Sunday, May 24, 2015

A Winning Strategy for the 2016 Presidential Election

Be unscripted.  That's the way to win the Presidential election in 2016.  The American people are looking for an authentic, sincere, unscripted candidate they can, for the most part, agree with.  Someone who speaks from the heart, and empathizes and sympathizes with them.  Someone they can sit down and have a beer with.  Not that they need to agree with everything the candidate advocates.  You can disagree with your friends and still like them.  But you can't be friends with a phony.

Unfortunately, scripting is what modern politics is all about.  Data-driven, Internet-interfaced, bet-hedged down to the last precinct, today's politics is a game of angles, maneuver and percentages.  There is a lot of well-deserved publicity about money in politics. But the money has to be spent wisely.  As Mitt Romney demonstrated in 2012, simply having a lot of money doesn't win the election.  It's important to appear genuine.  Mitt couldn't pull that off when it came to hunting or being a right wing maniac (a prerequsite for bringing the far right to the polls).  He is basically a moderate who tried to pose as a conservative and came across as implausible.  That cost him the election.

The political cognoscenti understand the importance of appearances.  Armies of political scriptwriters are furiously working on scripts for how to appear unscripted.  Candidates are making appearances in very small towns in Iowa with real people, as in folks who might drive nine-year old cars because they can't afford anything better.  Candidates appear in shirtsleeves and eat ethnic food, preferably the kind that's not healthy so that you don't appear preachy about diet. 

But the electorate isn't fooled.  Hillary Clinton seems to have used her financial war chest to scare off serious primary challengers.  But she's so heavily scripted she's having trouble generating enthusiasm outside her longtime coterie of loyalists. Jeb Bush was against the invasion of Iraq, then he was for it, then, last we heard, he was against it.  At this rate, he won't have a chance even with the ardent support of the Republican establishment.  There are genuine, sincere wackos on the far left and far right.  But the general election won't be won by a mouth-foamer.  It will be won by a charismatic, empathetic, reasonable candidate who captures the public's imagination.  And that candidate will . . .  uh . . . perhaps . . . um . . . arrive with Godot.

Wednesday, May 20, 2015

Planning For Your Obsolescence

The ongoing debate over trade policy highlights a major career risk:  the possibility that you could become obsolescent because of cheaper labor elsewhere and/or automation.  For example, in the auto industry, many car parts and some cars are made in other countries and shipped to America because labor and other costs are cheaper elsewhere.  In America's auto assembly plants, robots have replaced large numbers of people because robots are more reliable and cheaper.  This trend will continue as many other tasks become mechanized and/or cost-effective in lower wage nations.  Computer programming, radiology, legal research and legal document review have joined data entry and call center jobs as routinized work that can be done by smart people living in many countries.  What can you do about your potential obsolescence?

Keep up your skills.  Maintain and upgrade your professional skills.  People capable of cutting edge work will often have an advantage over foreign competition and robots.

Be flexible.  Keep an open mind about working in new and different jobs.  Many people have succeeded in fields they didn't plan on entering.  But they were open minded about learning new things and taking on new challenges.  The economy will keep changing, and success can follow if you change with it.  If you're unemployed, be open to taking temporary and part-time work in order to prevent your personal finances from eroding faster than necessary.

Computers and computer science.  Much of the reason for personal obsolescence is computerization.  Computers and related technologies (most importantly, the Internet) make it possible for workers overseas and robots to compete against American workers.  Don't get angry about this because computerization will continue--and most likely at an accelerating pace.  If you can't beat them, join them.  Acquire and maintain computer skills.  Go into a computer-related field.  Become a programmer, technician, data management engineer or something else computer-related that fits your skills.  Computers won't become obsolete, and people who can work with them have a better chance of staying employable.

Build your benefits.  Work as long as possible to build Social Security credits.  If you have the potential to earn a pension, stay in that job long enough to qualify.  Having a stream of payments that doesn't depend on your employability is a major victory over obsolescence.

Save.  Here's an ugly truth:  just as the wages and salaries of the middle class have fallen due to globalization and other reasons, the returns on capital have improved.  People who hold capital are becoming comparatively better off, while people who work are on average becoming comparatively worse off.  Save. Acquire capital and improve your chances for a comfortable life.  Then save some more.  Whatever your views on social issues like the distribution of income and wealth, you are individually better off with a pool of savings to protect you from the riptides of a free enterprise economy.

Sunday, May 17, 2015

Obama's Irrelevance

Barack Obama is becoming irrelevant.  With a Republican-controlled Congress, he cannot implement much of his agenda.  When he tries, he has to ally himself with the Republicans, as he recently did on trade policy.  The result was to aggravate the Democrats in Congress, who used the moment to extract concessions of their own.  Now, the Republicans don't like Obama, because he's a Democrat.  The Democrats don't like Obama, because he's not really a Democrat.  And Obama finds himself without any real friends in Washington.  Not that anyone has real friends in Washington, except maybe their dogs.  

ISIS does its best to give the President opportunities to shine.  With every atrocity, the extremists provide another excuse to drop a smart bomb or authorize a Special Ops raid on the hideaway of some senior nasty guy.  But in the war against terrorism, there is no Omaha Beach, no Bastogne, no bridge at Remagen, no unconditional surrender.  And there won't be much opportunity for a President to build a lasting legacy. 

The President would like very much to pivot toward Asia.  And smaller Asian nations, watching China literally construct territory in the South China Sea, would like America to swivel their way.  But the increasing chaos of the Middle East keeps sucking the President into its vortex.  He dreams of detente with Iran, seemingly unaware that making nice nice with the ayatollahs will probably increase the desire of Saudi and Gulf State Sunnis to support Sunni insurgents in Iraq and Syria (possibly including ISIS) in order to counterbalance growing Iranian power.  A gain in stability could be met with an increase in instability.

But even as Obama recedes into the background, the Republicans can take no comfort.  They will achieve little in Washington without control of the White House.  And they're bogged down by a mosh pit full of Presidential hopefuls, none of whom have captivated the electorate.  Perhaps they, too, are fading into irrelevance.

Thursday, May 7, 2015

The Zen of Investing

How do you allocate your investment funds in times like these?  Stocks bound upwards for a couple of days when statistical data indicates the economy is slowing or a Fed governor smiles.  Then, the market nose dives crazily the next couple of days when oil prices rise or unemployment falls or another Fed governor frowns.  Bonds slump and then surge, or surge and then slump when inflation expectations rise or fall.  One constant in the financial markets is volatility.  Another is unpredictability.  And a third is no net gains--as in, for all the hysteria, stocks have hardly done squat this year.

The financial media is full of conflicting predictions--the market will boom, the market will crash--and conflicting advice--buy this, sell that, short the world and stock up on survivalist gear.  To paraphrase former Fed Chairman Ben Bernanke, things are unusually uncertain.

At times like this, the best option may be to step back from the chaos and cleanse your mind of desire.  At least, of desire for short term gains and avoidance of losses.  It's impossible to make money all the time, or to avoid all loss.  With entropy seemingly on the increase, any effort to make every day a good market day will have you believing six impossible things before breakfast and doing battle with windmills.

There's nothing wrong with holding cash, maybe even a lot of it.  Cash is beautiful.  A goodly amount in a federally insured bank account or U.S. Treasury debt promotes equanimity and sound sleep.  You will smile more.  There may be some who would argue that a fully invested, well-diversified, periodically rebalanced portfolio will provide better returns than a partially invested portfolio with a lot of cash.  This may be true in theory, but an awful lot of investors don't have the nerve to stay the course with a fully invested portfolio through the periodic mania of the markets.  They sell and freeze up, never again to invest, and potentially lose a great deal of future gains.  All the nice theory in the world doesn't amount to diddly if you're too stressed to implement the theory.  To maximize returns in real life, you have to be calm and unemotional.  And if doing that takes having bundle of greenbacks under the mattress, then so be it.  Don't feel the need to allocate every last dollar to something or other right away.  Hold off on betting your last buck until you feel comfortable.  Be zen, and increase your chances of becoming rich.