Jonathan Clements's Blog, page 69

Consumer Advocate by Ken Cutler

When I experience an issue with a food product, I don’t suffer in silence. While eating lunch at work in the late 1980s, I found what I thought to be a bug in my frozen turkey dinner. I mailed the specimen to the manufacturer, along with a cover letter that included a subtle attempt to mimic the comic style of the Lazlo Letters. I received some coupons and a boiler-plate apology, along what I thought was an unsatisfactory reply: “We sent your exhibit to our lab and they have informed us that it was a piece of fatty tissue with dark brown meat fibers adhering to the piece of fat.”

I showed the company’s letter to my co-workers and--goaded on a bit by them--I sent a response that stated in part: “Madam, I can assure you (along with about a dozen of my scientifically trained professional colleagues) that what I sent you was a “’roach or similar bug adhering to a crouton.’” Wisely, the company left the second letter unanswered.

I went through a brief period during which I was hyper-sensitive to anomalies in food items I’d purchased. When one of my Life Savers candies contained a suspicious dark spot, I sent it to the company with a request that they identify which kind of worm egg it was. The apologetic response: “The substance you discovered in your recent purchase of this variety was analyzed to be burnt sugar.”  They also sent me two coupons for free Life Savers.

Another time, I found that the inner bag in my box of Life Cereal had not been sealed properly. Among other things, I told the company, “The cereal tastes okay, I guess, so I’m not demanding my money back or anything. I just thought you’d like to know.” Despite my soft touch, they did send me a replacement coupon or two.

The novelty of being such a stickler must have worn off, or maybe life just got too busy to be concerned about such minor trifles. Recently, however, I’ve been given reason to return to my old practice of holding food companies accountable.

A couple months ago, I found a piece of plastic wrap cooked into a relatively expensive enchilada frozen dinner made by a well-respected company. No longer having to pull out my typewriter to compose a formal letter, I just found the company on the internet and emailed them my complaint, along with a photo of the offending material. True to form, this company took the issue seriously, even sending me a mailer to provide their Quality Control department with the contraband. They also generously provided me with three replacement coupons. I was impressed.

Not long after that, I bought a container of a popular grape juice drink. It was horrible. I couldn’t even describe what the problem was…it was just not drinkable and was unlike any other containers of the juice I’d had before. I sent a quick email, received a follow-up asking for a little more information, and soon received a replacement coupon in the mail.

Since I’m now a “mature” individual, I no longer try to amuse myself by writing colorful or bizarre cover letters to companies when I find a problem. But with the extra time I have as a semi-retiree, doing my part to hold corporate America accountable for providing a safe and high-quality food supply seems like an activity worth engaging in. Especially when I get coupons.

Are there others in the HumbleDollar community who engage in similar activities? I’d love to hear your stories in the comments.

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How’s Your Crystal Ball? By Jonathan Clements

Many folks are unnerved by what's happening in Washington, DC, and predictions of doom are widespread. Are you now in the forecasting game? Let's find out how good you are. Six months from now—as of Wednesday, Oct. 1, 2025—what's your best guess for these eight:

Trailing 12-month inflation? Current reading is 2.8%.
Unemployment? Today's reading is 4.1%.
Whether we're widely considered to be in a recession? Typically, a recession is defined as two consecutive quarters of negative economic growth, so we won't know for sure as of Oct. 1. That means that, if there's no strong consensus, we may need to cut HumbleDollar's pundits a little slack on this one.
The S&P 500's Oct. 1 closing value? We're currently at 5500.
The Nasdaq Composite's closing value? Right now, we're at 17000.
Whether foreign stocks will still be outperforming U.S. stocks in 2025?
Whether value stocks will still be outperforming growth stocks in 2025?
The yield on the 10-year Treasury as of Oct. 1? Today, we're at 4.23%.

Please list your answers below, and then we'll check back in six months.

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I’ll take the “best” thing on the menu says Quinn

I was having breakfast recently in a small cafe when three people were seated at the next table. The server handed out menus and a woman asked her, “Between the pancakes, waffles and French toast, which is the best?”

I felt like saying, what a dumb question, but the quiet, reserved me said nothing. They are three different things and the “best” is highly dependent on personal taste. 

I was waiting for the customer to say, I don’t really like French toast, but if you think it’s the best, I’ll have that. “Should I have it with bacon, sausage or Taylor ham (a NJ thing).”

Coming in second in my book of silly questions is asking a server which item on the menu they like. I intensely dislike coconut so that cream pie is out of the question, but perhaps it’s your favorite. Now you are having chocolate cake instead. 

All this is like asking which hot tip on a stock should I pick. Or maybe asking me what percentage of pre-retirement pay you need to replace in retirement 🤣.

Do I need a million dollars to retire? You tell me. How much income do you want/need and for how long - among other considerations. 

If there is any place you can read about diversity of thought and action, it is on HD. Readers seem to set a goal, do some research, take some advice and take responsibility for their decisions. That is not typical in the real world. More common is asking advice without a plan to reach a stated goal, i.e. pancake or waffle based on no criteria and an irrelevant opinion.

Yes, I’m cynical, but I think most people want to take the easy route and then complain about where it took them. The future state of retirement for many Americans is questionable at best. Maybe asking dumb (or no) questions and no effort at a plan is part of the problem. 

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Any Bonds Today? By Marjorie Kondrack

You can learn a lot about history by studying it but to truly understand it, you had to have lived through it.   This holds true for the popularity of financial instruments as well.  This is a companion piece to Jonathan Clements’s recent post, “Seeking Uncertainty,” in reference to Savings Bonds.

Savings Bond mania was in full swing during World War II.  They were introduced by President Franklin D. Roosevelt in 1935, before I was born.  But I can remember, even at 5 years old, the tremendous push and popularity for buying savings bonds.  Artists made colorful, eye catching  posters encouraging Americans to save 10% of their wages to “buy their share of freedom”.  Movie stars went on bond rally tours to induce their purchase.   The movies had shorts exhorting patrons to buy “freedom”, liberty” and “war bonds”, as they were sometimes called, with a reminder that patrons could even buy them at the movie theatre.  Savings Bonds made you feel patriotic.  You were helping the war effort.

In 1941, Gene Autry, a popular singing cowboy actor made a recording of  catchy upbeat song entitled, “Any Bonds Today”.  Bing  Crosby and others recorded it too.  Irving Berlin wrote the words and music.  A repetitive phrase from the bouncy song is still remembered—“scrape up the most you can, here comes the freedom man, asking you to buy your share of freedom today”

Through June, 1970, You could get a savings stamp book from the post office where you could buy 10, 25, or 50 cent stamps you pasted in the book until you had $18.75–enough stamps to purchase a bond worth $25.00 face value. If you’re thinking 75 times 25 cents you are right.   

The popularity of savings bonds continued after the war, well into the introduction of “I” bonds in the late 1990s.   The benefits of savings bonds were indelibly ingrained in our psyche.   Gifts of savings bonds were given to us by grandparents, aunts and uncles for all occasions, even as wedding gifts.  They were easy to purchase and came with a nice gift folder. Best of all, they were a low risk, solid investment. But their popularity waned when Treasury Direct took over all functions of the Savings Bond Program.  Grandparents and others also gave up on the complexity of purchasing them.

I stopped buying savings bonds years ago.  The final maturity years of 30 years seemed so faraway at the time of purchase, I never gave a thought as to how much of a problem it would prove to be, keeping track of them.  I had a slew of them, and my husband inherited some from his father—some offering 6% interest.  But It was an ongoing chore to figure out the optimum time to cash them without triggering tax complications;  and they were onerous and time consuming to cash in.  Off putting as well, the rules kept constantly changing.

Time is not on my side and Savings Bonds have long since lost their luster for me.   I agree with Jonathan Clements’s wise assessment of them as being a hassle for investors and for those settling estates, but I get nostalgic when I think of the Andrews Sisters singing and jivin’ to “Any Bonds Today.”

Reminiscences of a bona fide,  but perspicacious, Lady Dinosaur.

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Lesson One From Taking Care of a 102 yo in Her Last Year of Life- Be Grateful

Note: This was a late comment to an earlier post that some may have missed. It’s still too early to post other lessons as there are more family gatherings to host.

Here is my take on being grateful: My mother in law is in the hospital now for the last time. When I was riding my stationary bike to relieve some stress the other day (That’s when my mind wanders and I do my best critical thinking/reflecting) I had an epiphany.  I was thinking about what I would say at her memorial service and I came up with this: Why would a son in law put his retirement life on hold for a year to care for a 103 year old? Because she is always grateful. I realized that if you always show gratefulness, good things will come back to you. I didn’t realize until just the other day that that is the life lesson she gave to me knowing her for nearly 45 years.

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Rats !!

Back in the 1960s I processed health insurance claims. Employees came to me with their receipts and I helped them put a claim together and then submit it for payment. 

One day an employee presented a receipt from a hardware store- for rat poison. I thought it was a mistake or a joke. I almost laughed. However, he was quite serious. Rat poison is a blood thinner and it was prescribed by his doctor. Unfortunately, it wasn’t eligible for reimbursement.  Good thing it was only a dollar or so. Heck, an office visit was $5.00. That would be $52 today - good luck with that. 

As crude as that may seem today, apparently it did the job- very affordably. Just imagine getting your health care at Home Depot instead of Walgreens. 

Today we know better. We even have a choice of drugs to accomplish the same thing as rat poison- except kill rats - at a price, of course.

The cost of popular blood thinners like Eliquis and Xarelto can vary significantly, with a 30-day supply potentially costing around $550 to $600. 

Older blood thinners like Warfarin can be significantly cheaper, around $20 to $30 per month. Warfarin was developed in the 1920s as a result of research on cows dying from a blood thinning disease. Just like we do to rats. 

You can get D-Con rat pellets for $8.64 at Walmart, but not Walgreens. 

No, I’m not serious. 

The thing with health care is we tend to want the latest of and perceived best of everything, regardless of cost as long as someone else is paying. 

I recently read a woman’s rant on social media complaining that she incurred a $3,000 expense because the insurance company “refused to pay.” It was her deductible, but she didn’t see it that way. She expected 100% coverage. 

Also, the way we use health care is not driven by demand, but by supply. More competition does not lower prices, it increases utilization. 

Let’s say a new scanning/MRI center opens a mile away from an existing facility. It invests a million or more into equipment. The goal is not to attract with lower prices, but simply to do more MRIs. 

The United States has 37.98 MRI units per million population. The second highest in the world. Everyone has to be paid for. The UK has 8.6 MRI scanners per million people, which is fewer than the average of 12.4 in the EU. 

Your doctor is likely paid by private insurance, Medicare and Medicaid. What each pays for the same service is in that declining order. A practice couldn’t survive on what Medicaid or even Medicare pays. So guess what happens to other prices and utilization? 

A 2017 study found that physicians themselves estimated that around 20.6% of overall medical care was unnecessary. A 2019 study in the Journal of the American Medical Association estimated that roughly 25% of total healthcare spending in the U.S. is wasteful.

Even competition among insurance companies is backwards. Too many competitors doesn’t lower premiums in an area, it dilutes their ability to negotiate lower fee payments because their ability to deliver patients is lessened. 

It seems that all we know about economics doesn’t apply to health care. I chalk that up to the people expectation factor. 

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Paying Your Tuition

OSCAR WILDE ONCE made this observation: “Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught.” In other words, the only way to truly learn something is through experience.

When it comes to investing, this is easier said than done because learning through experience can be expensive. As Warren Buffett once quipped, “It is good to learn from your mistakes. It’s better to learn from other people’s mistakes.”

How can you square this circle? Wilde and Buffett each make good points. I believe both education and experience are key to learning more about investing. How might you approach that?

Let’s start with education. Finance books and articles could fill a library, but there’s no need to read them all. Instead, I’d focus on four important concepts.

1. History. The one thing about the stock market that’s predictable is its unpredictability. New crises frequently come along, and each is different enough to give investors renewed anxiety. In dealing with these crises, what’s most important? In my opinion, it’s perspective. Good investors have a sense of market history that can help them navigate crises better than other investors.

To learn history, you might consult this list of past market crashes. While it’s useful to study U.S. history, this list is global, going back to the Dutch tulip craze in 1637. Lists like this can help us appreciate an unavoidable reality: that crises have always been a feature of investment markets, and likely always will be. While this fact might seem unnerving, knowing this can help us better weather future events.

The investment consulting firm Callan provides another great resource: Its Periodic Table of Investment Returns helps investors appreciate the largely random nature of markets and thus the futility of making predictions.

For a more comprehensive study of market history, turn to William Bernstein’s 2002 book The Four Pillars of Investing . One of the four pillars is dedicated to history. As Bernstein puts it, markets periodically go “barking mad.” But by studying history, investors have “at least a fighting chance” at recognizing and understanding the madness when we see it. A second edition was published in 2023.

2. Psychology. I believe understanding market psychology is as important as studying market history. Benjamin Graham’s The Intelligent Investor is a good place to start. In a preface to the book, Warren Buffett notes that he first came across Graham’s book 75 years ago: “I thought then that it was by far the best book about investing ever written. I still think it is.” Why? Graham explains market psychology by way of a parable.

Mr. Market is a fellow who can’t control his emotions. Sometimes he’s rational, Graham says, but sometimes “his enthusiasm or his fears run away with him.” Mr. Market’s behavior is representative of the market as a whole. That’s why, Graham says, investors “should neither be concerned by sizable declines nor become excited by sizable advances.”

3. Statistics. How should we think about star investors who seem to be able to beat the market? In his book Fooled by Randomness , retired investor Nassim Taleb offers this illustration: “If one puts an infinite number of monkeys in front of (strongly built) typewriters, and lets them clap away, there is a certainty that one of them would come out with an exact version of the Iliad.”

Taleb acknowledges that the probability is “ridiculously low,” but he uses this idea to explain why we should never be too impressed by investors who manage to beat the market. In short, Taleb ascribes this to random chance. Each year, there will always be investment managers who end up way ahead, but there will be very few, Taleb points out, who are able to beat the market multiple years in a row. 

Taleb’s book is 20 years old, but more recent data still confirm his argument. Each year, Standard & Poor’s publishes its “Index vs. Active” report comparing the performance of actively managed funds to their benchmarks. In any given one-year period, somewhat more than half of active funds underperform. But over longer periods, upwards of 80% or 90% of active funds lag behind.

4. Simplicity. Retired money manager Peter Lynch commented that investing “is both an art and a science,” but added that “too much of either is a dangerous thing.”

To illustrate Lynch’s comment, I recommend the book When Genius Failed . It tells the story of a group of Nobel Prize winners who started a hedge fund based on highly quantitative strategies. While the fund was successful, their combined pedigree and early accomplishments led to an overconfidence in the system they’d built. The result was a financial meltdown so severe that the Federal Reserve stepped in to stabilize the situation.

The lesson: While complex investment strategies may seem compelling, I believe simplicity for most investors most of the time is a more reliable strategy. For more on that point, you might like a book titled The Simple Path to Wealth .

Another recommendation: Longtime journalist and investment manager Barry Ritholtz recently published an entertaining volume titled How Not to Invest . The book is a field guide to avoiding the worst of what he calls bad ideas, bad numbers and bad behavior. The idea is to keep things simple.

What about Oscar Wilde’s comment that we need to learn through experience? There’s truth to it. In addition to this recommended reading, I suggest that investors—especially those just getting started—experiment a little. What should you buy? To answer this question, we can look to Albert Einstein.

At one point in his life, Einstein owned a small sailboat which he named Tinef—German for “piece of junk.” Because it wasn’t very seaworthy, he often ended up on the rocks. But Einstein continued to sail the Tinef, even refusing a motor that a friend bought for him. He preferred wandering and exploring, even if it didn’t always end well.

If you want to learn more about investing rather than by reading about it, I suggest taking a page from Einstein’s book. Explore a bit. If you have a favorite product, try buying the company’s stock. Interested in cryptocurrency? You could put a few dollars into one of the new bitcoin exchange-traded funds. In short, you might explore some of the investments that—according to the data—aren’t necessarily recommended. As long as the amounts are modest, I believe this is an effective way to learn.

Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.

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Lessons Learned from Taking Care of a 102 Year Old in Her Final Year

As I have written before in April of last year my wife and I decided to take in my 102 year old mother in law when her second husband, whom she married at 93, was sent to a nursing home. Amazingly that resulted in moving her out of their independent senior housing apartment.

Well she peacefully passed way yesterday morning at the age of just days past 103 1/4. As my wife’s cousin said in call yesterday, “ amazing, but she didn’t break the record of (my mother in law’s) aunt Edith (103 1/2 in 1988).”

I’ve always have read about what people have learned when reflecting on a loved one’s life when caring for them in their final days, and thought, yeah, right. However, I have found out it is true.

In the coming weeks and months I have decided to share some of these thoughts on what I learned and how it will hopefully, with a lot of help, change me as a person.

WARNING: These posts will have nothing to do with money as she always lived on very little.

But for the present time, it’s time for family to gather and celebrate a truly amazing woman’s amazing life.

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Seeking Certainty

WE WANT OUR STOCKS to behave like bonds, and our bonds to behave like cash investments. That leads to all kinds of portfolio contortions—some of them damaging to our investment results.

Remember, risk is the price we pay to earn higher returns. Many folks want those higher returns, but they’re anxious to avoid risk. Chalk it up to loss aversion: We get far more pain from losses than pleasure from gains.

Result? Think about stock-market strategies like purchasing equity-indexed annuities and writing covered call options. Equity-indexed annuities capture part of the market’s upside while guaranteeing against losses—assuming the buyer owns the annuity for long enough. Meanwhile, writing call options allows folks to collect extra income in the form of option premiums, providing a small buffer against market declines, but the price is a cap on potential stock-market gains.

As investors look to limit losses, however, the biggest portfolio contortions tend to revolve around bonds, not stocks. The strategies employed typically involve favoring individual bonds over bond funds, and then holding those bonds to maturity. This can add a fair amount of complexity, especially if folks build elaborate bond ladders, with each rung designed to cover a particular year’s spending.

No doubt about it, there’s some reward for this complexity. If we buy an individual bond and hold it until it matures, we know exactly how much interest we’ll receive each year and how much we’ll get back upon maturity. Sound appealing? My advice: Before buying into the notion that bond funds are riskier than individual bonds, and that holding individual bonds to maturity eliminates risk, we should ask ourselves four questions:

Bailing early. Where’s the certainty if life intervenes, as it often does, and we’re compelled to sell our individual bonds before maturity? How easy will it be to sell the bonds in the secondary market, and could we receive far less than the bond’s par value?
Worrying about pennies. If we’re willing to own stocks and run the risk of steep short-term losses, should we really get hot and bothered because we don’t know precisely what a bond fund will be worth when we’ll need our money back in, say, 10 years?
No safety in numbers. Are we really reducing our financial peril if we trade the diversification of bond funds for the single-issuer risk of an individual bond? Is the added risk involved worth it, given that the return of an intermediate bond fund will likely be similar to that of an intermediate individual bond of comparable credit quality?
Losing to inflation. Where’s the certainty in knowing that each of our individual bonds will be worth $1,000 upon maturity, but we have no idea what the purchasing power of that $1,000 will be?

To be sure, the risk of individual securities is reduced if we stick with Treasury bonds, which most experts believe carry scant risk of default. Worried about inflation? That can be addressed with inflation-indexed Treasurys and Series I savings bonds.

Still, I’ve never owned an individual bond, except a $75 EE savings bond I won for finishing second in a 5k road race. Why not? I’m not that concerned that my bond funds might be worth a few percent more or less than I’d hoped when it’s time to cash out. Why would I? Heck, I’ve lived through two 50%-plus stock market declines during my investing career, so modest fluctuations in bond prices hardly seem worth the worry.

Meanwhile, I simply don’t want the hassle and complexity of dealing with individual bonds, including Treasurys and savings bonds, and I sure don’t want to bequeath that sort of portfolio to my family. Given all the complaints I’ve read about dealing with TreasuryDirect, and especially cashing in Series I and EE savings bonds, I’m glad I made that choice.

But many readers, I know, strongly disagree.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier posts.

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Recommendations for Free Portfolio Analyzer?

For years I've used Vanguard's "Portfolio Watch" feature, which provides portfolio analysis of assets held at Vanguard as well as those held at outside investment firms.

I've liked the Vanguard analyzer since, by agreeing to its aggregator feature via Yodlee (now owned by Investnet), it will update on a daily basis all your holdings' values and analyze them as far as stock/bonds/cash; foreign/domestic; large cap/midcap/smallcap; growth/blend/value; etc. And it likewise analyzes your bond holdings as to credit quality, interest rate sensitivity, etc.

The catch is you have to provide the login credentials for your outside accounts, and as I read the fine print at Schwab, where my outside accounts are held, sharing your login credentials voids their promise to reimburse you for any loss of funds due to unauthorized activity. There may have been some discussion of this here on HD but I also read about this concern on the Bogleheads forum.

So I decided to unlink my Schwab accounts from Vanguard. The fact that there seems to have been a fairly dramatic change in the way Vanguard analyzes portfolios---without any warning or explanation---contributed to my decision.

I'm looking for a new place where I can enter all my brokerage and retirement accounts and get a decent analysis in the manner Vanguard used to provide. For the reasons stated, I don't want an aggregator which will login to my accounts. Rather, I'm willing to set it up manually, entering each holding and the number of shares. Ideally, the analyzer will update the stock prices each day, but I'll need to enter any changes in number of shares.

I know many folks use the Morningstar X-ray tool, but as an inveterate cheapskate I'm unwilling to pay $249 a year for that service. Does anyone have a recommendation for a free or very low cost portfolio analyzer they have used and are happy with?

Thanks for any suggestions.

 

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