Lucky Break

2015.dec2The procedure used by a marriageable Etruscan young woman of 2300 years ago to identify her prospective husband may have lacked precision compared to today’s computer dating services, but it was more fun. The first step was to draw a circle on the ground, then divide the circle into twenty-four sections and scrawl a letter of the alphabet in each section. The next steps involved dropping a kernel of corn beside each of the 24 letters and releasing the family hen to forage among the kernels. The hopeful bride then worked out two names one might make from the kernel-free letters. The hen had to be sacrificed and its cleaned collar bone was left to grow brittle in the sun… to become a wishbone. At the appropriate time two people each grasped an end of the wishbone, making a wish for one of the two names, and they pulled until it broke. The larger side was the “lucky break” and the rest is human nature.

One can wonder whether the Etruscans had a stock market from which to select lucky breaks among investments of the time. Whatever the application, the wishbone procedure continues to reflect human nature to this day.

Fishing Trips

FlyFishingFor many of us anglers, fly fishing trips start with a mental image of the destination lake or stream. The image includes the type of fish we hope to catch, and that determines which fly rod and which flies to take along. It is essential to make reservations and review the route, the rest stops, and the cafes on the way. And it helps to sum up the anticipated costs for gas, guides, food, lodging, and “stuff” we invariably buy at a local fly shop. It also helps a lot to have a friend or a grandfather to teach us the ropes at an early age so all this planning becomes routine enough to do in the dark. Eventually fly fishing trips become a part of life, regularly and with joy. The same process applies to planning for and practicing our retirement: establish an image of where we want to be across our retirement years, locate a guide, assemble the necessary gear, sum up the anticipated costs, and arrange life to accommodate regular excursions into that realm: rehearsals for the main event. As with anything else worth doing, the earlier we begin, the more fun the trip. Don’t miss it!

Trusting

2015OctcDuring our Civil War public sentiment to add God to the design of our minted coins moved Salmon P. Chase to action. He invited Congress to choose the motto and pass the law in 1864 that allows In God We Trust to be used on minted coins…starting with the 1864 two-cent coin. The motto didn’t appear on paper money until 1957. That’s a lot of time and a lot of change (when did you see your last two-cent coin?), but the trust was well-placed and the Republic still stands. Speaking of trust, an alternative to accepting probate of one’s estate is to establish a trust that can own one’s worldly goods. Why do that? The statutory limit attorneys can charge to probate a million dollar estate in California is $23,000; executors can charge that much again. Establishing a trust skirts probate fees. A trust can endure throughout a lot of time and a lot of change; one can only hope successor trustees will do a good job as stewards of the estate. Establishing a trust instead of accepting probate does afford greater personal attention to heirs…sometimes for generations. Underneath it all, In God We Trust still works.

Relief

2015.SeptThe photo shows a familiar medicine that buffers stomach upset and treats a headache. When we reach our personal threshold for tolerating digestive discomfort, the fizzy water is there if we keep some on hand. Declining stock markets bring us up against another personal threshold, this one for financial discomfort. It is our nature to sell off stocks when we think we will lose more in the next market session, even though we know full well it is the worst time to sell. The “medicine” in this case is to recognize our personal threshold for market risk, and then add a sufficient amount of fixed income assets –bonds and cash—to buffer our stock holdings well enough to keep the possibility of market discomfort within tolerable bounds. Whether it’s indigestion or a falling market, in each case the right dose of “medicine” can bring a satisfying measure of relief if we plan ahead… a simple strategy indeed.

Leverage

leverageA baseball bat extends our reach and provides immense leverage when it connects with a fastball… every now and then there’s a home run. When it comes to buying a home or a car, a loan leverages our reach beyond resources at hand. We need to qualify for credit, and if approved the resulting commitment lets us enjoy something we could not obtain any other way… as long as we keep up with the payments. Investors leverage their real estate deals and they buy stocks on margin, hoping for that home run where a relatively small cash commitment reaps a profit bonanza. A baseball player who strikes out in two-thirds of his or her times at bat is a champion with a .333 batting average, but a borrower who misses a few payments is a poor credit risk. Leverage works both ways, and careful coaching can make the difference between win or lose before signing loan papers or stepping up to the plate.