Finance

The U.S. State Department is now processing routine passport applications in seven to 10 weeks, an improvement from earlier this year.
The State Department issued a record number of passports during the 2023 fiscal year.
Delays are likely to ease further by year end.

Tooga | Digitalvision | Getty Images

Long delays to get a new U.S. passport have eased from earlier in 2023 but haven’t yet returned to their pre-pandemic baseline.
As of Nov. 6, the U.S. State Department is processing routine passport applications in seven to 10 weeks, the agency said. It’s processing expedited applications — which cost more — in three to five weeks.

Travelers who applied for a passport between March 24 and Oct. 1 — the peak of the backlog — waited 10 to 13 weeks for routine passport processing, and five to seven weeks for an expedited application.
After factoring in additional mailing time, the State Department had been recommending travelers apply at least six months ahead of planned travel or passport expiration.
“Passport processing times are definitely shorter than they were,” said Sally French, a travel expert at NerdWallet. “[But] it’s still a really long period of time if you’re trying to jump on some sort of last-minute airfare deal” like ones typically offered on “Travel Tuesday,” which falls on Nov. 28 this year.
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Record passport demand fuels delays

Jordan Siemens | Digitalvision | Getty Images

Passport processing delays resulted from high demand for international travel as pandemic-era health fears and travel restrictions loosened.

The State Department issued more than 24 million passport books and cards between October 2022 and September 2023, a record number during a federal fiscal year.
The agency has tried to cut the backlog by “aggressively” recruiting and hiring across passport agencies and centers, having passport staff log “tens of thousands” of overtime hours a month, and opening a satellite office to help process applications, it said.
“As more Americans are traveling internationally again, we are directing resources to meet the unprecedented demand seen so far in 2023,” the State Department said.

Though delays have improved, they’re not yet back to normal.
Before the pandemic, it took two to three weeks for expedited passports and six to eight weeks for routine passport processing, the State Department said.
“It’s always been a fair amount of time,” French said. “You’ve always needed to plan well in advance to get that passport.”
The State Department anticipates additional updates to processing times later this year.
Passport demand generally fluctuates throughout the year. Processing times are typically faster during the slower season from October through December, according to the State Department.

How much does a passport cost?

Andrea Comi | Moment | Getty Images

A traditional passport — a passport book — costs $130. First-time applicants must pay an additional $35 acceptance fee.
Travelers can pay more for faster service. Expedited passport processing costs an extra $60.
Travelers can buy expedited delivery of a new passport book by mail — for delivery in one to two days — for an extra $19.53.
They can also send an application more quickly by purchasing Priority Mail Express service from the United States Postal Service. The price varies depending on the area of the country, according to the State Department.
In some circumstances, travelers may be able to speed up the process further.
Life-or-Death Emergency Service is available for people traveling abroad in the next three business days and who have a qualified emergency. Urgent Travel Service is for those traveling abroad within 14 calendar days.

Why a nonexpired passport can still cost you

U.S. passports are generally valid for 10 years. They’re valid for five years if issued before age 16.
In some cases, Americans may not be allowed to travel even if their passport hasn’t yet expired. Some countries disallow entry if a passport’s expiration falls just a few months after a trip’s end date.
For example, the Schengen Area, which encompasses 27 European nations, requires a U.S. passport be valid for at least 90 days beyond your intended date of departure from the Schengen Area.

Many countries in the Asia-Pacific and Middle East regions require at least six months of validity for permission to enter. Other areas, such as Hong Kong and Macao, require one month.
This is among the reasons why it’s generally wise to consider renewing a passport a year out from its expiration date, French said.
You may also need to apply for a separate visa to enter certain nations, a process that requires additional time and planning. The State Department has information about passport and visa requirements for specific countries.
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Atomico’s “State of European Tech” report, published Tuesday, showed that overall funding for European venture-backed companies is projected to decline 45% in 2023 from a year ago.
U.S. and Asian institutional investment into European tech faded as growth-oriented funds that flooded the market in 2020 and 2021 retreated in the last year or so due to macro headwinds.
Artificial intelligence was one bright spot though, with 11 AI companies raising mega funding rounds of $100 million or more.

A 3D map showing the continent of Europe.
Constantine Johnny | Moment | Getty Images

Venture capital investment into Europe’s tech industry plunged by half in 2023 as investors continued to reel from the effects of high interest rates, according to data from venture capital firm Atomico.
However, artificial intelligence was a standout category that saw continued mega funding rounds.

Atomico’s “State of European Tech” report, published Tuesday, showed that overall funding for European venture-backed companies is projected to decline 45% in 2023 from a year ago.
Total venture funding for European tech companies will reach $45 billion this year, Atomico expects. That’s down from $82 billion in 2022, which is itself down from $100 billion the previous year.
Atomico said that this year was a case of correction and a reversal to the pre-pandemic years which saw a wild rise in valuations and funding levels as the tech industry secured record amounts of capital flows.
Tom Wehmeier, head of data insights at Atomico, told CNBC that where Europe stood out was that the region is actually up on the past three years compared to its U.S., Chinese, and other international counterparts.
“There has been this reset after an overheated and unsustainable period of growth in 2021 and early 2022,” Wehmeier told CNBC. “Now you see that new reality is embedded and green shoots are starting to emerge.”

U.S. and Asian institutional investment into European tech faded in a big way, Wehmeier said, as “tourist” funds like Tiger Global and Coatue, who flooded the market in 2020 and 2021, retreated in the last year or so as macroeconomic headwinds caused them to get cold feet.
Whereas the U.S. has declined 8% and China slipped 9% for overall venture funding since 2020, Europe has seen investment levels grow 19% in the same time period, in a sign of resilience for the region.

Green shoots

Still, tech has benefited from a rush of interest in artificial intelligence.
Companies like Aleph Alpha, Mistral, and DeepL have raised hundreds of millions of dollars’ worth of capital from investors at high valuations thanks to the hype swirling around OpenAI, which is behind the wildly popular ChatGPT chatbot.
According to Atomico, AI was the biggest pull for fundraising rounds amounting to $100 million or more, with 11 AI companies bagging these so-called “megarounds.”
At seed stage, AI was the buzziest space for investors, attracting 11% of all funding rounds worth $5 million or less, Atomico said.
Meanwhile, Europe is the top hub for global AI talent, with the number of highly-skilled AI roles rising 10-fold over the past decade and outstripping the U.S.
Climate tech was another standout sector, according to Atomico. Funding into companies in the carbon and energy space accounted for 27% of all capital invested in European tech in 2023, three times more than in 2021.
According to Atomico, the combined value of all private and publicly listed tech companies in Europe topped $3 trillion in 2023, regaining that level after slumping well below it in 2022.
Last year, the European tech sector saw $400 billion wiped off its overall market capitalization.

IPO window remains closed

There have been virtually no IPOs of significant scale in Europe this year.
Arm, the British chip designer, went public in the U.S., and its performance has been lackluster since. Company shares are up from its debut price, but the performance of Arm, and other recently listed tech firms like Instacart and Klaviyo, haven’t convinced other tech leaders to pursue stock listings.
Still, Wehmeier said there’s now a healthy pipeline of companies looking to tap the public markets. Late-stage companies like Klarna, Revolut and Monzo are looking closer to the IPO gates than they’ve ever been.
Meanwhile, mergers and acquisitions activity remained muted compared to earlier years. Deal transaction value reached $36 billion in 2023, with the majority of exits being smaller, sub-$100 million value deals, Atomico said. More

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Wells Fargo Securities is officially out with its 2024 stock market forecast.
Chris Harvey, the firm’s head of equity strategy, sees a volatile path to his S&P 500 to 4,625 year-end target.

“It’s really hard to get excited. If we have better [economic] growth, then the Fed doesn’t do anything,” he told CNBC’s “Fast Money” on Monday. “If we have worse growth, then numbers are going to come down and then the Fed will eventually cut. The second half will be better, but the first half is going to be really, really sloppy.”
Harvey’s target is just 75 points above Monday’s S&P 500’s close.
“Can we go higher from here? Sure, we can go a little bit higher. But I just don’t think you can go a ton higher,” he said. “People have talked about 5,000. I don’t see how you get to that level.”
In his official 2024 outlook note, Harvey told clients to brace for a “trader’s market” instead of a “buy-and-hold situation.” His early year strategy: Start with a risk-averse stance.
“The VIX [CBOE Volatility Index] is up 13. Every time we’ve gone into a new year with the VIX at 13, we’ve seen spikes. We’ve seen the equity market pull back, and it’s just not a great setup into 2024,” Harvey added.

He warns the higher cost of capital is an additional market problem because it prevents multiples from going higher.
“As long as the cost of capital stays higher, it’s really hard for me to get to a much higher price target,” Harvey said.
Yet, he still sees opportunities for investors.
“What we want to do is we want to go to the places that are oversold. We just upgraded utilities today. We upgraded health care,” Harvey noted. “Those are areas that have good valuations, decent fundamentals and most people really aren’t there at this point.”

‘I hate to say that as being head of equity strategy’

Harvey also sees Treasurys as an option.
“If you look at the alternatives, there are things that are pretty attractive. And, I hate to say that as being head of equity strategy, but you can park money at the front of the curve and make a pretty good rate of return and not put on a whole lot of risk,” said Harvey.
His 2023 S&P target is 4,420 — which implies a three percent drop from Monday’s close.
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Nasdaq launched new short-term options contracts that expire on Wednesdays and allow traders to take positions on non-stock products, like the United States Oil Fund (USO).
Trading in options that are about to expire has expanded dramatically as a share of the options market in recent years.
The rise of short-term options trading has created split opinions on Wall Street, with some critics warning that they could create additional volatility.

The Nasdaq MarketSite is seen on October 12, 2022 in New York City. The Nasdaq Composite Index yesterday hit its lowest level since July, slipping into a bear market for the second time this year. (Photo by Michael M. Santiago/Getty Images)
Michael M. Santiago | Getty Images

The rapid growth in short-dated options that have become popular with hedge funds and retail traders alike is now spreading beyond stocks into other asset classes.
The Nasdaq last week launched new two-week options contracts that expire on Wednesdays based on the following exchange traded products:

The short-term options market is already well built out for contracts based on stock index products, such as the SPDR S&P 500 ETF Trust (SPY) and the Nasdaq 100-tracking Invesco QQQ Trust (QQQ). While options contracts historically expire on Fridays, the most popular stock indexes now have contracts that expire on every day of the week. This creates the ability for “zero-day to expiration,” or “0DTE,” options trading.
The new listings bring new asset classes a step closer to that reality.
“The Exchange believes that there is general investor demand for alternative expirations, including Wednesday expirations, as evidenced by the relatively significant percentage of volume in Wednesday SPY, QQQ, and IWM expirations,” the Nasdaq said in its rule change proposal in June. The Securities and Exchange Commission approved the products on Nov. 13.
The new funds come as trading in options that are about to expire has expanded dramatically as a share of the options market in recent years. According to data from Cboe, the percentage of options trading on the S&P 500 in contracts that expired in less than a day has gone from 8% in 2018 to at least 42% in every month this year so far.
The popularity may be due to traders looking for ways to take a position on the outcome of events that happen on a particular day. For example, the Wednesday expiration contracts would coincide with new policy statements from Federal Reserve eight times a year.

The rise of short-term options trading has created split opinions on Wall Street. For example, JPMorgan strategist Marko Kolanovic has warned that the craze could create a “volmageddon” type of event, but not everyone is concerned about the increased trading causing a risk to the markets. The term refers to an extreme volatility day in February 2018 that wiped out short-term strategies.
“In my mind, 0DTE has always been a risk day, but we’ve now spread that risk out across an entire month. So to me that makes it even less risky. And if you’ve got a handful of people who want to speculate on what the market might do on any given day, from when it opens to when it closes, so what, no big deal,” Randy Frederick, managing director of trading and derivatives for the Schwab Center for Financial Research, told CNBC.
Nasdaq said in its rule change proposal that it does not expect any “market disruptions” from the introduction of the new Wednesday options. More

Comerica, Zions and First Horizon might ultimately be acquired by more profitable competitors, according to KBW.
Larger banks with strong returns including Huntington, Fifth Third, M&T and Regions Financial are positioned to grow through taking over smaller lenders.
Two other lenders, Western Alliance and Webster Financial, could also consider selling themselves, KBW analysts said.

An automatic teller machine (ATM) at the Zions Bank headquarters in Salt Lake City, Utah, US, on Monday, July 10, 2023.
Kim Raff | Bloomberg | Getty Images

A trio of regional banks faces increasing pressure on returns and profitability that makes them potential targets for acquisition by a larger rival, according to KBW analysts.
Banks with between $80 billion and $120 billion in assets are in a tough spot, says Christopher McGratty of KBW. That’s because this group has the lowest structural returns among banks with at least $10 billion in assets, putting them in the position of needing to grow larger to help pay for coming regulations — or struggling for years.

Of eight banks in that zone, Comerica, Zions and First Horizon might ultimately be acquired by more profitable competitors, McGratty said in a Nov. 19 research note.
Zions and First Horizon declined comment. Comerica didn’t immediately have a response to this article.
While two others in the cohort, Western Alliance and Webster Financial, have “earned the right to remain independent” with above-peer returns, they could also consider selling themselves, the analyst said.
The remaining lenders, including East West Bank, Popular Bank and New York Community Bank each have higher returns and could end up as acquirers rather than targets. KBW estimated banks’ long-term returns including the impact of coming regulations.

A customer enters Comerica Inc. Bank headquarters in Dallas, Texas.
Cooper Neill | Bloomberg | Getty Images

“Our analysis leads us to these conclusions,” McGratty said in an interview last week. “Not every bank is as profitable as others and there are scale demands you have to keep in mind.”

Banking regulators have proposed a sweeping set of changes after higher interest rates and deposit runs triggered the collapse of three midsized banks this year. The moves broadly take measures that applied to the biggest global banks down to the level of institutions with at least $100 billion in assets, increasing their compliance and funding costs.

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Invesco KBW Regional Bank ETF

While shares of regional banks have dropped 21% this year, per the KBW Regional Banking Index, they have climbed in recent weeks as concerns around inflation have abated. The sector is still weighed down by concerns over the impact of new rules and the risk of a recession on loan losses, particularly in commercial real estate.
Given the new rules, banks will eventually cluster in three groups to optimize their profitability, according to the KBW analysis: above $120 billion in assets, $50 billion to $80 billion in assets and $20 billion to $50 billion in assets. Banks smaller than $10 billion in assets have advantages tied to debit card revenue, meaning that smaller institutions should grow to at least $20 billion in assets to offset their loss.
The problem for banks with $80 billion to $90 billion in assets like Zions and Comerica is that the market assumes they will soon face the burdens of being $100 billion-asset banks, compressing their valuations, McGratty said.
On the other hand, larger banks with strong returns including Huntington, Fifth Third, M&T and Regions Financial are positioned to grow through acquiring smaller lenders, McGratty said.
While others were more bullish, KBW analysts downgraded the U.S. banking industry in late 2022, months before the regional banking crisis. KBW is also known for helping determine the composition of indexes that track the banking industry.
Banks are waiting for clarity on regulations and interest rates before they will pursue deals, but consolidation has been a consistent theme for the industry, McGratty said.
“We’ve seen it throughout banking history; when there’s lines in the sand around certain sizes of assets, banks figure out the rules,” he said. “There’s still too many banks and they can be more successful if they build scale.”

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About 89% of employers allow workers to save in a Roth 401(k) account, according to a recent survey. Just 58% did so in 2013.
Employers and workers have historically gravitated to traditional pretax savings, instead.
The Secure 2.0 retirement law passed last year has changes likely to increase adoption.

Team of millennial colleagues sharing ideas for new business start up, togetherness, innovation, diversity
10’000 Hours | Digitalvision | Getty Images

More workers are getting access to a Roth savings option in their 401(k) plans.
In 2022, 89.1% of employers that sponsor a 401(k) plan allowed workers to set aside money in a Roth account, according to a recent poll by the Plan Sponsor Council of America, a trade group.

That share has increased significantly over the past decade: Just 58.2% of employers made a Roth 401(k) available in 2013, PSCA found. It also rose slightly over the past year, from 87.8% in 2021.
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A Roth is a type of after-tax account. Workers pay tax up front on 401(k) contributions, but investment growth and account withdrawals in retirement are tax-free. This differs from traditional pretax savings, whereby workers get a tax break upfront but pay later.
“Offering Roth as an option is a relatively easy-to-administer customization that offers employees more flexibility in their retirement savings approach,” Hattie Greenan, PSCA research director, explained in an email. “Offering this choice has become a best practice over the last 10 years.”

Why workers may miss out on a Roth 401(k)

However, Roth uptake by employees remains relatively low by comparison: About 21% of workers made a Roth contribution in 2022, according to PSCA data. By comparison, 72% saved in a traditional pretax account. (Workers can opt to use either, or both.)

There are a few reasons why usage likely doesn’t correspond with overall availability.

For one, automatically enrolling employees into 401(k) plans has become popular: 64% of plans used so-called auto enrollment in 2021, PSCA found. Companies often choose pretax — not Roth — accounts as the receptacle for automatic contributions. That means workers would have to make a proactive decision to switch their allocation.
High earners may also mistakenly think there are income limits to contribute to a Roth 401(k), as there are with a Roth individual retirement account.

Roth accounts are poised to be more widespread

Employers that match 401(k) savings have historically done so in the pretax savings bucket, regardless of whether the employee contributions are pretax or Roth. But that’s changing: A retirement law passed last year lets employers offer their company match in a Roth account, if a worker elects that option. About 12% of employers with a 401(k) plan are “definitely” adding that feature, and 37% are “still considering” it, according to the PSCA survey.
“Many [employers] are seeing requests from employees for this option, and it is something we will see begin to take hold moving forward,” Greenan said.

The recently passed retirement law, known as Secure 2.0, is also expected to increase Roth uptake in another way. It will require “catch up” 401(k) contributions to be made to Roth accounts, if the worker’s income exceeds $145,000 (indexed to inflation).
Employers must make the change by 2026. Those that don’t already do so must allow Roth contributions to facilitate this change, or disallow catch-up contributions, according to Principal.
Catch-up contributions are available to people age 50 and older. Such workers are permitted to funnel an additional $7,500 into 401(k) plans in 2024, beyond the $23,000 annual limit.

When Roth 401(k), IRA savings makes sense

Roth 401(k) contributions may not be wise for all workers. Generally, they make sense for investors who are likely in a lower tax bracket now than they expect to be when they retire, according to financial advisors.
That’s because they would accumulate a larger nest egg by paying tax now at a lower tax rate.
It’s impossible to know what your tax rates or exact financial situation will be in retirement, which may be decades in the future. “You’re really just making a tax bet,” Ted Jenkin, a certified financial planner and CEO of oXYGen Financial, previously told CNBC. Jenkin is also a member of CNBC’s Financial Advisor Council.
However, there are some guiding principles for Roth.

For example, Roth accounts generally make sense for young people, especially those just entering the workforce, who are likely to have their highest-earning years ahead of them. Those contributions and any investment growth would then compound tax-free for decades. (One important note: Investment growth is only tax-free for withdrawals after age 59½, and provided you have had the Roth account for at least five years.)
Some may shun Roth savings because they assume both their spending and their tax bracket will fall when they retire. But that doesn’t always happen, according to financial advisors.
There are benefits to Roth accounts beyond tax savings, too.
For example, investors with Roth 401(k) savings won’t need to take required minimum distributions from those accounts starting in 2024. This already applies to Roth IRAs. However, the same isn’t true for traditional pretax accounts: Retirees must pull funds from pretax 401(k)s and IRAs starting at age 73, even if they don’t need the money.
Roth savings can also help reduce annual premiums for Medicare Part B, which are based on taxable income. Because Roth withdrawals are considered tax-free income, pulling money strategically from Roth accounts can prevent one’s income from jumping over certain Medicare thresholds.
Some advisors recommend allocating 401(k) savings to both pretax and Roth, regardless of age, as a hedge and diversification strategy.
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Morgan Housel is a partner at The Collaborative Fund and became a best-selling author with the 2020 publication of his book, The Psychology of Money.
Now Housel is back with a second book, “Same As Ever: Timeless Lesson on Wealth, Greed and Happiness.”
It utilizes the same style that Morgan rode to success in his previous book: short chapters, paragraphs, sentences and an emphasis on storytelling to reveal deep insights into very broad topics.

Morgan Housel, author of “The Psychology of Money” and partner at the Collaborative Fund, says no one is crazy when it comes to money. But we all need to update our thinking in key ways in order to build true wealth.
Morgan Housel

(Note: Morgan Housel will be on HalfTime Report today at 12:35 PM ET and on ETF Edge at 1:10 PM.  ETFedge.cnbc.com)
Morgan Housel has become the Mark Twain of financial writers: funny, pithy, folksy, occasionally sarcastic and always seeking to peel away the layers of reality to reveal a deeper truth below.

Housel is a partner at The Collaborative Fund and became a best-selling author with the 2020 publication of his book, The Psychology of Money. It explored the relationship between money and human behavior. The main thesis was to maximize what you can control: managing your own expectations, knowing when was enough, how to stop changing the goalposts.
It was a relatively brief (250 pages) book, with short chapters, laden with Housel’s folksy wisdom on savings, the power of compounding interest, and plenty of stories about the role of luck and risk, and how certain key people (like Bill Gates) got lucky breaks that enabled them to go on to greater things (in Gates’ case, he had attended Lakeside High School in Seattle, one of the few high schools that had a computer at the time).
The book not only caught on, it has sold roughly 4 million copies worldwide.
To give you an idea of how big that is, a typical financial book will sell roughly 5,000 copies. If you can sell 10,000 copies, you’re really doing well.
Now Housel is back with a second book, “Same As Ever: Timeless Lesson on Wealth, Greed and Happiness.”

It utilizes the same style that Morgan rode to success in his previous book: short chapters, paragraphs, sentences and an emphasis on storytelling to reveal deep insights into very broad topics.
Except this time Housel is going for a larger audience than those who wanted financial insights: He is going for timeless wisdom that is aiming to show people how to look at life in general. 
Morgan’s thesis is that the same things that have motivated men and women throughout our existence (fear, love, hate, greed, envy) are still present today, and because of that, much of what happens is perfectly predictable: Same as ever.

The role of envy

Take envy. Housel cites Charlie Munger, who noted that the world isn’t driven by greed, it’s driven by envy.
Morgan illustrates this with a fine digression: Why are people so nostalgic about the past, and was it really better than the present?
Take the 1950s, which baby boomers and their parents seem to think was some kind of golden age.
On one level, it was: It was possible to have a family with one wage earner to have a modest, middle-class life.
But the idea that people were better off in the 1950s is not supported by the facts. 
Mortality rates were much higher. People died far younger.
Today’s families are also far wealthier than prior generations. Housel notes the median family income adjusted for inflation:

1955: $29,000
1965: $42,000
2021: $70,784 

“Median hourly wages adjusted for inflation are nearly 50 percent higher today than in 1955,” Housel noted. “And higher income wasn’t due to working more hours, or entirely due to women joining the workforce in greater numbers.”  It was due to gains in productivity.
More stats about the “golden era” of the 1950s versus today:

The homeownership rate was 12 percentage points lower in 1950 than it is today;
An average home was a third smaller than today’s, despite having more occupants;
Food consumed 29 percent of an average household’s budget in 1950 versus 13 percent today;
Workplace deaths were three times higher than today. 

So why are we so nostalgic about the 1950s? It gets down to envy and the very human desire to compare how you are doing with everyone else:  in the 1950s, “The gap between you and most of the people around you wasn’t that large.” 
During World War II, wages were set by the National War Labor Board, which preferred flatter wages: “part of that philosophy stuck around even after wage controls were lifted,” Housel noted.
During the 1950s, very few people lived in financial circles that were dramatically better than everyone else. Smaller houses felt fine because everyone had one.  Everyone went on camping vacations because, well, that’s what everyone did.
By the 1980s, that had changed. Changes in the tax code, among other changes, created a group of ultra-wealthy individuals: “The glorious lifestyles of the few inflated the aspirations of the many,” Housel concluded.
What did people do? They looked around, saw that some people were doing better, some much better, and they got envious. And then they got mad.
Housel notes that envy has been given a much greater boost than in the past thanks to social media, “in which everyone in the world can see the lifestyles — often inflated, faked, and airbrushed—of other people. You compare yourself to your peers through a curated highlight reel of their lives, where positives are embellished and negatives are hidden from view.”
“The ability to say, I want that, why don’t I have that? Why does he get it but I don’t? is so much greater now than it was just a few generations ago. Today’s economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people’s wealth.”
Envy triumphs. Same as ever.
But Housel goes a bit deeper, which is what makes this book satisfying: Besides demonstrating that envy is a key element, what else does this nostalgia for the 1950s illustrate?
This nostalgia, Housel says, “is one of the best examples of what happens when expectations grow faster than circumstances.”

Managing expectations

“When asked, ‘You seem extremely happy and content. What’s your secret to living a happy life?’ Charlie Munger replied: The first rule of a happy life is low expectations. If you have unrealistic expectations you’re going to be miserable your whole life. You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.” 
Housel’s conclusion: “Wealth and happiness is a two-part equation: what you have and what you expect/need. When you realize that each part is equally important, you see that the overwhelming attention we pay to getting more and the negligible attention we put on managing expectations makes little sense, especially because the expectations side can be so much more in your control. ”
I put this slightly differently: Everyone has circumstances that they are living in:  how much money they make, where they live, whom they are living with, what they own.  These circumstances have a definitely external reality.  Your mortgage is very real, as is your house or apartment, as is your spouse or partner.
Beyond your current circumstances, there are needs, and there are wants.  Needs are what people require to get by: shelter, food. Wants are what people aspire to:  a bigger house, a bigger car, a bigger everything. Those wants are being dramatically inflated by the wealth gap that has opened up and is amplified by social media. 
Here’s the mental trick: While your circumstances and your needs have a definite external reality, the “wants” only exist in your head; they have no external reality.  You don’t have to be envious of your neighbor who has the Rolex or the big house.  To the extent that is causing your envy and your anxiety, it is completely in your own control to change those thoughts.  By changing your relationship with your wants, which only exist in your head, you can change the way you view your circumstances.
Housel comes to the same conclusion:  “the expectation side of that equation is not only important, but it’s often more in your control than managing your circumstances.”

On risk taking

Managing risk is a topic Housel addressed in The Psychology of Money, and he returns to it again.   

“It’s impossible to plan for what you can’t imagine,” he says, urging his readers to think of risk the way the State of California thinks of earthquakes: “It knows a major earthquake will happen. But it has no idea when, where or of what magnitude.”  But the state has emergency crews at the ready, and buildings designed to withstand earthquakes that may not occur for years. The lesson: he quotes Nassim Taleb: ‘Invest in preparedness, not in prediction.'” 

What does that mean in practice?  It’s about managing your own expectations, and risk tolerance. “In personal finance, the right amount of savings is when it feels like it’s a little too much.  It should feel excessive; it should make you wince a little.”

On the right way to view geniuses like Elon Musk, Steve Jobs and even Walt Disney

“What kind of person is likely to go overboard, bite off more than they can chew, and discount risks that are blindingly obvious to others? Someone who is determined, optimistic, doesn’t take no for an answer, and is relentlessly confident in their own abilities…the same personality traits that push people to the top also increase the odds of pushing them over the edge.”

On why so many events that are supposed to happen once in a hundred years seem to happen quite often

“If next year there’s a 1 percent chance of a new disastrous pandemic, a 1 percent chance of a crippling depression, a 1 percent chance of a catastrophic flood, a 1 percent chance of political collapse, and on and on, then the odds that something bad will happen next year—or any year—are . . . not bad.”

On why companies are much more than just the sum of their financial figures 

“The valuation of every company is simply a number from today multiplied by a story about tomorrow.”

On the impossibility of predicting the future and the need to be more comfortable with uncertainty

 “The ones who thrive long term are those who understand the real world is a never-ending chain of absurdity, confusion, messy relationships, and imperfect people.”

On the value of patience

“Most great things in life—from love to careers to investing—gain their value from two things: patience and scarcity. Patience to let something grow, and scarcity to admire what it grows into.”

“The trick in any field—from finance to careers to relationships—is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth…An important lesson from history is that the long run is usually pretty good and the short run is usually pretty bad. It takes effort to reconcile those two and learn how to manage them with what seem like conflicting skills. Those who can’t usually end up either bitter pessimists or bankrupt optimists.”

On why compounding interest is the key to understanding stock market investing

“If you understand the math behind compounding you realize the most important question is not ‘How can I earn the highest returns?’ It’s ‘What are the best returns I can sustain for the longest period of time?’ Little changes compounded for a long time create extraordinary changes.”

On what the best financial plan looks like

“The best financial plan is to save like a pessimist and invest like an optimist. That idea—the belief that things will get better mixed with the reality that the path between now and then will be a continuous chain of setback, disappointment, surprise, and shock—shows up all over history, in all areas of life.”

On trying to understand people who don’t agree with you

The question “Why don’t you agree with me?” can have infinite answers. Sometimes one side is selfish, or stupid, or blind, or uninformed. But usually a better question is, “What have you experienced that I haven’t that makes you believe what you do? And would I think about the world like you do if I experienced what you have?”

Same as ever?

Housel ends with a series of questions the reader should be asking themselves, including “What strong belief do I hold that’s most likely to change? What’s always been true? What’s the same as ever?”
This is an ambitious book that sits at the intersection between investing, self-help, leadership, and motivation & personal success.  The primary message is simple but easy to lose sight of:  technology, politics and other trends seem to be accelerating, but human behavior has not changed. 
And as long as those age-old emotions that motive us don’t change, the new fancy gadgets we all have are just different tools to help us engage the same old emotions. More

Coinbase CEO Brian Armstrong told CNBC’s Joumanna Bercetche that the U.S. government’s enforcement action against Binance will allow the crypto industry to “turn the page.”
Binance was hit by the U.S. government with a $4 billion settlement last week, which saw its founder and CEO Changpeng Zhao step down and plead guilty to charges of money-laundering violations.
Armstrong pushed back on the suggestion that crypto is mainly used for nefarious purposes such as fraud, money laundering, and terrorist financing, however.

Brian Armstrong, chief executive officer of Coinbase Global Inc., speaks during the Messari Mainnet summit in New York, on Thursday, Sept. 21, 2023.
Michael Nagle | Bloomberg | Getty Images

The crypto industry can finally close the chapter on a litany of scandals and problems after Binance was hit with a historic settlement by the U.S. Department of Justice, Coinbase CEO Brian Armstrong said Monday.
“The enforcement action against Binance, that’s allowing us to kind of turn the page on that and hopefully close that chapter of history,” Armstrong said in an interview with CNBC’s Joumanna Bercetche.

“There are many crypto companies that are helping build the crypto economy and change our financial system globally. But many of them are still small startups.”
“I think that regulatory clarity is going to help bring in more investment, especially from institutions,” he added.
Binance was hit by the U.S. Department of Justice with a $4 billion settlement last week, which saw its founder and CEO Changpeng Zhao step down and plead guilty to charges of money laundering violations.
The government accused Binance of violating the U.S. Bank Secrecy Act and of breaching sanctions in Iran.
Armstrong pushed back on the suggestion that crypto is mainly used for nefarious purposes such as fraud, money laundering, and terrorist financing, a common refrain from financial firms that have avoided jumping into the space due to compliance concerns.

“It’s true that there have been some small amount of illicit activity in crypto but it’s actually less than 1% from what we’ve seen. If you look at illicit uses of cash it’s oftentimes more than that,” Armstrong told CNBC.

Some players, he conceded, have been “bad actors,” referring to the case of Binance, as well as the collapse of crypto exchange FTX and the sentencing of its founder Sam Bankman-Fried to jail over allegations of fraud.
Armstrong is in the U.K. Monday for the Global Investment Summit, which gathers a host of business leaders to encourage foreign investment in the U.K.
Coinbase was the only crypto company invited to the summit, which Armstrong termed an “endorsement” for the company, but not necessarily the broader industry.
Armstrong said he is “impressed” with U.K. Prime Minister Rishi Sunak’s leadership when it comes to digital currencies and that Coinbase was investing more in the U.K. as a result.
The U.K. is seeking to bring digital assets such as cryptocurrencies and stablecoins into the regulatory fold.
Coinbase is currently engaged in a tense legal battle with the U.S. Securities and Exchange Commission over allegations that the company is violating securities laws with its platform.
On that point, Armstrong said he feels very good about Coinbase’s chances fighting the lawsuit. He also disputed the idea that the SEC’s actions have forced Coinbase to move offshore, adding that the company is still investing actively in its home market. More