One of the best ways to calm your anxieties during market turmoil is to track your portfolio over time in a robust and sustainable way. What does that look like? It means periodically and consistently -- on a weekly or monthly basis (daily is too volatile and yearly is too high level to see intra-year fluctuations) – in a way that makes you actually have to engage with your portfolio.
This means using software or an app to track might not be sufficient if the app does all of the work for you. One of the best ways to do it is to use an Excel file and simply list your total portfolio value over time, row by row, with each row representing a particular point in time (see example below).
What this will give you is something incredible – it’ll give you some perspective. Perspective is an amazing gift, but it isn’t very easy to come by. To get real perspective, there aren’t a lot of shortcuts you can take – it takes time. But, even if you have been investing for years and years, you still likely won’t gain perspective if you don’t track your portfolio but instead mindlessly go about checking it every once in a while without putting its current value in appropriate historical context. Remember - perspective is earned.
By having some perspective, you'll be less likely to make dumb investing mistakes. When stocks go down severely due to short term market turmoil, you'll have enough historical perspective to understand that markets are volatile in the short term.
This is useful for all sorts of investors - those that invest in stocks obviously, but it's also useful for investors in real estate, derivatives, cryptoassets, and even fixed income (although fixed income can be a bit more complex because it is exposed to interest rate risk in addition to market risk).
Cities vs. Nations - Cities have been and will continue to be the true drivers of economic growth and development in the 21st Century
Nations and countries are illusions at the most basic level of reality. Cities are too, but far less so. Where the idea of a nation like the United States exists only in our minds, the idea of a big city like NYC or Los Angeles exists both in our minds and in the immediate world around us.
Cities are were life and economics happen:
Cities are where stuff happens - countries have cities and benefit from them, but can you name things that happen economically in a country but that doesn't happen in a city? Asked differently, what can you point to that's economically beneficial that, at its core, is something that happens in a country but not in a city? It's hard to think of an answer because most economically beneficial activity happens within cities themselves - nations benefit, but it's not within the nation that these things originate. Think about this another way - if you're city was run by idiot monsters who made only bad decisions, what could the national government do to fix things? The answer - not much.
When news businesses are started, when new museums and coffee shops open up, when ideas are created and implemented, or when intelligent and driven entrepreneurs drive intense economic growth in an area, it's all city-based. Cities are the economic engine of the modern world and, therefore, way more focus should be placed on cities and far less focus should be placed on nations.
If people focused as much on mayoral and city council elections as they do on Presidential races, we'd start creating better cities. A city like Detroit, for example, will never be improved because of national decisions - more granular decisions at the city level (and by people who understand local dynamics) are required. People must take city life and the responsibilities that come with being part of an urban community far more seriously in the 21st century - through that, the nation will become great on its own.
Check out a UN Habitat piece on the economic role of cities here - it's an interesting piece on how cities are the driver of economic growth globally in today's world.
Focus on primary news sources when consuming news - don't let others do the filtering and thinking for you
We have come to the point of absurdity in terms of news consumption - far too many people consume news from secondary (or tertiary) sources instead of going directly to primary sources. This is tragic because primary sources are more easily-available today via the internet than ever before.
What are primary news sources?
Primary news sources include the following:
There are implicit (sometimes explicit) biases in secondary and tertiary news source
Secondary and tertiary sources take primary source information and do things to it - this may include analysis, synthesis, etc., but, all secondary and tertiary sources include something extra. That extra stuff can be incredibly useful and interesting, but it is also removed from the primary source in some way.
In today's world, a lot of news-related secondary (and tertiary sources) still provide interpretation, summarization, and synthesis. However, they also very often add in heavy doses of bias. This bias may be implicit or explicit, but it seems to be ever more present as Big Media can leverage Big Data and create far more granular approach; social networks like Facebook and Twitter do this too. Where 25 years ago, everyone tuned in to the same few news channels on TV, today, every single person in the Western world can have a customized/tailored Facebook or Twitter feed. These feeds can become deeply biased as a result of tech firms' attempts to get more eyeballs for longer periods of time.
Watching primary news can seem very strange to a person who only consumes secondary and tertiary news sources. The initial reaction can vary, but it is often one of surprise at how different and "more real" consuming primary news it. People are surprised at how the world really is vs. how they typically see the world presented in heavily-biased secondary and tertiary news sources.
Primary news sources lead to clearer perspectives on what really is happening in the world
To have a clear mind and understand the world, one can't rely only on secondary and tertiary news sources. Especially terrible is relying on free secondary and tertiary news sources - in these cases, the reader is, in fact, the product and the source of the secondary or tertiary news have no real responsibility to the reader (either from a moral, fiduciary, or economic perspective). This, however, is a topic for another time.
The problem with modern Western self-improvement and self-development thinking is that it treats the human mind as a machine when it should instead be treated more like a tree - we'll get into what this actually means in below. But, the vital thing to note is that this type of thinking has permeated self-improvement and self-development thinking quite profoundly. It has penetrated so deeply that when most people think of becoming better human beings are strictly in the machine paradigm; most people don't even understand that a different way of thinking about the mind and self-improvement exists.
Machine vs. Tree: Be a tree, not a machine
Machine: The machine paradigm is easy for most Western readers (e.g., readers who grew up in an environment where Western post-Platonic thought formed the foundation of academic/scientific thought) to understand. Treating your mind like machine means having a paradigm where you believe improvements to the machine (your mind) are to be made based on external analysis/planning/thinking (exogenous improvements) and where those improvements can be immediately implemented (e.g., upgrading the machine).
Tree: The tree paradigm is more difficult for Western-oriented thinkers to understand and is somewhat more in line with Eastern, though, but not completely. The tree paradigm is where you believe that mental "upgrades" are impossible or exceedingly rare, and you acknowledge how little control you actually have over your own mind. Instead, with the tree paradigm, you more clearly see the only real way to make lasting changes to your mind: through feeding it with useful information over a long period of time and allowing that information to be absorbed, integrate, and recalled later. Someone who understands the tree paradigm has a far clearer perspective on their own mind, their ability to improve or develop it, and the timeframes it takes for such improvements. This is just a brief into the tree paradigm - there's as much and more here as there is in the well-known machine paradigm
The descriptions above are accurate, but they might seem confusing to readers without proper examples. Often, the best way to illustrate a point quickly is to give examples. So, here are a few.
Problem: A man realizes he's terrible at relationships - his wife is unhappy and he finally realizes that there are things he just doesn't know about women, relationships, and how to have a happy marriage.
Problem: A man's friends sit him down and tell him that they feel he has a deep problem with aggression - at bars he picks fights, friends are always afraid of him getting upset when he's drunk, and they remind him of how he became aggressive with his wife a few months ago.
Problem: A high school kid who is good in school but self-conscious, timid, and possibly under-developed physically compared to his peers gets harassed at school by older, more aggressive kids looking for easy prey.
News is by definition most relevant in the short term – as time moves forward each piece of news information degrades quickly in terms of how relevant and/or useful it is. In effect, information can be thought of as having a half-life. If we map things out in this respect, we can see that not all information is equal:
So, if you’ve got a limited amount of time and energy -- and your goal is to maximize the amount of useful information you obtain -- you’ll want to focus on things with a far lower half-life. In practice, that means making choices like this:
Here are two great articles that in-part inspired this piece:
Bitcoin cash is a cryptocurrency created in August 2017, arising from a fork of Bitcoin, the classic/original cryptocurrency. The most significant difference between Bitcoin and Bitcoin Cash has to do with the size of blocks on the blockchain.
By increasing the block size from 1MB up to 8MB, Bitcoin Cash allows many more transactions to be processed in one block. The idea is to process larger transaction volumes faster and for lower fees.
Bitcoin Cash offers lower fees and a purportedly, more reliable transaction rate than Bitcoin. In terms of development, Bitcoin Cash and Bitcoin share a majority of code. Having so much code in common makes developing software or altering existing software to support Bitcoin Cash quite simple.
Bitcoin Cash differs from Bitcoin Classic in that it increases the block size from 1 MB to 8 MB.
Bitcoin Cash attempts to increase the number of transactions that can be processed in a given interval of time. Bitcoin Cash supporters hope that this change will allow Bitcoin Cash to compete with the volume of transactions that PayPal and Visa can handle by increasing the size of blocks. Since the issue of scalability tends to be at the forefront of cryptocurrency debates, developers have made increasing block size and improving transaction processing speeds their top focus areas.
Despite the many vocal Bitcoin Cash advocates, as of early 2019, Bitcoin cash is used in exchanges at far lower rates than Bitcoin. In fact, with so little traffic that as of yet in the Bitcoin Cash network, the block size increase hasn't been necessary to process transactions more quickly than Bitcoin.
Since the beginning, there have been questions surrounding bitcoin's ability to scale effectively. Bitcoin is a cryptocurrency that exists within a decentralized network of computers all over the world. Payment transactions are verified by majority rule, not by an individual actor.
The problem with this technology is that it's slow, especially in comparison to banks that deal with credit card transactions. For example, Visa processes 150 million transactions per day, averaging roughly 1,700 transactions per second. The company's capability far surpasses that, standing at aproximately 24,000 transactions per second.
How many transactions can the bitcoin network process per second? Seven.
Transactions take about 10 minutes to process. As the network of bitcoin users grows, waiting times will become longer since there are more transactions to handle without a change in the underlying technology that processes them. Ongoing debates around bitcoin's technology have graviated around this central problem of scaling and increasing the speed of the transaction verification process.
We're two decades into the 21st century and real estate transactions, at their core, are still as archaic as they have ever been. Any first time home or condo buyer will understand how ridiculous the process is - it's a process that involves:
The four steps to a real estate transaction, simplified a lot
In a general sense, the steps of a typical residential real estate transaction (or even a small retail real estate investment) are as follows:
Step 1 is easy, and Step 2 is relatively easy in practice in developed real estate markets like those in the United States and Canada. Step 1 is easy because the decision is binary, and only one party is involved (the buyer). The "buyer" might also include the buyer's family, but it's all one party when the binary decision needs to be made. Step 2 involves a real estate agent, but it's usually not overly complicated or unpleasant.
Unlike Step 1, Step 2 includes another person. But, this other person isn't truly an interested party to the agreement/transaction that's going to happen down the line. The real estate agent is simply someone helping the buyer with the process. A buyer's agent (as opposed to a seller's agent helping to sell the house) helps the buyer find a place while maintaining a responsibility to act in the buyer's best interests. You, in effect, have a knowledgeable real estate person in your corner -- that's what a buyer's agent is. It, therefore, makes a lot of sense that Step 2 isn't the bottleneck in the process – it's, in fact, the core part of the process itself; it's in Step 2 where the house buying actually takes place.
Once you pick a place, you need to fund the purchase somehow. If you've got the cash set aside, you can skip Step 3 and go directly to Step 4, which involves actually executing the transaction. If you skip Step 3, you also only have to contend with a 2-party sale instead of a 3-party transaction because the lender isn't in the picture.
For most of us, however, Step 3 is needed – we either don't have the money to buy a property outright, or we can't do such a thing more than once and need to use other people's money to obtain assets as we grow our real estate portfolios/businesses. In this case, we'll need a lender – this will almost surely add a ton of complexity to the process and prolong it.
Lender's due diligence adds a ton of complexity to real estate transactions
The primary reason using a lender adds so much complexity is because the lender faces a very significant amount of risk – they are giving you money to buy a house with most of the purchase being put up by them and only a small portion being put up by you (e.g., the down payment). With the lender financing 80% to close to 100% of the purchase price, they are exposed to significant credit risk and are prudent with not taking this lightly. A lender will require a ton of documentation from you so that they can perform the necessary due diligence to (1) understand, (2) mitigate, and/or (3) prevent unacceptable risks. These risks include the following:
All of these due diligence steps lenders take to provide themselves (and future buyers of the debt) with assurance over the quality of the credit risk they are taking on. This process can involve a lot of people – these may be people working at the actual firm lending the money and third-parties like appraisers, inspectors, insurance agents, and bankers.
If technology is to further assist in the real estate transaction process, it's in Step 3 where the most value can be added. An easier way for providing assurance over borrower quality and for determining title might help house buying and selling go a lot faster. If, for example, all property claims or titles were stored on a secure blockchain, title might be able to be ascertained far quicker than it is today.
And now, given the rise of cyrptocurrencies and crypto assets to quasi-mainstream financial assets, we're dedicated to providing quality, relevant, and interesting material on cryptocurrencies and cryptoassets. Articles on Bitcoin, Ethereum, Ripple, Cardano, and many more cryptocurrencies and cryptoassets can be found on Pennies and Pounds - all that in addition to a plethora of information on what cryptoassets are, how the entire crypto industry came to be, blockchain/immutable ledger technology, mining, proof of work, proof of stake, and how to prudently invest in crypto if you are so inclined (based on your risk tolerance and ability to withstand the volatility that will come with a crypto portfolio).