender role assumptions.

“We thought about how women are being bombarded with these price signals while grocery shopping. Men are, at least traditionally, not doing that so much.”

Their research did indeed confirm that within households of heterosexual married couples, wives consistently expected higher inflation than their husbands.

And this is interesting:

In households where men didn’t do any of the grocery shopping, “this gender gap in inflation expectations almost doubled…” In other words, those wives were significantly more pessimistic about future inflation than their husbands.

However, “in households where the spouses share grocery shopping more equally, the gender gap disappeared.”

So never mind the hypothesis that women are less financially literate than men.

In fact, the gender gap in inflation expectations is due to women’s frequent exposure to volatile grocery prices—at least those women who do the grocery shopping.

In my family, the roles are reversed. If my husband hadn’t remarked on the price, I would have remained blissfully unaware of the astounding price of fresh mozzarella.

What about in your household? Who does the grocery shopping? If you don’t normally discuss the state of the economy over dinner, give it a try tonight, either with a partner or with friends.

• Do you and your dinner companion(s) feel the pinch of inflation equally?
• What are your expectations for prices over the course of the next several months?
• Are your opinions similar—or surprisingly different?

Now that I’m more keenly aware of the economic impact of our grocery list, I’ll be more strategic about our weekly meal plans.

Fingers crossed, carbs are less expensive these days than cheese. But given my newly pessimistic expectations … I kind of doubt it.

Buried near the end of the August 29 Bloomberg Businessweek story, “Hope You Enjoyed the Summer Rally,” was a remarkable piece of data.

“The American Association of Individual Investors’ latest survey showed that bears [PPA note: those pessimistic about market prospects] went from outnumbering bulls [those optimistic about market prospects] by 41 percentage points in June to less than 4 percentage points as of mid-August.”

As you’re very likely aware, the stock market declined sharply through roughly the first half of this year. The S&P 500 hit its year-to-date low point on June 16. A summer rally then lifted stocks; the S&P 500 rose roughly 8% from its mid-June low through the end of August, which includes this past week’s declines.

Amid all this topsy-turvy performance, we would note that investor sentiment was at its lowest at nearly precisely the moment in time that the market upswing began. For investors who acted on their pessimism and sold during that time period, they would have locked in their losses and missed a significant rebound.

Sentiment is a feeling. It’s not the Truth.

Being a long-term investor can be stressful. Especially when short-term fluctuations — most of which are the result of traders placing bets on short-term events with no connection to your longer-term goals — are covered tirelessly by the financial news media and an investment establishment that stands to profit when investors feel anxious.

Stress can make us do things we would not typically do when our minds and spirits are calm. Financial writer and author of The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, Morgan Housel, writes about this phenomenon in his short essay, “Five Lessons from History”:

“…the idea that people who are under stress quickly embrac[e] ideas and goals they never would during calm times has left its fingerprints all over history.

“In investing, saying ‘I will be greedy when others are fearful’ is easier said than done, because people underestimate how much their views and goals can change when markets fall apart.

“The reason you may embrace ideas and goals you once thought unthinkable during a downturn is because more changes during downturns than just asset prices.

“If I, today, imagine how I’d respond to stocks falling 30%, I picture a world where everything is like it is today except stock valuations, which are 30% cheaper.

“But that’s not how the world works.

“Downturns don’t happen in isolation… So my investment priorities might shift from growth to preservation. It’s difficult to contextualize this mental shift when the economy is booming. That’s why more people say they’ll be greedy when others are fearful than actually do it.

“The same idea holds true for companies, careers, and relationships. Hard times make people do and think things they’d never imagine when things are calm.”

So what should investors do amid the volatility, uncertainty, and stress?

Likely not much.

This is the advice of New York Times “Strategies” financial columnist, Jeff Sommer, in his August 26 piece “To Make Money in the Stock Market, Do Nothing.”

Sommer writes:

“…buying and selling at the right moment isn’t going to happen regularly enough to beat the market. Instead, this year shows why it’s better, for the vast majority of people, to take a longer-term approach.

“Once you have set up a solid investing plan, using low-cost index funds for steady purchases of stocks and bonds, you can do absolutely nothing…further except rebalance your holdings every so often to make sure you have the proportion of stocks and bonds that you really want.”

This rebalancing process is one of the most important pieces of ongoing advice that Park Piedmont provides to clients.

Assuming your personalized investing plan is already in place, the asterisk here, as always, is if you’ve had a change either in your life circumstances, or your time horizon for the use of your financial resources, or in your long-term financial life goals. Then, it’s important to re-assess and ensure your custom asset allocation is still aligned with your longer-term objectives.

Otherwise, better to ignore the noise, and focus on enjoying the tail end of summer.

Twenty-five hundred years ago, a middle-aged man – a husband and father – walks miles across the Indian countryside to pay a visit to a teacher with an extraordinary reputation for insight.

Then as now, the Indian landscape was dotted with gurus and spiritual teachers.

But there’s something special about this teacher – his humility, his wisdom – that makes people travel great distances, at great personal risk, for a few minutes of his time.

When the man at last arrives and his turn comes, he says (and I’m paraphrasing here):

“Great teacher, I’m just an ordinary guy, married, with a few kids. What can you tell me that will help us be happy in this world and hereafter?”

The teacher, who has come to be known as the Buddha (“he who is awake”), nods. He’s given this question some thought.

“There are four things that are conducive to happiness in this world,” the Buddha says.

“First: find a profession you know well, and in which you can be skilled, efficient, earnest, and energetic.

“Second: save the money you’ve righteously earned through your hard work.

“Third: make and keep good friends who are loyal, thoughtful, intelligent, and open-minded – and who’ll keep you out of trouble.

“And fourth: live within your means, not spending too much or too little, avoiding both miserly hoarding and extravagance” (Rahula, 1959, p. 82-83).

This vignette comes from a slim, highly readable book called What the Buddha Taught, by the late Sri Lankan Buddhist monk, professor, and writer, Walpola Rahula.

If you’re keeping score at home, at least 75 percent of the Buddha’s instructions about finding happiness relate to our financial life. And the percentage is even higher when you consider that one way good friends prove their mettle is by helping us avoid doing extremely dumb stuff — including in the realm of money.

We’re curious: Does it surprise you that the Buddha’s teachings articulated such a clear relationship between good financial decision-making and happiness?

—

Rahula, W. (1959). What the Buddha Taught. Oneworld Publications.

Word association:

When I say, “Rod Tidwell,” you say…
Game show host? Nope.
Congressman somewhere? Incorrect.
Cuba Gooding Jr.’s breakout role in “Jerry Maguire”? Bingo. Well done.

Now, knowing what you do, when I say Rod Tidwell, you probably say…

SHOW ME THE MONEY!

There in his modest kitchen, dancing, jacking his body, holding that now-antique cordless phone, giving his agent Jerry Maguire a singular marching order.

Do you remember that scene? If you’re over 18 and have had access to basic cable, you must. It’s a great scene, and it still holds up 20 years later.

For those who don’t remember, here are the basics:

Rod is a young, talented, cocky wide receiver for the Arizona Cardinals, and Jerry Maguire is Rod’s agent.

For much of Rod’s career, Jerry has been a “super agent,” focused on tending the needs of the biggest stars of professional sports. Clients like Rod Tidwell – good, but not great players – would get the leftovers of Jerry’s time and attention.

But when nearly all of Jerry’s clients are poached by a rival at his agency, Rod is the lone hold-out who stays with Jerry. And this gives Rod some serious leverage with Jerry.

“Show me the money” is such a memorable movie line. But writer-director Cameron Crowe expected – perhaps better said, hoped – that a different catchphrase would emerge from Jerry Maguire.

And that’s Rod Tidwell’s invented word, the “Kwan.”

Recall that the “Kwan” is conceived in the Cardinals’ locker room. Jerry Maguire is talking to Rod, who’s still in the shower, about Rod’s contract negotiations.

Rod steps out of the shower, naked as a jaybird, and criticizes Jerry for just “talking,” while his peers, other NFL All-Pro receivers, are making the “big, sweet dollar… they are making the Kwan.”

“Kwan? That’s your word?” Jerry, now at Rod’s locker, asks.

“Hell yeah that’s my word. You know, some dudes might have the ‘Coin,’ but they’ll never have the Kwan.” Rod is still air-drying.

Jerry starts to ask, “What is –“ but Rod anticipates his question.

“It means love, respect, community, and the dollars too. The entire package. The Kwan.”

Jerry pauses. And then, upon reflection, says: “Great word.”

Despite Crowe’s high hopes for the Kwan, audiences were lukewarm – “pleasant, at best” – when screening the Kwan scene (Premiere Magazine, 2000). It’s hard to compete with the hilarious call and response of “Show me the Money!” Even Nick and Tom’s dear, departed Grandma Ruth loved saying that line.

As it turns out, Jerry Maguire isn’t really about football. And it’s only partly a love story, even though “You had me at hello” remains a cinematic signpost to this day.

What’s Jerry Maguire about, really? The search for meaning in the world of money. What we do for a living; why we do it; and what we aspire to in our professional lives.

Recapturing some lost meaning in the world of money is what prompts Jerry’s sleepless night in the movie’s opening moments. It’s the fuel behind his “mission statement.”

Other people reject his vision, and Jerry’s subsequent downward professional spiral is steep. In a fit of desperation, he launches his new agency. And that’s what sparks Dorothy Boyd (Renee Zellweger’s character) to trade her stable secretarial job at the big sports agency for the chaos of Jerry’s start-up.

Finding meaning in the world of money is at the heart of the conflict in Rod Tidwell’s character.

On the one hand, he is driven by “Show me the money!” The desire to amass it, flaunt it, and center his life’s work around that pursuit.

On the other hand, he is called to pursue the Kwan, a shopping cart of aspirations so eclectic – “love, respect, community, and the dollars too” – that Crowe had to invent the word because, tellingly, the concept didn’t already exist in our contemporary American lexicon.

Re-watch Jerry Maguire, and you see people act badly, underhandedly, immorally, contrary to their best selves, when their money doesn’t reflect their values.

Money for the sake of money is what “Cush,” the presumed savior of Jerry’s fledgling agency and the number one pick in the NFL draft, is focused on. Cush’s father assures Jerry that they’ll stay with Jerry’s agency – but then they ditch Jerry without a word of warning.

Money for the sake of money is what “Show me the Money” Rod Tidwell is all about.

In a climactic scene, Jerry and Rod, now friends as much as client and agent, are arguing. Rod’s frustrated that despite a great season, he still has not received a contract extension. Jerry tells Rod:

“I’ll tell you why you don’t have your ten million dollars yet. Right now, you’re a paycheck player. You play with your head, not your heart.

“Your personal life? Heart. But when you get on the field, it’s all about what you didn’t get, who’s to blame, who underthrew the pass, who’s got the contract you don’t, who’s not giving you your love.

“You know what? That is not what inspires people. Just shut up, play the game. Play it from your heart. And you know what? I will show you the Kwan. And that’s the truth.”

To which Rod says, “Quit using that word, Kwan. That’s my word!”

As opposed to an attitude of “Show me the money,” money in service of the Kwan – money as one crucial component of the good life – is the journey that the movie’s main characters, Jerry and Rod and Dorothy, all take in one way or another.

The Kwan is only attainable when money is an expression of authenticity, of one’s true self.