Heartland Musings

How to Get a Great Shave

Many guys want a nice close shave, and the big companies that make men's grooming products are eager to supply that need.  I've learned that there's one thing you can make use of that will give you a fantastic increase in the quality of your shave more than anything else, and for modest cost.

Get yourself a shave brush.  You know-- the old-school brush like you saw the barbers use in the old Western movies, right before they broke out the straight razor and leather strop.

You need not spend a fortune on different blades or cream, or even on a fancy brush.  Just get an inexpensive badger hair brush and use it to put on the same shave cream you use now.

Wash your face like you normally would.  Squirt your shave cream into your hand.  Take your DRY brush and lather the cream in the palm of your hand and use the brush to put it on your face.

Then shave as you normally would.

Gently rinse the brush and stand it up to dry.  Done.  It's amazing how much closer your shave will be using the exact same products you used before.  Not that a company would quickly advertise that using their overpriced razor refills has little to do with shave closeness and comfort.

Save your money on the Gucci-priced cartridges and buy a shave brush instead.  I dare you to go all the way to 100% silvertip badger hair.  If you spend more than $150, you're buying fancy, not performance.  You can get a decent brush for less than two four- packs of Mach 4 cartridges.

 

 

For you electric shaver types: sorry you miss out.

Filed under "Shocked, Just Shocked"

The headline says:

Health care law won’t rein in costs, study says

 

The Assimilation of the GOP Class of 2010

We are seeing the assimilation of the formerly-optimistic GOP freshman class of 2010.  That class was swept into office on the overwhelming sentiments that not only is Washington spending way too much money, but that the process by which the spending is decided was improper, rife with the much-clichéd "smoke-filled room" or "back-room deal."

As the Establishment Republicans led by John Boehner stake out the "not-as-bad-as-Democrats" position, the Freshmen-- largely Tea Party-Affiliated-- are left wondering why the Republicans are giving in so easily.

The Freshman see the basic numbers and are baffled by the conclusions that the DC Establishment reaches.  Servicing the debt costs $30 billion per month.  The federal gov't brings in about $200 billion per month.  You and I see $170 billion in "extra" revenue, and know that a default on the $30 billion when you have $200 billion is absurd.

It's as absurd as your wealthy friend asking YOU for a loan because the 26th Ferrari in his collection needs its expensive ceramic brakes replaced.  You would balk, saying something like "if you can afford the Ferrari, you can afford the Ferrari brakes."  Put another way, you would be offended that your friend with the conspicuous consumption problem would dare come to YOU for a loan rather than consider the possibility of a downgrade of his affluent, debt-financed lifestyle.

Yet that is exactly why Washington is asking of the taxpayers. Washington is taking in more than $170 billion per month after debt obligations-- yet it is asking the taxpayers for a massive loan because Uncle Sam is used to spending $300 billion per month-- about 50% more than it takes in. 

This represents the "too-big-to-fail" thinking that led to bailing out GM, Chrysler, and various well-connected Wall Street interests-- only now it is the gov't itself that is "too big to fail."

Too many people need the gov't, they say.  Former Speaker of the House Pelosi is mouthing off about Republicans wanting to end life as we know it:

What we're trying to do is save the world from the Republican budget. We're trying to save life on this planet as we know it today.

Therein lies the problem.  Life as "we" know it is impossible to sustain.  This American life we "know" sees our government borrowing over a hundred billion dollars per month-- largely for healthcare of the least productive citizens (Medicare: 23%), sending them monthly checks even though most of them are at the wealthiest stage of the entire lives (Social Security: 20%), and Pentagon spending (20%).  If you included servicing the interest on our debt, you have accounted for 70% of all gov't spending between just two entitlement programs, our debt, and the DOD.

Put another way, every single other function of the federal gov't is funded by only 30% of the budget: block grants, highway construction, all regulatory agencies, all of it.

 

This is the economic reality that greeted the incoming Freshman.  They ran on on the idea that the gov't was too big, the spending out of control, and that something needed to change; they won with that idea.

Now Speaker Boehner asks them not to be so incorrigible-- to be less resolute in their commitment to deliver on their electoral mandate.  After all, *some* deficit is always going to be around, right?  No one dare conceive that Washington should live within its means.  Speaker Boehner's plan for modest cuts now and that time-honored Washington tradition-- an independent commission-- to handle spending prove that the Speaker is not serious about cutting spending.

Now that media accounts are reporting that the mini-revolt of the Tea Party Freshman against the Speaker has largely been put down, we can safely conclude that the assimilation of the GOP Class of 2010 is complete.  They are no longer part of the solution, but part of the machine that brought us the problem. 

 

EDIT:  It looks like Sarah Palin is now sounding a similar note as mine.

New NASA Data Blows Hole in Global Warming Alarmism

The Headline courtesy of Yahoo(!):

New NASA Data Blow Gaping Hole In Global Warming Alarmism

 

The lead paragraph:

NASA satellite data from the years 2000 through 2011 show the Earth's atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing. The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.

Now they tell us....

Cheer Up, Law School Flunkies!

There's always a career for you in broadcast journalism--at least at MSNBC, that is.  Rumor has it that lawyers are taught to never ask a question to which they don't know that answer.  Sometimes, it can be a little awkward if you forget:

 

 

Oops.  Turns out Brooks actually holds degrees in economics, law and political science.  He's cracked a book or two.

More than can be said for Contessa Brewer and her undergrad degree in broadcast journalism.

How to Speak Reuters

It is very helpful to know when reading this Reuters article that when "revenue" is followed by the word "increase,"  it actually means "taxes."  Thus, opposing a "revenue increase" becomes opposing a "tax increase."

One would almost get the idea that either Reuters doesn't know where gov't revenues come from-- or is scared to reveal that it does.  Almost.

How Much "Fortune" Do You Need?

From Powerline today:

The Census Bureau tells us that more than 30 million Americans are living in poverty. This is routinely denounced by liberals, and sometimes even by conservatives, as a great moral scandal. However, hardly anyone knows what living conditions are characterized, these days, as poor. Robert Rector and Rachel Sheffield of the Heritage Foundation point out that in 21st century America, most “poverty” is what would until very recently have been considered “wealth.”

Do read it all.  It builds the case for what I've often thought with regard to "less fortunate" Americans.  If you were born in America, how much more fortune do you need?

Chart of the Day- 7/19/2011

From Randall Hoven:

Please note the legend at the bottom of the chart.

 

Not much more need be said.

What’s Wrong with the Financial Industry—Approach to Risk

We continue our short series on what's wrong with the Financial Industry in the US. I previously wrote that the industry suffers from a fundamental misalignment of interests. But that's not the only way the conventional approach is wrong.

Another significant way the conventional financial wisdom is so dreadfully wrong is how it views and manages risk. Even those of us who have no financial advisor sitting in a fancy office with plush leather furniture have absorbed enough conventional wisdom from TV commercials that we know that we should be diversifying and should probably be considering a mutual fund towards that end.

But mutual funds are not the panacea of investment goodness that the commercials would have you believe. Firstly, they have expenses that dilute returns. Managers don't work for free; someone makes a full time occupation of deciding which investments to buy, sell, or hold. Secondly, the large numbers of different stocks the mutual fund hold prevents them from being able to take decisive action in managing its portfolio. If a mutual fund holds 1500 different securities, it would have to conduct thousands of transactions to completely turn over the portfolio (and these transactions are not free). The funds struggles under its own diversity, and has no agility in case of a need for rapid response (like say, when Lehman Brothers started to collapse).

Additionally, the large variety of securities held by many mutual funds represents no real increase in safety or diversity because it is well past the point of diminished returns. If you own 10 stocks, the worst loss that can come from any one stock is obviously 10%. Likewise, owning 100 stocks means a single stock can only generate a maximum loss of 1%. A very large mutual fund like Fidelity Contrafund has hundreds of stocks. This is highly diversified, for sure. But is it safe?

What the modern financial industry seems willing to ignore is that over-diversifying can be as risky as under-diversifying in your investments. This is because the industry defines risk only in terms of "the likelihood you will lose money." But making too little money is also risk in terms of pure opportunity cost. What if your over-diversification has cost you 6% per year in return? Your 40-year investment in a "safe" mutual fund of $200/month at 10% return has netted you a handsome sum of $1.27 million. But what if you had averaged 16% return in something a little riskier? Now your $1.27 million has become $8.75 Million!! That measly six percentage point difference has made your investment worth almost seven times more than without it.

This is the price of over-diversification. It is wise to have multiple investments and to diversify, but you can surpass the point where diversification is additional safety and get to the point where excessive diversification is costing you money. If all your money is in mutual funds that own hundreds of companies, then you are over-diversified. You might as well just invest in an "index fund" that has little to no management fees, as this will give you just as much safety and better long-term returns.

The key takeaway here is that often there is risk in not taking any—or enough. It always pays to explore the opposite and re-assess your position from the contrarian view.

What’s Wrong with the Financial Industry—Alignment of Interests

The establishment financial services industry suffers from a number of flaws in both its current practice and its orthodoxy. I'd like to mention a few in the next few postings.

Firstly, the basic business model of a traditional full-service "wealth management" agent betrays a misalignment of interests that would be laughable if it wasn't so grievous. You hand over your life savings to one of these "wealth management" houses and you get one of two outcomes: they do very well and enlarge your holdings, while taking a portion of the total for themselves, or they do poorly and you lose money—but they still take a portion for themselves. What's wrong with this picture? The "manager" gets paid whether you gain money or lose money!

Let's say that you and several others hand over your savings totaling $10M to a "pro" who charges 0.5% management fee. That means the "pro" is making 0.5% of $10M every year—or $50k. Your "pro" makes some bad investment decisions and that $10M portfolio is now only worth $9M, having lost 10% of its value. The "pro" is paid $45,000. Not a problem?

Actually, it's a big problem. As an investor, you assume risk because you want to win, not lose. Yet the "pro" managing your money wins whether you lose or win—it's just a question of how much he will win. You could lose a fortune; he won't lose a cent—ever. Thus misalignment of interests is a serious flaw in the business model.

What if, instead of getting paid just to transact business, your "pro" was only paid when he made you money? What if he also lost money when you did?

That changes everything. Now, you have a fundamental alignment of interests; you both have skin in the game, the same way a captain of your ship or the pilot of your airplane does. Suppose you ask someone for directions to a place you've never been. Would you rather have someone go with you who will also be lost if you are, or just have someone give you a verbal description of location? Whose directions would you trust more?

A proper financial service model would reflect this alignment of interests, where the advisor experiences both the ups and the downs along with the client. The advisor will make better decisions, and the client will be better served.