Longevity

 Longevity

There is an old saying that "youth is wasted on the young, and wealth on the old." That presents a true quandary, because for many of us wealth does not appear until there is gray in the hair and we are on the pickleball courts! So barring a tectonic shift in altruism, the only other option is for investors to internalize a truth: time is the most valuable commodity. It deserves to be considered its own asset class.

If time is truly the most valuable commodity, then investors need to embrace longevity as one of their key tenets in creating dynastic wealth. Along with creating value (the more the better) and buying assets (once again, the more the better), living long allows for many opportunities for both creating wealth and compounding it. The latter factor is vital. Compounding alters lives.

Even a grub stake over time can become princely wealth. A vital factor is correct asset selection which results in compounding. Much of the asset selection process can be learned, and it is often quipped "lessons are expensive and good ones dear." Continuous (yes "Dollar Cost Averaging") of proper asset selection (read that as "real growth," defined as growth in excessive of inflation) over time (and here we want AS MUCH TIME AS POSSIBLE) can result in magnificent wealth. 

Of the three components of #CVBALL (Create Value, Buy Assets, Live Long), Live Long is the most important. You can have many, many failures in life, but generally the older you become you learn from mistakes and try not to repeat them. You may have new mistakes and never exhaust the total "pool" of mistakes possible, but generally you get better at the game as you age.

New Year, same plan! #CVBALL! Concentrating on the "LL," there have been many studies done on longevity. Increasingly it has moved from the fringe to mainstream, especially with widespread adoption of "miracle drugs" like Ozempic. These semaglutides decrease the urge to eat and help jumpstart a virtuous cycle that combined with exercise and a modified diet often results in significant weight loss, improved cardiovascular fitness, and better cognitive functionality. Bottom line, semaglutides along with changing behaviors will result in collectively MILLIONS of years in longer lifespans.

Longevity, whether obtained from pickleball, Ozempic, and/or a reboot of the traditional food pyramid will have massive effects on wealth. Adding just one (1) more doubling cycle to your wealth can drastically improve your quality of life and potentially that of your heirs. Adding two (or more!) doubling cycles is almost hard to fathom...an estate saved over a lifetime for someone in their early 60s worth say $3M potentially becomes close to $25M if they can live into their 90s. And that is becoming increasingly possible. The centurion is one of the fastest going age demographics.

So ILAF (Invest Like A Farmer) offers a solution to those who may feel they are priced out of the real estate market, or don't earn enough to compete, or who have perhaps just suffered a big financial or life loss...hang in there. Longevity offers a myriad of outcomes and forgives many mistakes. Create Value. Buy Assets. Live Long. (#CVBALL).

The Brass Ring

 The Brass Ring

Here at Invest Like A Farmer (ILAF) we play the long game, and you should too. Investing over the long-term, by definition, provides significantly more opportunities for you to compound your wealth than shorter, sporadic intervals. Even measly annual returns compounded over time can become great generators of wealth. We are not interested, however, in measly returns at ILAF...we seek the brass ring during life's carousel.

Getting the brass ring is tricky though, it takes a combination of skill and luck. For some, they are given a brass ring upon birth and their challenges are different; the adage "from shirtsleeves to shirtsleeves in three generations" is often aptly true. For those on the come, the deck and the game need to be understood.

Here is a quick primer: Modern economics in the United States has basically evolved from five (5) seminal events over the past ~100 years. One could go on the cocktail circuit for a lifetime simply addressing these five events.

The first was the creation of the Federal Reserve in 1913. For better or worse, this created an unelected quasi-government akin to Gringott's Wizarding Bank. Over time "The Fed" has arguably become the most powerful unelected (unaccountable?) organization in the world. Controlling interest rates is God-like power.

The second event(s) were World War I and World War II. Wars are extremely expensive in terms of resources, both physical and human capital. The United States transformed from a largely agrarian economy and culture to a full-on manufacturing behemoth. Some argue that the United States entry into WWII finally got it out of the Great Depression.

Bookending the two World Wars, there occurred the third and fourth events. The third was the creation of the income tax via the 16th Amendment in 1913 which effectively replaced tariffs for supporting the Federal, State, and Local government expenses. The fourth event occurred at the tail end of WWII, The Bretton Woods Agreement in 1944 which made the U.S. Dollar the de facto reserve currency for the entire World.

Finally, the fifth seminal event following the creation of the Federal Reserve, the 16th Amendment, WWI & WWII, and Bretton Woods was in 1971 when President Nixon took the United States off of the Gold Standard.

Often referred to as the "Nixon Shock," it effectively ended 2,000 years of monetary policy which had tethered gold to a unit of global government money.  These five events are critical to the long-term game plan of investors seeking the proverbial brass ring.

What the five seminal events normalized was the loss in buying power of the United States Dollar over time, ie a dollar today is worth more than a dollar tomorrow. The Fed organized it, the income tax solidified it, wars (WWI, WW2, Vietnam) expanded it, and Bretton Woods transmitted it around the world.

These five events have made it possible for the government(s) to essentially print unlimited amounts of money without necessarily creating any additional value. Everything humanity knows is finite, except fiat money. That is infinite. The only way around this quagmire is for investors is to: 1) Create value by increasing productivity in some manner, 2) Buy Assets, and/or 3) Live a long time. The crib notes? Create Value, Buy Assets, Live Long...CVBALL.

Qui Bono?

 Qui Bono?

The Roman people regarded Lucius Cassius as a wise and honest judge. He was in the habit of frequently asking "Qui Bono?" or "to whom might it be for a benefit?" Why the history lesson? Because responsibility has become a very touchy subject. But it shouldn't be a partisan one. Hence the utility of an impartial judge from 2,000 years ago.

What Cassius was getting at with the simple question of "Qui Bono?" is who benefits from an outcome? By and large, purposeful decisions over time result in outcomes. You study hard in high school, go to college, get a good job, further your education, etc. Generally you turn out with a decent outcome. Same with investing. If you start young and are diligent and have some luck along the way you generally compound your money over time. The LA Fires are an outcome.

Much will be written and hopefully studied during the autopsy of these fires. A "blue-ribbon" panel would be welcome. There are many important questions that need answers from Gov Gavin Newsom, Mayor Karen Bass, and Insurance Commissioner Ricardo Lara.

Having the courage to ask "Qui Bono?" is an important first step, whether you are evaluating a business deal, looking at an investment or in this case trying to understand an outcome like the LA Fires. LA, California, and yes US citizen taxpayers will be (not "could be" or "may be") on the hook for billions of dollars. We deserve better than the LA Fires outcome.

The challenge of asking "Qui Bono?" aloud is there are many intellectually weak and morally bankrupt  individuals who will instinctively label you a "conspiracy theorist" or worse. Hold your head up high and ask away, this isn't China. Very apropos for the LA Fires oddly though, in an almost mystical way calling back from the past some 50 years ago, is the required viewing of "Chinatown." Test your metal like Jake Gittes and follow the money...it will lead to the truth, perhaps one as Californians we do not want to admit.