Friday, March 11, 2022

Short Takes: Sanctions Against Russia, Evidence-Based Investing, and more

Over the past decade or so, I’ve read many articles about Tesla that confused me.  It took me a while to figure out that a lot of the nonsense originated from oil “boosters” and supporters of competing car companies.  But, even after filtering out these “stories,” I still found some articles confusing.  I realize now that many writers discuss Tesla the stock instead of Tesla the technology company.  I’ve never cared about Tesla stock, but I’m fascinated by Tesla the technology company.  They were incredibly ambitious, and failure was all but certain.  Yet they succeeded.  

Tesla remains dedicated to excellent engineering and technology.  As a Tesla car owner, I know that their cars have some issues like any other car, but they seem committed to correcting their errors, as I can see from the frequent software updates I get.  Overall, my Model 3 has been the best car I’ve ever owned.  That said, I would buy a competing electric car if a better one comes along, but I see a lot more marketing than substance so far from competitors.

Another aspect of Tesla that has impressed me is their charging network.  This is irrelevant while I’m at home because I just plug in my car in the garage.  But when I travel in Canada or the U.S., chargers are everywhere, and I can always charge slowly from a regular 110 volt plug if I want to avoid stopping at a charging station.

Tesla makes me even more optimistic about the future.  Where politicians and large established businesses have failed us, Tesla and certain other technology companies are leading the way to a better future.  I don’t care which companies win the stock market battle, as long as people dedicated to quality engineering keep moving us forward.

Here I look at the practical matter of what income to put on a credit card application when you have no income and live off your savings:

How Does a Retiree Answer the Question ‘What is Your Income?’

Here are some short takes and some weekend reading:

Preet Banerjee explains what the SWIFT system is and why banning Russia from SWIFT would have severe repercussions well beyond Russia.

Robb Engen at Boomer and Echo looks at some investor choices through the lens of evidence-based investing.  One part I don’t think much of is Ayres and Nalebuff’s time diversification; Engen seemed lukewarm about it as well.  The idea is for young people with modest savings to borrow to invest in stocks so they have adequate stock market exposure at all times.  However, our ability to add to our long-term savings throughout our lives is much riskier than it appears looking back over our personal histories.  Nobody can save the mythical $1000 per month every month of their working lives.  Families often can’t save for a while, and may even be forced to dip into savings sometimes.  Financial success may be the result of good long-term habits, but it can be destroyed by being exposed at the market’s worst moments.  If the stock market crashes and you lose your job while you’re leveraged into both a house and stocks, you could lose your house and all your savings.

Andrew Hallam explains why indexes beat actively-managed funds.  He makes his points clearly and convincingly.  But I always worry that many people reading articles like this would then think “Thankfully, I don’t pay any fees on my mutual funds.”  It can seem hard to believe, but there are still many Canadians who don’t realize that their savings are a piggy bank for advisors and mutual fund companies to dip into.


  1. That evidence based investing reminds me of this study at Yale. What the researchers learned was that using leverage to invest in the markets has always historically produced better financial results than not borrowing to invest. The catch is you have to use a very methodological strategy and remove all emotions from investing. Personal finance is 80% psychology as they say. :)

    1. It's true that a leveraged investing plan can be derailed by losing your nerve and selling at a bad time. However, it's not just emotions that are the problem. Life events outside your control can be financially devastating as well. Imagine a health event that leads to job loss at the same time as markets are down. Having to dip into a leveraged portfolio for money to live on and pay interest on the amount borrowed can permanently impair an investing plan.

  2. wHaT? yOu mEaN I PaY FeEs oN SeLlInG, bUyInG AnD HoLdInG My mUtUaL FuNdS? #FaKeNeWs

    Yes, I am enjoying my Sarcasm translator. Not as good as Jive was but still satisfying.