Wednesday, January 26, 2022

Anti-Vaxxing is a form of Mental Illness?


Just because the government wants you to do something, doesn't always mean it is bad.

A reader writes that I am full of shit for criticizing anti-vaxxers.  They are not getting the CoVid vaccine because, "I feel the government is pushing it on us!"  And of course, any time the government wants you to do something, it probably is bad for you.  Boo Government!

At first I was going to dismiss this complaint out of hand, but then I thought more about it.  I have harped time and time again, that you can spot a bad deal at 100 paces simply by the way it is presented.  You drive by "Mattress Land!" with the big orange-and-red-and-yellow signs proclaiming "Big Savings!"   Across the street is "Mattress World!" with the same signs.  And you quickly figure out there are no bargains to be had at these places - and financing a mattress is nonsense - a bunch of padding that is covered with fabric isn't worth thousands of dollars.  And no, it isn't a "Scientific Good Night's Sleep!"  If you are having trouble sleeping at night, odds are, it ain't the mattress.  I've gotten a good night's sleep on the ground or the floor - a mattress is just a bonus.

But I digress.

The point is, when you see something hyped, you should be suspicious.  When you see the bandwagon going down the street with people encouraging you to jump on, you should be wary.  And our reader, although I think they are wrong, is right to wonder why they are pushing the vaccine - and doing so badly.  And it isn't just our reader, it is a worldwide phenomenon that many people don't trust the way the vaccine is being rolled out.

In totalitarian countries (and no, this isn't the USA by a long shot!) such as China, you get the vaccine or else.  Lockdown?  Enforced with a vengeance.  China has done a good job of tamping down a virus that admittedly originated in their country.  The rest of the world has crazy ideas about personal freedom, and as a result, has struggled with this pandemic.

In many Western European countries, lockdowns and mask mandates have been ordered, and although vaccines are not mandated, if you are not vaccinated, you may find yourself unable to get a job, take a train, fly on an airplane, or whatever.  It is like "constructive discharge" in employment law - they can make life so difficult you give up.  And people in Europe are protesting this, although the vast majority are doing the right thing and getting vaccinated and using masks and following other recommended guidelines.

In America, we have tried a patchwork approach, with various States enacting different policies, with some, such as Michigan, enacting strict lockdowns, while others, such as Florida, seem to be encouraging anti-vaxxing.   Mandates by the government have been struck down by the Supreme Court, but given that we are a free country, companies are still entitled to fire people who are not vaccinated, as is the military (indeed, to be a soldier, you are first given a plethora of vaccines in basic training).  Some people call this "tyranny" but they've never been to China, so they really don't know.

The problem is, the way this vaccine thing has been rolled out has made a lot of people suspicious - and I am not just talking about the Qanonsense people or the Karens on Facebook who want to be attention whores by posting nonsense about how they are using holistic medicine on their children instead of getting a smallpox vaccine.  That shit has been going on long before the pandemic - sort of like young vegan girls who starve their cats to death by feeding them nothing bur broccoli.  It is just doing something outrageous to get attention.

But I get it - a lot of the vaccine information (not disinformation) is being presented in a way that makes it seem like people are jumping on a bandwagon.  And by banning people from jobs and airplanes or cruise ships, it makes it seem that people are being coerced into getting vaccinated.  And quite frankly, as someone who has been vaccinated (I didn't need coercion!) I do cringe a bit at how they are trying to "persuade" people to get the shot.

I recounted before how a lot of anti-bullying efforts are preordained to backfire.   The third grade teacher tells the kids, "Be nice to little Billy or you'll go to the Principal's office!"  And little Dirk, the bully, smiles that sickly smile and says, "Of course, Mrs. Beasley!" and waits until recess to beat the crap out of poor Billy.  You can't force people to like you and attempts to do so, will backfire.  We see this today with a lot of this transgender nonsense - trying to "make" people accept that it is OK to allow a child to pick their gender and pronouns, and to use the wrong pronoun is akin to throwing acid in their face.

It is a plan that backfires in a big way - people try to be "nice" but let's face it, it doesn't make you a horrible person if people different from yourself make you feel uncomfortable.  That's 50,000 years of instinct and is hard to overcome.  But again, I digress.

Or did I?  Because I think the same thing is going on here.  People mean well and want the world to be a better place.  Unfortunately, what they do is say, "If only everyone would do THIS, then everything would be better!" - where "THIS" is not bullying, or accepting transgender kindergartners, or getting the vaccine.  The net result is that some folks feel they are being pushed around, and they push back.

We should be encouraging people to get vaccinated, but forcing them, directly or indirectly, will only backfire - has only backfired.  So while I was initially wanting to shout down our reader for being an anti-vaxxing idiot, the more I thought about it, the more I realized what they were getting at.  Because even I think the efforts to get the whole population vaccinated are ham-handed and poorly done.

Granted, most people realized that vaccines work.  Coming from the post-polio era, I realized that getting vaccinated was a good thing - our health in America is far better than it was in the not-too-distant past.  My parents had to worry about things like polio as well as a host of other diseases that we have - or had - virtually wiped out.  Having a technical background, I appreciate how the science works.  Note that I didn't say "I believe the science!" because that is an idiotic statement - science isn't based on belief but the painstaking efforts of trial-and-error, revising theories, and peer review.

And so far, the data backs up the vaccine.  The vast majority of people dying from CoVid today are the unvaccinated.  The vast majority of those getting seriously ill and clogging up the ICUs across the country are the unvaccinated.  If you have the vaccine, odds are far greater that you won't get sick, or if you do, the effects won't be as bad.  I don't like getting sick.

Of course, the hard-core anti-vaxxers have an answer for everything - a made-up answer.  "Millions of people are dying from the vaccine!" they say, with zero evidence to back this up, other than a "meme".  Meanwhile, the hard data is dismissed out of hand as "coming from the gub-ment!"  This sort of nonsense is why I initially rejected our reader's argument out of hand.

Sadly, this is part of an overall trend, as the government, has, for years, been "telling us what to do" in terms of improving our health and safety.  We are told to stop smoking and taxed if we do.  We are told to wear seatbelts and drive carefully - and are fined heavily if we don't.  We are told to do a lot of things that are actually in our own best interests, but we don't like being told what to do.

And granted, the government has lost a lot of credibility over the years.  The Iraq war, for examples, sort of ruined government credibility both at home and abroad.  We invaded the wrong country, killed an awful lot of people, and accomplished nothing other than to perhaps empower Iran further.  Even the invasion of Afghanistan, even if it was the "right" country, accomplished little.  We should have realized after Russia left that country with its tail between its legs that trying to "Nation Build" was a fruitless task.

Our government has done a lot of wrong over the years.  We declared a "war on drugs" and after ruining a lot of people's lives and incarcerating more people per capita than even China, accomplished nothing, other than to make even more people distrust the government and the Police.  The government, has done a lot of wrong over the years.  But that is only because it is a government of people and thus prone to failure.

A lot of other governments have done a lot worse.  There is no such thing as a perfect government.  But that doesn't mean that the government isn't right some of the time - or much of the time.

As with evaluating good or bad deals, you have to look at the motivations of the actors involved.  The car salesman will tell you leasing is a good deal because "it frees up your cash flow!" and because of "opportunity cost!" - both of which are nonsense arguments.  But they are arguments that make you feel good about a bad deal and more importantly, get you to sign those papers.

In the case of vaccines, what is the government's interest?  The hard-core anti-vaxxers argue that the vaccine will kill off millions of people - almost the entire population of the USA or indeed, the world.  I am not sure how this would benefit the government at all - it would cease to exist, which oddly enough, many hard-core anti-vaxxers seem to secretly want.

Others claim it is a conspiracy between the government and "big pharma" and somehow the vaccine will make the pharmaceutical companies very rich.  Maybe they will make money on the vaccine, but again, you could say the same thing about any government program - it makes no sense.  "Big Asphalt" is going to profit from repaving the Interstate!  "Big Bridge" is going to make money from "Build Back Better" infrastructure program!  "Big Defense" is going to make billions of dollars from the new stealth submarine!   All of these things are true.  Then again, it is kind of hard to build roads, bridges, or a military, without spending money on it - and you have to spend it with the people who make the things you need.  As a former government contractor, I know how this works.  Or am I just a mouthpiece for "Big Patent"?

We have a pandemic - and yes, it is real.   And yea, I "get it" that people want to deny horrible things that happen.  It is comforting when an insane person with an assault rifle guns down grade school children to simply believe it never happened.  But reality is what it is, and another theme of this blog is that denying reality will come back and bite you on the ass big time.  The better you can perceive reality, the better off you will do.  That's why crazy people and drug addicts are usually poor - their perception of reality is clouded.

We have a pandemic - so how do you stop it?  You can quarantine infected people.  You can wear face masks.  You can come up with a cure or a vaccine.  We've been doing all of the above.  The fact that it is being orchestrated by the government doesn't mean these are bad ideas.  But again, I "get it" that the government has squandered a lot of credibility over the years and the way this is being sold is off-putting to some people.  That doesn't make it a bad idea.

Will the pandemic end?  Eventually.  One way or another it will.  Even if we did nothing, it would end, eventually.  A lot more people would die prematurely, to be sure, if we took that route.  The old, infirm, the unhealthy, the sick - they would be the first to go.  The remainder - those whose immune system could fight of the virus - would survive and perhaps pass that immunity on to the next generation, which would work until some new virus came along or generations later, we lose that immunity as it no longer becomes a survival factor.

The problem with that approach is that those who support it fail to realize that they may be the ones who die or get very sick from this virus.  So long as it is "the other guy" getting sick, it sounds like a good plan.

The problem we've had, with this pandemic, is that just as it seems it is under control, people get anxious and insist on abolishing lockdowns or getting rid of mask requirements and the whole thing blossoms all over again - three times now. The only saving grace is that this latest variant, while more easily transmissible, isn't as deadly.  Nevertheless, I'd rather not get sick from it.

All that being said, there is another aspect about these mandates and requirements - the unvaccinated are as able to spread the virus as the vaccinated.  So why require that everyone have a vaccine in order to get on an airplane?  It is an interesting question, and I think the answer is this:  while having everyone vaccinated on the airplane might not stop the immediate spread of the virus, if everyone was vaccinated, we would kill this thing once and for all, and put an end to masks and vaccines and lockdowns forever. So, for example, if you are running an airline or a cruise ship, you don't just want to stop people from getting the virus onboard, you want to wipe it off the face of the earth.

I read a quote somewhere along the lines of "It is easier to convince someone of something than to convince them they are wrong about something."  And I think that is what is going on today.  People retreat into their positions and beliefs and if you attack their beliefs they get defensive and think you are attacking them.  So it is pointless to get in someone's face and try to convince them they are wrong.  You might as well not waste your breath.

So I have no interest in convincing our reader to get vaccinated - that is indeed a personal choice.  But I would point out that I have no sympathy - none whatsoever - for someone who proclaims to be an anti-vaxxer and then ends up getting sick of the disease they could have been vaccinated against.  CoVid or Polio, it makes no difference.  And that's where their personal freedom intersects mine - because when I can't get into the hospital because every bed is taken up by anti-vaxxers and they run up a million-dollar bill in the ICU and don' pay it, that affects me (and other people) directly.

And maybe right there is where the government is coming from, because this is a public health matter more than a private one.

Monday, January 24, 2022

It's Just One Guy (Revisited) - The Evil of Social Media

Social media isn't evil because of the mass of humanity, but rather the actions of a few people directing the mass of humanity.

A recent study shows that the bulk of anti-vax information on the Internet is being created and spread by just a dozen prominent "influencers".   This is startling information, as one might think that anti-vaxxer movements are comprised of a legion of people - as evidenced by mass (maskless) protests worldwide.  but like any good "flash mob" it isn't so much the actions of the many, but the few - the few people who instigate and promote dissent.

It is akin to the "Stonks" or "Crypto" movements.  A few smart people put up thousands of postings (or have them put up at their bidding) and millions of "useful idiots" read these and decide to buy.

\Are there really that many idiots in the world? Well, drive by your local "prosperity theology" mega-church on a Sunday morning and count the clapped-out cars in the parking lot.  These are poor people who have had life crises, and yet fork over 10% of their pre-tax income to some pastor who is banging his church secretaryThere are a lot of idiots in the world, don't add to the collection.

It isn't just social media - regular media ends up being a megaphone for single voices, in this case, Sinclair communications.   Just because you "don't watch Fox News" doesn't mean you aren't being fed propaganda, in this case, conservative propaganda.

This is not a vast conspiracy theory, just facts.  In fact, conspiracy theories are the way these sort of folks keep the useful idiots in line.  Think about it for a second - how do you get people to vote for a political party that continually promises to cut the taxes of the very rich, get rid of (or privatize) social security, reduce regulations designed to safeguard our financial markets, our workplaces, or the environment (among others), slash programs that mostly benefit the working class, and at the same time, outsource their jobs to China?  Tell them there is a vast conspiracy on the Left to torture babies for their glandular excretions.

Farfetched?  Beyond that.  But that is Qanon in a nutshell (emphasis on "nut" shell), tying in other conspiracy theories such as the Kennedy assassination and even aliens in Area 54.  And people willingly believe this shit - and willingly watch, stream, and download it all day long.  If Qanon doesn't work on you, well, they've got a religious angle - vote for me, and I'll make sure your kids don't get gay-married or have abortions - and well ban all those naughty books in the school library, too!

Any good magician doesn't use magic - it doesn't exist and they don't need it.  The trick is to get people to watch what you are doing with one hand - by making dramatic gestures and movements.  In the meantime, with the other hand, you are palming cards or doing some other chicanery.  It's not that really hard to do, if you are dexterous.  The secret is in the showmanship - the distractions.

"But Bob!" you say, "I'm smarter than that!  I'm not one of those legions of idiots who is absorbed by their phone or Fox News or Infowars!"   That may be true.  And maybe you have "legitimate" reasons to support the GOP - you want the government to get tough on crime or lower your taxes (because you are in one of those higher brackets).  OK, I get that.  But all of us are subject to this sort of indoctrination, all of the time, every day, every night.  You start reading right-wing news, your opinions tend to move rightward.  You start reading left-wing news, your opinions tend to move more to the left.  It isn't a matter of us being smart and them being dumb, we are all subject to indoctrination.  Everyone - you and me included.

So how do we escape this trap?  It ain't easy, to be sure, because everyone - everyone - has an agenda these days.  It is easier to walk away from end-times theology, scientology, prosperity theology, Qanonsense, Antifartism, ISIS recruiters, and whatnot.  Only the most dense of people fall for those sort of cults.  But what about more nuanced influence?   That's where it gets tough.

I see online a lot of criticism of Elon Musk, for example, and there is a lot not to like about him.  But then again, there is a concerted effort to union his factories, and one has to wonder where the Musk hate is coming from.  On the other hand, when you read the comments accompany such an article (always a bad idea) you see people defending Musk in terms he would enjoy - denigrating and attacking the authors or anyone who dares suggest their idol might have a few flaws.   When you parse it out, the firs thing you have to ask yourself is what is the motivation of these people?  Why is someone attacking Musk, and why would anyone defend him?  Is it possible that any of them have an agenda?  Perhaps some of these people are paid trolls?

If you start to look at it that way, you can sort of see the more obvious ones.   After all, why would someone be a "fan boy" of a billionaire - when he can afford to hire an army of 'bots to do his fan-boyism for him.  And if you think that is a conspiracy theory, think again - every major corporation, organization, celebrity, and politician has a publicist and public relations company they hire - and grooming the Internet is part and parcel of any public relations strategy.  If it wasn't, I'd fire my publicist.

We only notice this when it is done poorly.  A white, conservative Congressman posts messages as a "Gay Black Trump Supporter" but on one occasion forgets to log out of his personal account before posting as his alter ego.  Amateur hour!  Smart folks let the experts handle this sort of thing - not only is it time-consuming, but you are far less likely to get caught at it.  And if your public relations company gets caught at it, you can argue it was a "rogue" operation, just as companies release distasteful "viral" ads and then claim later on they had nothing to do with it.

I guess what I am getting at is skepticism, but even that can be co-opted, as people become skeptical of logic and science, but fully embrace para-science and "belief".  Time was, we used to have a consensus in society - worldwide - as to what norms were and what truth was.  Sure, we had disagreements, but no one seriously believed the world was flat (I am still convinced that started as a drunken bet between two operatives of the Russian Internet Research Agency - "I'll bet you 10,000 Rubles that I can get them to believe the Earth is flat - they are that dumb!"  He collected on that bet.).

Speaking of the Russian Internet Research Agency, one of the largest sources of disinformation is, in fact, governments themselves.  And this is nothing new, as I noted in an earlier post. "Disinformation campaigns" go back decades, and both the CIA and KGB were active participants.  The only thing that has changed is that today, you need not bribe or blackmail journalists or other opinion-shapers, you can get them to volunteer to do it - over the Internet.  You need not even meet them in person - or even know them or talk to them over the Internet.   And you can cover your tracks very effectively.

Whenever you read something on the Internet, assume the story is false, exaggerated, slanted, or otherwise fabricated or manipulated.   Shocking, I know, but people actually put up postings online just to get clicks.  I am not sure exactly how it works, because I refuse to get involved, but apparently, if you get enough "followers" and clicks and click-throughs, you can command a decent amount of money for endorsing products or services.   The anti-vaxxers documented above get a lot of clicks - and a lot of associated ad revenue.  Some actually sell bogus "cures" for CoVid.

As an experiment, someone posted a thing on 4Chan that drinking your own urine was a "cure" for CoVid.  It was a joke - to see if the "mainstream media" picked it up.  Well, sure enough, within a fortnight, it was picked up and rebroadcast by "influencers" and the media picked it up, to report to controversy - which only bootstraps the whole thing.  What started out as a joke, ends up being taken seriously.

But the trolls made their point - you can get people to believe just about anything.  Well, at least some of the people, some of the time.

Sunday, January 23, 2022

Things You Should Never Pay For - or Pay Much For!

Small appliances are a huge mark-up item for retailers.  Yet they can be had cheap secondhand.  Odds are, you will find out you didn't want one in the first place.

We've had a lot of small appliances over the years.  Counter-hogs I call them - they take up so much space and have limited uses.  Consumer magazines always put single-use appliances at the top of the "useless" list and I have to agree.  I have to agree having bought so many of these machines over the years, only to get bored with them and let them sit in a cabinet somewhere or sell them at a garage sale (or donate to Goodwill) for pennies.  I've also bought such machines at garage sales or Goodwill for pennies, and the experience was about the same as buying them brand-new, other than I also had the satisfaction of not paying very much.

Take bread machines.  Back in the 1990's it was a real fad.  All the morning talk shows (which we watched religiously back then) talked about them and one Christmas, I think I bought one for Mark.  We had a lot of counter-hog appliances back then, but Mark worked for Williams-Sonoma and later for Sheets 'n Things and got a lot of these things for a few dollars as "scratch and dent" items.  Williams-Sonoma was so crazy back then with their return policies.  One lady brought back an appliance that they didn't even sell and the store manager gave her money "back" on it.  It sat in the back room for years until the GM told Mark to take it home if they wanted it - I think he declined.

Speaking of crazy - that was the Tyson's Corner store.  They had the store on one level and the storage area on another.  So they had this brand-new Chevy van they used to haul merchandise between the levels.  It never left the mall parking garage.  It was like five years old and had 3,000 miles on it (oil never changed, no doubt) and the battery went dead - so they went back to using carts.  Again, the GM or DM told Mark to keep the van if he wanted it and foolishly he said, "What would I want a van for?" and by the time I talked some sense into Mark, another employee pounced on it.  It would have come in handy for his catering business.  But I digress.  Retail is so wasteful sometimes!

Anyway, we used the bread machine for year or so.  It made these odd-shaped loaves of bread and it was OK, I guess, but over time, maybe the heating elements got weak or something, as the loaves got smaller and smaller.  It got put away in the back of a cabinet and then taken out a year later and rediscovered and then we got bored again.  Eventually, it was sold at a garage sale, when we had stopped using it for several years.  I am not sure that the point of it was, as you can make bread (many do!) without a machine.  Bread is also one of the cheapest staple foods out there, even those fancy breads.  So I am not sure what the point is.  Better bread?  Not really.  Saving money?  Plueeze!

Last year or the year before, a friend of ours .gave us a bread machine, and it being a pandemic and all, we decided to give it a try.  Oddly enough, it seems everyone else had the same idea, as the local gocery store was sold-out of yeast and bread flour.  It worked OK, I guess, and we used it for a couple of months and then.... back into a cabinet somewhere.  Bread isn't bad for you, unless you eat huge quantities of it.  It is like anything else - you consume cyanide every day and it doesn't harm you.  Eat enough of it, it will kill you.  Bread will kill you a lot more slowly, of course, unless you choke on it.

The great thing about the internet is that you can find lots of documentation for older appliances.  I typed in the model number of the bread machine and downloaded the user manual and a cookbook from the manufacturer.  It makes OK bread, but lately we have been experimenting with making pizza dough with it.  I want to try using it in dough-mode to make dough that we can later use in the oven to make normal loafs of bread, boules, or french bread loaves.

Could we have lived without the bread machine?  Sure.  But it was free - or at least the second one was.  And in fact, over the years, I have seen many such machines sold at garage sales for pennies, once the fad wears off.  Today's "must have" insti-pot/slow cooker/air fryer/microwave is tomorrow's garage sale fodder.  People shell out a ton of money on these things and then later on discover it hasn't changed their life forever, or in fact, done much of anything.

I am deeply suspicious of any trend that causes people to do things en masse.  Crowds are irrational and dangerous, and usually they are on their way to some sort of crucifixion, witch burning, or stoning.  So when I see dozens of "people" on the Internet ooh-ing and aah-ing over the latest piece of techno-garbage, I get very nervous.  When I see a pyramid of these appliances on display at WalMart and all the plebes scurrying to get one in their cart, I get very turned off.

If you really want to find out what the fuss is all about - no matter what the "must have" appliance or game or tech crap or whatever - just wait a year.  Pretty soon, it will be in the bargain basement section or you will see one for sale, cheap, on Craigslist or whatever.  People get bored with this trendy shit in a real hurry and these things end up in a drawer somewhere or pushed to the back of a closet.

It is funny, too, how quick we are to kick things to the curb.  At Goodwill the other day was a pristine, never-been-used Faberware electric percolator, art deco style right out of the Raymond Lowey sketchbook.  We bought it ($5!) for the camper and it works great.  We both remember, as a kid, getting out the electric perkolator and our parents saying, "Put that away! We have Maxwell House instant!" which parents of that era thought was "good coffee".  Besides, the percolator was a wedding gift or something and was expensive (probably $5 back then!) and you might break it or something.

People go ga-ga over a "cartridge" coffee maker that increases the cost-per-cup by a factor of five or more, (not counting the cost of the machine itself) and yet overlook perfectly good percolator devices and coffee machines (of all sorts) which are cheap or sometimes even free.

But of course, the "logic" if you will, at the time, is that "I can afford to pay $200" [or $300 or $500 or whatever] "for the latest and greatest thing everyone is talking about, because I am making good money!"  And that was the logic I used, over a lifetime, thinking that "keeping up" with technology and styles and trends was somehow living and not just squandering my life forces.

Because that is what it is.   I get some pushback from some folks that I am obsessed about money.  But no, I am not.  Lack of money and debt - yea, those things concern me.   Today, I am debt-free and as a result I don't have to worry about money, except perhaps running out of it.  But since I earn more in dividends, interest, and capital gains (at least in recent years) than I spend, it isn't much of a worry.  Even if my portfolio went flat, I have enough cash to last another 30 years or so, God willing.  Others are not so fortunate.  In fact, most are not.

Unless you are born into wealth, it takes labor - your life force - to earn money.  And no matter how much you make (or think you make) every bit of spending is dissipating that life force.   Every new car you buy is another year you have added to your working life and one year subtracted from your retirement.  But of course, we don't see it that way - retirement and "old age" sneaks up on you and one day you wake up and wonder what the fuck happened.

It is funny, too, how you look back, even a few years or a decade, and think about how your priorities have changed, how your interests have changed.  When we moved to Jekyll Island, 15 years ago or so, we had five cars, two boats, two houses, and a ton of "stuff" that we thought was oh-so-important.  We also had jobs and thought our potential income was unlimited - when in fact it is a finite amount.

And I guess you can say you did it and look back on those experiences.   And yes, you also look back with regret at each missed opportunity.  Mark still kicks himself for not taking a free van.  But you can't go through life with regrets.  All you can do when you make a mistake is pick yourself up, dust yourself off, and try to learn something from it.  If you can learn from someone else's mistakes, so much the better.

And no, spending $200 on a bread machine isn't going to bankrupt most folks, although that money, invested over time, would be worth over $1000 today.   If I had waited a year or two, I could have had the same machine for nearly nothing.

Paying extra to be trendy or have "the latest thing!" is one mistake I made in life.  A simple thing, really, but once you "have to have" something, you might as well just hand them your wallet.  The marketing people create this "buzz" to sell products at premium prices, whether it is "hard to get" concert tickets, a tickle-me-Elmo doll, or a new PlayStation that "scalpers" are "hoarding".  It is a gag they have been using against us since the dawn of time.

Being trendy or having the latest gadget is not wealth, it is anti-wealth.

Saturday, January 22, 2022

Interest Rates And P/E Ratios


Understanding markets, in general terms isn't hard to do - what would you do with your money?  Answer that, and you have it figured out.

As an investor you can put your money into any number of things.   But the overall goal is to make some money in the process- with as little risk as you can afford.  So if interest rates in FDIC-insured CDs are at 8%, maybe you'd leave your money there - as a neighbor of mine did.  Problem was, these CDs expired and he had to find a place to put his money.  So he went and invested with a peer-to-peer lending site - a lot more risk, but in an era of 1% Certificates of Deposit and 0% Savings Bonds, well, it seemed like a good deal at the time.  He moved away a while ago, so I don't know how that worked out. Perhaps not well.  But it was interesting to observe - when high-yield and low-risk investments dried up, he went hunting for something with a higher risk factor to get a better rate of return.

What his experience illustrated is how investors, from individual retail investors to large institutions, chase after returns.  It also illustrates why the market has taken a downturn in recent days.  It is not that Netflix suddenly lost value or is losing money, only that with interest rates rising, a P/E/ ratio of 40 or more isn't acceptable.  In "normal" markets where banks pay "bank interest" a P/E ratio of 20 is considered somewhat "normal" as you are getting a 5% rate of return on your money (even if it isn't paid in dividends necessarily).  But a P/E ratio of 40?  That's like 2.5% which is keen in 2021 when banks are paying 0.05% on savings accounts and maybe 0.5% on a CD.  So what was "normal" in 2021 is now unacceptable in 2022.

Hence the sudden decline in Netflix stock price.  It also reflects the 50% drop in Bitcoin.  Like Netflix, there are other factors involved.  Netflix needs to grow to justify its forward-looking stock price, and it isn't growing as fast as expected.  Netflix faces competition from Disney and Paramount and Hulu and YouTube - and others.  Similarly, Bitcoin faces headwinds from government intervention - both China and India have claimed to have banned it, and the US government is looking into regulating it - or at least regulating funds that invest in it, as well as "exchanges" - both of which are essential to the crypto universe existing.  But the big deal is, if you can get 3% in a T-Bill with no risk whatsoever, why go after riskier investments elsewhere?

So, as interest rates rise, expect people to pull back from riskier investments, just as they sought out higher yields and tolerated greater risk when interest rates were low.  I tall you first hand that having cash in a savings account sucks - you watch as your other investments go up by 10% just in one quarter, and think, "maybe I should put all my money in the stock market!"   But has history has shown, what goes up can come down rapidly, and a 50% drop in market value isn't unheard of, in my lifetime.  1000% drops are not unknown - if you bought GM stock before it went bankrupt, you know what I mean.

Many folks argue that such-and-such investment is a "hedge against inflation" and I am not sure they know what "hedging" really means (if any of us do) other than it sounds cool to say it.  It's like EBITA - sounds like you know what you are talking about when you throw it around, but no one bothers to ask why a company that only makes money if you don't count their tax liabilities and staggering debt load is "profitable" in any sense.  The SEC thinks it is nonsense as well, but as we all know, they don't know about the "new paradigm" in investing, right?  Or maybe they've lived through enough paradigms already.

So what is a good hedge against inflation? Some say gold.  Others say crypto (really?)  Others say real estate.  Bonds.  T-bills - you name it.   But I think the best "hedge" is to be as debt-free as possible, particularly debts that have variable interest rates or callable notes.  If the economy goes south - as it has in the past and will do again in the future - the guy who is not saddled with debt and has some money in the bank will make out better than all the "hedge" investments out there.   They can't take your house away if it is paid-off or on a 30-year fixed-rate note.

On the other hand, the guy who leveraged himself to the hilt with borrowed money will end up in a world of woe - as we saw in 2008, when people refinanced their homes on liar's loans and ended up "upside-down" on a note, while at the same time their 401(k) was raped by Wall Street.  In terms of cash and real wealth and real assets, it turns out they had none.  Well, they had some - on paper - but paper values can fluctuate with the market.

It's not hard to see how these things will play out.  As interest rates rise, people can't afford to pay as much for a house - so housing prices will go down.  This, in turn, will cause a boatload of people to shit their pants, particularly as some have variable-rate notes which will reset.  Mortgage-stressed, they will tighten their belts and stop ordering delivery Big Macs from GrubHub for $10 apiece.  It is pretty predictable - what would you do in their shoes?  Keep spending like a drunken sailor?  Not likely.

Then they get their quarterly 401(k) statement.  Holy shit!  For the first time in their lives (if they are under 40) their portfolio value has gone down.  Time to wet your pants, for sure.   It is 2008 all over again, only this time with inflation.

But like I said, this stuff isn't hard to figure out.  There is no black-magic.  No mumbo-jumbo.  No secret sauce or bold plans to fix things - other than to make things worse, as we have done over the years with free money.

Eventually, there has to be an accounting.

Friday, January 21, 2022

Yonder Comes the Bears

It was inevitable that something had to give....

Maybe a post-pandemic recession is akin to a post-war recession.  All that spending on what is ultimately wasteful things, must come to an end.  And an economy pumped up with borrowed money eventually has to deflate somewhat.  But it a recession upon us?  Maybe.

As others have noted, it is long past due for the Fed to raise interest rates and event though they haven't been raised yet, people are reacting to the talk of it.  If you are writing 30-year mortgages, you have to factor in higher interest rates down the road - which is why, even in an era of 0% rates from the Fed, mortgage rates never went much below 3%.  There is risk involved, and not just of default.

As mortgage rates go up, housing prices go down in a see-saw fashion.  And no, a 1% rise in interest rates doesn't mean a 1% decrease in housing values.  Consider a hypothetical $100,000 mortgage at 3%, which yields a monthly payment of $422.  If rates go up to 4%, then the same payment will only finance $88,500 - an 11.5% drop in borrowing ability.  And let's face it, people buy based on how much they can borrow.

I think another effect will come into play.  People are putting up with higher prices as they view this as a "temporary" measure due to the pandemic, as the Fed Chairman once said.  It is becoming abundantly clear that due to higher labor costs, tensions with China, and just plain old greed, that higher prices are pretty much here to stay.  It takes a long time and a lot of sharp competition for prices to come down.  But right now, what is the incentive to lower prices at all?  Whatever it is you are selling, your competitor across town is selling for the same price.  And since supplies are short, well, what's the point in price-cutting?

People will start to cut back on spending and perhaps they already are.  Two hyped stocks recently took a nosedive - Peloton and Netflix.  The financial media breathlessly reports about millions of "market cap" that were "lost" as a result - but we all know that Market Cap is nonsense and those millions never existed in the first place.  What happened with Netflix was pretty predictable.  The stock was overpriced, with a P/E ratio over 40 (compared to most television production companies having a P/E ratio less than 10!).   A decent ration in this day and age would be about 20 - particularly with interest rates rising - more about that later.

Netflix is facing competition from other online streaming services. As I noted before, what we do is stream one service for a month, see all there is to see there, and then maybe go with no services for a month, before we try another service.  We recently signed up for one month of Disney+ because Mark liked "The Mandlorian" (which surprised me, but like all Star Wars movies, it was more like a Samurai movie than SciFi ).  We watched a few episodes of "Boba Fett" and gave up - it was not as good, and in fact, kind of ridiculous.  The fact they handed out episodes weekly instead of all at once was the nail in the coffin.  We'll come back when all the episodes are online.  As for the rest of Disney+ there isn't a lot of "there" there.

On the other hand, if you want to watch great old Film Noir movies, commercial-free on YouTube, you can.  We just saw Humphrey Bogart and Zero Mostel in The Enforcer which was probably considered a "B" movie at the time, but was still classic Noir.  You'd be surprised how much free content there is online.  But I digress.

The problem for Netflix was that their subscriber base wasn't growing as fast as expected.  With a high P/E ratio, people are betting on expanding the subscriber base and thus profitability over time.  But just as many people disconnect as connect (folks like me, who dive in and out) and likely they will put an end to this by offering only yearly subscriptions or allowing you to watch only one or two episodes of a series per week.  Just as YouTube took most of the tun away, most of the other streaming services will do likewise when there is money involved.

Netflix claims that all the competition from other online services isn't affecting their bottom line. But we all know that isn't true.

Peloton made big news by selling fancy exercise bikes and treadmills during the pandemic- for thousands of dollars each plus a subscription service.  Apparently everyone who wanted one got one, and then the fad died out.  All these exercise fads are the same way and have the same story arc.  They start out as New Year's resolutions and end up as being expensive laundry drying racks.

The problem Peloton had was they assumed the demand would go on forever and they over-ordered the machines, which are now filling up the warehouses and "supply chain" - so they are shutting down manufacturing for several months (a year for some models) to let the market catch up.  They also hired the infamous "up or out" McKinsey firm as consultants (if you work for Peloton, polish up your resume!).  It is not that the product is bad or demand is zero, only that the retail investors went ga-ga over the darn thing and like the Segway, it turned out to be a thing, but not the thing.  Nevertheless, investors got nervous and the stock price tanked.   The other shoe will no doubt drop - opportunistic lawyers (I hate those...) will file a shareholder derivative suit, alleging the officers of the company hyped the stock price.  Just wait for it.

There are other signs as well. Bitcoin has gone from over $67,000 to $38,000 in the last few months.  While the Bitcoin faithful deny it, I think this is large part due to government crackdowns in China and India, which as we know, are small, inconsequential countries with tiny populations and no Billionaires trying to move cash around illegally.  It is charming, their denial, sort of like Netflix claiming that ten new streaming services won't affect their bottom line.  The DJIA has been on a tear but is seeing decline in recent days.  Is this the start of a trend, or just a blip in the market?

The problem for stocks is that profitability has to keep increasing in order for stock values to increase.  The exception, of course are hyped or "bubble" stocks, such as these "meme stocks" or "stonks" such as AMC and Gamestop - which are being hyped so a few people can make a lot of money off the misery of a few.  But ordinary investments have to eventually follow a certain logic - they have to earn money to be worth more.  And you can't just keep making more money in an era where prices of materials and labor are increasing as well.  I mean, I guess stock values could go up just because of inflation, but real value might not.

I guess we'll just have to wait and see. But my gut feeling tells me this party can't go on forever.