Monthly Archives: January 2021

I’ve been watching the stock market with a bit of trepidation lately.  (Roughly half of our retirement/long-term-care money is in stock market mutual funds, the rest is in less risky bond funds and CDs.)  The current “Reddit Revolt” led by a self-assembled group of online trader-warriors against Wall Street hedge funds has turned the popular notion of stock-market-as-casino into something that feels more like the Running of the Bulls.

These self-styled Davids (you know, of Goliath fame), spurred along by everyday Joes and Josies tempted by quick profits, have led to wild gyrations — and absurd valuations — of the stocks of GameStop, AMC Theaters, Blackberry and whatever meme company that the Redditors will decide to target next.

I don’t think this will end well for those companies, for the speculators in those companies, nor inevitably for the whole idea of normal people like you and me using mutual funds as a means to secure one’s retirement.  Something has broken, and I am wary of the machine falling apart.

This Gamestop stock-market ploy smells a lot like the January 6th US Capitol rampage: a loosely-coordinated anarchical uprising of people wanting to take something back (but not sure exactly what) and who discovered their sudden and surprising power to create havoc.  As Sen. Susan Collins (no relation) of Maine would put it, this is all very troubling. Luckily, there have been no casualties so far in GameStopGate, as it is already called.

Yes, fellow lefties, I realize that hedge funds and the big investment banks like JPMorgan, Goldman Sachs, Barclays and others, have been screwing ordinary saver-investors forever to enrich themselves and their high-net-worth clients.  But financial anarchy would portend something far worse.  Reddit speculators are not going to topple the powers-that-be and usher in a new era of capitalism-as-a-positive-force in our lives.  Rather, financial anarchy a la Reddit would be more like a forest fire, burning down anything in its path.  My fear is that government regulators would respond like forest firefighters, i.e., trying to contain things only after much damage is done and lives are ruined.

Have I painted a too fatalistic scenario?  I’m not sure.  The embers of the fire are there for all to see.

• • • • • 

With that sad taste-in-the-mouth, I offer an update on The Trend.  The U.S. stock market as of January 2021 is at a level well above what The Trend (its performance between 1950 and 2012) suggests is reasonable.  Below is an updated chart of how the S&P 500 Index has fared relative to The Trend since 1950.  As of this writing, the S&P 500 Index — which mainly reflects the stock prices of the big U.S. tech companies Apple, Amazon, Facebook, Google and Netflix — is almost 24% above The Trend.

This excess performance represents three-years-worth of normal stock market returns.  This is not sustainable, I repeat, not sustainable.  The party could go on for quite a while longer, or it could end tomorrow.

I take The Trend seriously — I lighten up on our family’s stock-market allocation when the Trend suggests we are 25-30% above historical price levels, as we are now.

• • • • • 

If you’re not a fan of The Trend, then may I offer this from Yale economist Robert Shiller.  Shiller created a metric (let’s just call it the Shiller P/E) that captures what investors are willing to pay for a dollar of corporate profits.  One would think that, after taking inflation and interest rates into account, the amount that an investor is willing to pay for a dollar of profits would be relatively stable.  But here’s the real story, a la Shiller:

The white line in the graph above is Shiller’s P/E Ratio, plotted from 2006 to the present.  Note how the P/E ratio (how much an investor is willing to pay for a dollar of earnings) has risen steadily since the Great Recession — then less than 15, now approaching 30.  Why?  Why are investors willing to pay so much more for the same return on stocks?

It’s not just about our ultra-low interest rates since the Great Recession.  Rather, it has much to do with the tons of money that have been pumped into the economy and where that money has gone.  The green line in the graph shows how the U.S. “M2” money supply (which includes checking, savings, and money-market funds) has grown over the same time period.  See any parallels between this and the prices being paid for stocks?

The Great Recession (Bush) tax cuts and Trump tax cuts, on top of the easy-money policies dictated by the Federal Reserve, have clearly benefited corporations, and those who hold corporate stocks, and those who receive corporate dividends, more than they did middle-income families.*   The haves who benefited the most from financial stimulus have been using the money to bid up the prices of the assets of greatest interest to them: stocks and real estate.  There’s only so much food rich people can eat, and only so much gas they can pump into their BMWs.  The rest of their money has to slosh somewhere.  That is why we have asset inflation (which the Fed mostly ignores) instead of food/energy inflation.

And that is why stocks are so expensive now, far beyond what The Trend and Shiller would deem that they are intrinsically worth.  And now, internet desperadoes have arrived on the scene to stir up this already-boiling pot.  Oh, did I forget to mention that we remain in the grips of a worldwide pandemic?  What (more) could possibly go haywire?  Stay tuned.


* As Lino Zeddies said on, “…money being created as bank credit systemically results in a multitude of direct and indirect factors that concentrate the distribution of power, wealth and income in the hands of fewer and fewer people.”
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Map Challenge II

Asked and Answered 12

As a followup to last year’s Map Challenge post, I thought I would pose a few geo-nerd problems inspired by the Four Corners in the southwestern U.S.  As most of you know, there is only one spot in the U.S. — about 12 miles north of the Sinclair gas station in Beclabito, NM — where four states meet at a single point.*  But this begs the question: what about the near-misses?  Shouldn’t those places get a little bit of nerd-love too?

I will call these areas Four-State Circles — circles that include at least some part of four different states, other than the aforementioned Four Corners.  Here are my challenges:

  1.  What and where in the U.S. is the smallest Four-State Circle (and its runner-up)?
  2.  Similarly, what about the smallest Five-State Circle (and its runner-up)?
  3.  Finally, the smallest Six-State Circle (and its runner-up)?

I am sure you’ll all agree that we can safely stop at six states without feeling like we have shortchanged the topic.  So let’s go exploring — and here’s a map to help.

Four-State Circles

When scanning the map for potential four-state solutions, the key is to focus on regions where two nearby states don’t share a border.  This suggests a closer look at places like the Oklahoma panhandle and the contorted path of the Mississippi River south of Illinois.

But it turns out that both the winner and the runner-up for the smallest Four-State Circle lie east of the Appalachians.  Surprisingly, neither circle involves Rhode Island, and both include my home state of Pennsylvania.


Zoom to 39.594ɴ, 78.350ᴡ, 100 feet from Pepper Lane in Doe Gully, West Virginia.  Next draw a circle of 8.83 miles radius around that point.  This circle touches four states: from north to south, Pennsylvania, Maryland, West Virginia and Virginia.  This may be the runner-up Four-State Circle, but I believe it is the shortest path that crosses four states, a subtly different problem.


Now shift your focus 200 miles eastward to 39.676ɴ, 75.666 in Delaware, across the street from an industrial park in Christiana.  A 6.55-mile radius circle around this point is mostly Delaware, with slivers of New Jersey, Maryland and Pennsylvania.  This would be a conflicted place to be a sports fan: 7 miles from three different states with major league sports teams, but not one to call your own.

Five-State Circles

The Five-State Circles were more painstaking to sort through.  It’s not like one can just enlarge a Four-State Circle a few miles in order to pick up a fifth state.  And what’s worse, all of the obvious candidates were so similar in size that some very careful plotting was needed to find the winner.  Here are the results:


Take U.S. 60 toward Grayridge, Missouri, then head a couple of miles south, and you will find — besides a lot of farmland — the center of the runner-up Five-State Circle.  This 28.8-mile-radius circle takes in parts of Kentucky, Tennessee and Missouri, plus razor-thin slices of Arkansas and Illinois.  S0, Grayridge, population 122, you are now on the map.  Welcome to internet fame.


Here is where the Oklahoma panhandle gets its chance to shine.  A 27.1-mile radius circle centered on 36.892ɴ, 102.514, just north of Boise City, touches parts of five states: New Mexico, Colorado, Kansas, Oklahoma and Texas.  Although the center of the circle is now just a pile of rubble next to U.S. 385, just wait until some enterprising Okie gets wind of this and builds a McDonalds there.

Six-State Circles

There are two attractive candidates here — the area around Baltimore, MD, and the area around Springfield, MA.  Only one of these, the smallest Six-State Circle, can be crowned the winner — the other will be the runner-up who, a la Miss USA, will assume the title if for any reason the winner cannot fulfill its duties.  So, may I have the envelope please…


Cold Bottom Road crosses Piney Creek and I-83 at 39.563ɴ, 76.665, just north of the National Lacrosse Hall of Fame in Sparks, Maryland.  The six states within 58.9 miles of this spot are: Maryland, Pennsylvania, Delaware, New Jersey, West Virginia and Virginia.  If Washington, D.C., were a state, this would be the winning Seven-State Circle but sorry — rules are rules.


The center of the smallest Six-State Circle is American Legion Post 452 in Chicopee, MA, at 42.1456ɴ, 72.6140.  (The post meets on the fourth Thursday of each month at 17:30, so snap to it.)  This 43.2-mile radius circle covers parts of Massachusetts, Connecticut and Vermont plus thin slices of New York, New Hampshire and Rhode Island.  And yes, Rhode Island is a state, not a plantation.

So there you have it, asked and — exhaustively — answered.  But for those who need even more bar-bet material, here’s one last bit of U.S. state-border trivia.  The number of places where three (or four) states meet is (a) 55, (b) 68 or (c) 92.  Answer below.


* The four states which meet at one spot are Arizona, Utah, Colorado and New Mexico.  And by my count, there are 55 places in the U.S. where three or four states meet at a point.
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Both of these are “after” photos… after almost a month of clean-out and sorting, that is.

I’m not sure how all those books (13 boxes, left) ever fit on these shelves (right) together with those that remain.*  May the old books find new readers via Habitat for Humanity.

Don’t worry, we did not drink all the liquor that was originally in those liquor boxes — not last month, anyway.


* Authors whose name appears multiple times on our shelves, post-cleanup: Asimov, Coetzee, Cohen, Eliot, Ferlinghetti, Franzen, Fromm, Gibran, Hamilton, Hardy, Hemingway, Hesse, Hitchens, Hofstatder, Kafka, Lamb, Maugham, McCann, Morrison, Munro, Oates, Sandburg, Silverstein, Undset, Vonnegut.   I’ve read at least one work by maybe half of these authors.  Your multiple-book author list?
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