The Future You Might Want To Fix Typewriters

Here's a glass half empty opinion. 

Is AI a black swan in terms of threatening jobs? It's hard to say that exactly but before Chat GPT three years ago, how much thought did you give to AI? That people in their 50's and 60's end up having to retire sooner than they plan to is not new, we've been writing about it for ages and of course the problem goes back much further than that. AI is maybe better thought of as the latest threat. 

On the flip side, here is a fantastic read from the NY Times about a guy who metaphorically "was dying a slow, workingman’s death under fluorescent light" in his mid 50s. He was moved by an article about a 92 year old typewriter repairman to quit his job and go learn from the 92 year old, eventually carrying on the tradition after his older mentor could no longer do so. 

Can you think of a better example of not knowing what the future you might want to do than becoming a typewriter repairman at 55? 

The comments on the unusualwhales post mostly express anger and denial from Gen-Xers. A recurring thought from me on that front is how important it is to not hold on to negativity, anger and resentment. It's bad for our health and doesn't solve anything. 

A more constructive path is to invest your time trying to prevent or solve your own problem. I don't think we can rely on anyone (the government) to fix whatever we each think is wrong. Great if they do but don't rely on it happening. 

The WSJ profiled a woman who successfully invested her time figuring out how to make retiring in Portugal work. She moved their four years ago at 55 and the article recaps her experience. It read like 75% of has gone very well with 25% of challenges she needed to sort out. She's had to move twice for example and there is a long distance issue with her kids but it seems like she's quite happy there. 

A big one for her is that she only pays $1840/yr for health insurance. She has some sort of auto-immune disease but reported no issues getting access to doctors or medication. The point is not to retire to another country unless you want to but if you read the article, it is clear she put in a good amount of time trying to find the right solution for herself. 

For the record, Portugal is pretty awesome so hopefully it works out for her.

Because I think it is related, here's something from Eric Balchunas.

Can you beat the market is the wrong question. A better question is are you getting what you need from your portfolio? Related to getting what we need from our portfolios, Barron's had an article titled These ETFs Promise Safety. There's A Steep Cost.

The article focuses on the iShares US Minimum Volatility ETF (USMV) and the JP Morgan Equity Premium Income ETF (JEPI). Both have "underperformed the S&P 500 for five years." But then it notes "to be fair, the funds are working as advertised." If an investor has the correct expectation and then the fund delivers against that correct expectation then it's hard to complain. 

JEPI came out of the blocks with great returns a few years ago but the last three years have shown very little price appreciation. I'm giving it the benefit of the doubt for 2022 when the total return was relatively strong.

JEPI looks more like Global X' XYLD fund since 2023, pretty much no upcapture for anyone taking the distributions as income. JEPI has outperformed XYLD though.

USMV has obviously lagged far behind market cap weighting but it has been less volatile. A 10% CAGR provides a real return after inflation (4.39% for the period per testfol.io) and a 4% withdrawal rate. These numbers aren't making anyone rich but for someone who had accumulated what they need, that's a pretty good outcome. 

I threw in the 85% SPY/15% client/personal holding BTAL in there. The volatility and drawdown numbers are almost identical to USMV but the CAGR is about 400 basis points higher. One of the comments on the Barron's article noted "for a retiree that needs income or can't take on more risk/volatility, these funds may be much better." If someone can handle the volatility of USMV then I would argue the slight pick up in vol from the SPY/BTAL blend could also be tolerated. 

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