Listen Now:
The Smart Take:
In the age of COVID, everyone has seemingly become a data expert …. regardless of one’s understanding of data and statistics (sigh).
Hear Kevin highlight some recent math errors he’s observed in media, relate them to investing errors, and tie in vaccines to boot.
He’ll describe how making bad comparisons in identifying mutual fund category winners is subject to similar errors to drawing conclusions about the recent Cape Cod headline where a COVID outbreak infected 74% of vaccinated people.
He’ll also explain how butter production in Bangledesh is tied to the S&P 500 and why you should (or shouldn’t?) “sell in May and go away.”
Put your thinking cap on and happy listening!
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The Host:
Kevin Kroskey – About – Contact
Intro: Welcome to Retire Smarter with Kevin Kroskey. Find the answers to your toughest questions and get educated about the financial world. It’s time to retire smarter.
Walter Storholt: Buckle up, it’s another episode of Retire Smarter, Walter Storholt here alongside Kevin Kroskey, President and Wealth Advisor at True Wealth Design in the greater Pittsburgh area, Southwest Florida, in the home base of Northeast, Ohio, but really serving clients all across the country now especially with the podcast, a lot of people who have reached out to Kevin over the last couple of years come from all over and you’re always welcome to reach out.
If you have any questions, a good way to do it is to go to truewealthdesign.com and look for the “Are we right for you?” button to schedule a call with the True Wealth team.
Kevin, great to be with you today. You sounded a little perturbed though before we hit the record button today.
Kevin Kroskey: I am but before, let me start off on a positive note.
Walter Storholt: All right, start positive then we can go crazy after that, okay.
Kevin Kroskey: I wanted to give a shout-out to Tyler Emrick. So, Tyler was, he and I did a podcast episode with your help a couple of months ago, Walter, and he’s been with us and he’s an incredibly good advisor, just a good human being. But I said on the podcast that he was taking his CFA, his Chartered Financial Analyst Level III exam. And I put them on some accountability.
Several clients have said, “Hey, did you pass the test? Did you pass the test?” And his response was, he hadn’t gotten results yet, which was true, but we are happy to report probably Tyler’s even happier than I am that he has indeed passed CFA Level III.
Walter Storholt: Right.
Kevin Kroskey: And in each of these are, I mean, they’re really, it’s like a 40% passing rate for each level.
Walter Storholt: Oh, wow.
Kevin Kroskey: I know a lot of smart people that have tried to pass and become a CFA and have flamed out through the process. And Tyler has made it and I’m not exactly sure how many dual CFAs and CFPs there are out there. A few years ago, I remember reading something there was about 1,100 in the entire country. I’m sure there’s probably a lot more today, but I would speculate it’s still below 10,000. And he is one of them.
So, he is definitely in some rarefied air. And we are incredibly proud of him and glad that he was able to do that. And I guess, somewhat related, we have, I would say-
Walter Storholt: That was Episode 68, by the way, if anybody wants to go listen to the episode where Tyler joined us on the show, and get to know him a little bit more.
Kevin Kroskey: Yeah, thank you for that. And we have another advisor who joined us a few months ago. And I think we’re about four months in our relationship, also incredibly smart. He’s also a CFA, and Aaron Seil is his name. And he’s been incredibly valuable. I have expectations for him coming in and he’s exceeded those.
So, we have a pretty good growing brain trust here that I’m very proud of. And so, it’s just definitely it’s not just me, but it takes a village, right? And we have a nice growing village here. So, kudos to Tyler, welcome to Aaron, and really happy to have them.
So, I guess now that the positive-
Walter Storholt: Right, feel-goods out of the way. Go for it.
Kevin Kroskey: Yes, Walter just asked me how things are going and how Florida was and I explained that we’re not in Florida. So, we’re in Ohio. And so, quick aside, last year through COVID, we stayed in Florida, my family and I through the whole year. Certainly, we felt fortunate that we have these choices, that we do have these two homes. Certainly, worked hard to get them, but we feel very fortunate and that we have the flexibility in our decision-making.
Well, if you’ve turned on the news, you’ve seen how prevalent COVID is throughout Florida and particularly the Naples area that we’re in. And so, we stayed put in Ohio and we feel relatively safe here. But then, unfortunately, so our… we have a second-grader who’s soon to be eight and obviously can’t get vaccinated just yet.
Her first day of school is yesterday. Walter, I’m very happy to report that she came home and just had a fantastic first day. Mom and Dad had a little bit of trepidation because the school board rolled a few days ago that they weren’t going to require masks. And it just, we were, hey, everything that we talked about here is science-based and should be no surprise that I’m a vaccine supporter because that’s where the science is.
But anyway, there were 18 out of 22 kids in her second-grade class that wore masks, talk to some other parents were that wasn’t the case particularly for their older kids, but anyway, our daughter had a good first day. So, we’re staying put in Ohio for a while. But I’ve been self-professed a political and I just can’t stand it, quite frankly, a lot of times, but I feel like we’ve been being pulled into a lot of this bias because a lot of the choices that other people are making are affecting us and our daughter.
What I wanted to talk about today, let’s see how we do this because I’m sure I’m going to piss some people off and I’m okay with that. For say right now, but I’m going to talk about math and some of the bad math and bad comparisons that I’ve seen on the media attended very rarely among on social media but add a little bit of engagement recently. And I’ve just seen a lot of bad thinking quite candidly.
I’m going to come at this from a purely mathematical perspective. And I’m not going to go ahead and rail on vaccines or whatever. I mean, I think most people pretty much made up their minds by this point. But I’m just going to use some recent examples that I’ve seen in the media that are probably using bad math or bad thinking, back comparisons. And then, I will try to relate that seems issue to an investing equivalent, and maybe even a vaccine equivalent if you will.
Walter Storholt: Okay. Let’s wrap it all together and just lean into it. We’re going to cultivate a culture of positivity on today’s show, good discussion. It’s okay to disagree with one another or with someone who’s listening to this show. You don’t have to turn it off or tune in now. Let’s engage. Let’s have a debate. Let it be healthy and let’s wrap all this together.
I like the idea. And, hey, we can all rally around bashing the media, right? All sides, all sides can get on board that.
Kevin Kroskey: Yes, right.
Walter Storholt: So, we’ll use that as our galvanizing point, and then we can have some differences on the other elements. But I think we can all rally around that at least.
Kevin Kroskey: Yes. No, I like and yeah for sure. I mean, if we could have a little bit more understanding and ability to see the other side, it doesn’t have to be a win or lose but it seems like we have a very polarizing quick to escalate world today. Probably, I think definitely fostered by social media. It’s just a whole other ballgame with social media these days.
But anyway, let’s come back to it. First, I’m just going to start very, it’s just too good to pass up, and it’s too sad and too funny all at the same time. But I don’t know, certainly, Walter, you remember when Michael Bloomberg was running for his presidential campaign and people were talking about how much money he was spending.
And I don’t know if you happen to recall the Brian Williams gaffe about that.
Walter Storholt: It feels like 45 years ago that that happened, but what was the Brian Williams?
Kevin Kroskey: So, Brian Williams, and it was someone from the New York Times editorial board, were commenting and somebody tweeted that Bloomberg spent 500 million on ads. The U.S. population is 327 million. He could have given each American 1 million and still have money left over.
Walter Storholt: Okay, right, yes, okay. That rings a bell now, yes.
Kevin Kroskey: Both of them, Brian Williams and this New York Times editorial board member were just marveled at it like, yes, they could have, I mean, oh my gosh, what they could have done with that money and hopefully you’re doing the math and moving the decimal point and see that it’s a little bit more than $1 per person.
Walter Storholt: Yes.
Kevin Kroskey: When you through, right?
Walter Storholt: Life-changing, life-changing dollars.
Kevin Kroskey: Yeah, life-changing dollar 53. So, math matters, that’s just bad math. It’s nothing too profound and I don’t have the relation to investing or to vaccines there. But that comparison, so I was watching, I can’t remember what it was. It was the Sunday TV was on in the background. I was on breakfast number two, which is a daily occurrence for me.
And having some coffee and the kids were on their iPads. We’re figuring out what we’re going to do for the day. And I heard-
Walter Storholt: Wait, breakfast number two?
Kevin Kroskey: Yes.
Walter Storholt: This is a thing? This sounds like an amazing world you’re living.
Kevin Kroskey: It is my world. It is my world. Breakfast number two, yes.
Walter Storholt: I’m sorry, I just couldn’t let that slide by. That was it.
Kevin Kroskey: Yes. It’s almost every day, but yes.
Walter Storholt: Okay.
Kevin Kroskey: Moving right, they made a comment. It was really a story. And they’re trying to make a point about the severe decline of black farmers today versus 1910. Now, I’m hoping when I say that, that anybody is thinking like, first 1910. Well, of course, a lot of people were farming back in 1910. You don’t have to do any research to really figure that one out.
But I was just laughing because it was like this whole big story. And I’m not saying that, I’m not saying anything about the plight of black farmers or not. I’m just saying the comparison was terrible, just like the math for Brian Williams was terrible. And it’s terrible for two reasons. Among others, probably, but there’s some cherry-picking there as I dug into it, and then there was also a selection bias.
So, I did just a quick search, I was like, why 1910? And I did a search on Wikipedia. It had the history of agriculture in there. And apparently, farming reached a peak in terms of the number of farms and the number of people on farms in 1910. So, here, you’re picking something from the very tippy top. And I think back then, they said about 40% of the U.S. population lived on farms.
Walter, do 40% of the U.S. population live on farms today, you think?
Walter Storholt: I’m going to go with an educated guess of, no.
Kevin Kroskey: I would say so too. So, the populations of 1910 versus today are very different. So, you have this problem of cherry-picking where you’re going back to 1910, at the tippy-top, and then in hindsight, we know it’s the top but, they could have chosen say, 20 years ago or 30 years ago or something. No, they went back to the tippy-top to make sure that they made their point and made it on objectively in my view.
But those populations are very, very different today. You can’t really compare the population of the U.S. in 1910 versus today in that way with any meaningful conclusion. Now, the investing equivalent, and I’ve seen this so many times over the years, and its bias, it’s one of my pet peeves. But you’ll see, I call it deceptive investment performance advertising.
So, basically, they are cherry-picking data. Sometimes they’re cherry-picking a certain time period, as in the case of 1910, or they could cherry pick a smaller sliver of the, sometimes you’ll see this with these indexed annuities and their crediting methods. And they’ll look at, hey, the S&P 500 did this. And with this crediting method, you have gotten this really high return, but it’s really, in my view, it’s data mining, and doesn’t really give a good indication of what you can expect going forward.
And also, because of this population difference, there tends to be a selection bias is what I would call it. So, two examples of that under this investing equivalent and looking at different populations. So, let’s say that we’re looking to pick a fund that we want to invest in a certain category. And we go to Morningstar, which is really well-known for doing this.
And let’s say that five years ago, this category had 100 funds in it. But today we look and there’s only 50, there’s only 50 remaining. And typically, that happens. That happens quite a bit a lot more than what people know and understand. But these funds that just disappear, they tend to be liquidated or merged into another fund that has a better track record within the fund family. And they got these go away or they died due to poor performance.
If you’re a mutual fund company, you want to be able to say, 80% of our funds beat their five-year Lipper average. How was that for radio voice, Walter?
Walter Storholt: That was poor.
Kevin Kroskey: Good thing I’m a financial adviser, yeah. Yeah, it was-
Walter Storholt: You said very sarcastically.
Kevin Kroskey: All right, I’ll leave that up to you going forward.
Walter Storholt: Actually, I guess in today’s world, you’d be fine then. Have plenty of bias in your reporting. Yeah, go for it.
Kevin Kroskey: So, if you’re comparing a fund, you just don’t want to look the ones that survived, you want to correct for that survivorship bias, and you want to go ahead and compare to the entire category, all 100 that were at the beginning of the period. So, the population of those funds has changed a lot over the five years, 100 down to 50, not too dissimilar from what I discussed with the change in the population of farming in the U.S. 1910 versus today.
Another example that it’s comes up from time to time, but you’ll see people talking about hedge funds, or maybe some private investments or something like that. All these mutual funds through Morningstar, they have to report their returns. It’s public information. They’re very consumer-friendly. Hedge funds and some other private investments, they don’t have that obligation.
Instead of being required to report, they self-report. So, whenever you have any self-reporting like that, there’s an inherent bias. If your returns are good, you’re going to report them, if your returns are not good, you’re not going to report them. And it also doesn’t correct for that same survivorship bias where the hedge funds or the private investments that blow up, don’t make it into the index.
And so, those indices on hedge funds, private investments, things along those lines, you have to take it with a big grain of salt, and they tend to be overstated from what the actual returns were for that asset class or for those groups of investments. Now, here we go into the vaccine equivalency.
Walter Storholt: Okay.
Kevin Kroskey: So, we talked about populations. We talked about cherry-picking. There are all kinds of that going on. I made a comment. Candidly, I was probably venting a little bit on Facebook, because I have some family members that I didn’t want to vent to, and I was liking certain articles, and it made me feel good. And I’m not going to do that anymore.
But one of the ones I did, I got a response from an advisor who’s a friendly competitor down the road. And he won’t go into all the details. But you may have heard this, Walter, for the vaccines, there was an outbreak in Cape Cod.
Walter Storholt: Yes.
Kevin Kroskey: And 74% of the people that had COVID were vaccinated. Did you hear that?
Walter Storholt: Yes, I remember that. That was big news a couple of weeks ago.
Kevin Kroskey: You got it. So, he responded with this. And I read the article, and I’m like, okay, I never heard this, let me check this out. And it said nothing about the underlying population in Massachusetts. And so, similar issue, you hear when you dug in, you saw a very high percentage of the population of the people on Cape Cod were vaccinated, it was literally like the mid-90s or something from a couple of the sources that I saw.
So, the population is very different in Cape Cod where 95% of the people are fully vaccinated, based on what I saw, versus the U.S. in general. The last stats that I saw was, I think 70% of the people had at least one shot, and then about 50%, I think we just crossed over 50% not too long ago, as we record this, at the end of August, are fully vaccinated in the U.S.
So, the populations between Cape Cod and the U.S. in general, very, very different relative to the number that were vaccinated or not. The other thing that goes along with this, I would say, so let me make sure that I make this very clear. But if there are a lot more vaccinated people in this case, 95% of the people are vaccinated, and only a handful, the percentage of the people are not vaccinated, it’s much more likely that you’re going to see more vaccinated people end up in the hospital or have a breakout and get COVID from it.
It’s just basic math and statistics. The other issue here was it was a pretty small sample size, it was a couple of hundred people. If you look more broadly, if you look at the U.S. data, I mean, it’s just very clear who’s getting sick here. I mean, you find one small, little outlier, and then you dig deep and say, okay, well, hey, I mean, the populations aren’t even comparable, and it’s a really small sample size.
This is just some cherry-picking and selection bias. Does that make sense? Walter?
Walter Storholt: It does, absolutely, yeah. And that’s also what then grabs the headlines, though, because it’s just not sexy to say 99.9% of people vaccinated aren’t ending up in the hospital. But this one spot had all these people end up in the hospital. And it’s the whole could happen here thing, right? Like it happened there tonight at 11:00, could have happened here. It’s that same mentality that’s what draws the eyeballs in the brain.
Kevin Kroskey: And I get it. I mean, it’s something that, I mean, it’s something worthwhile to look into, but it’s just the bad comparison. As I’ve explained a couple of times over, I mean, if you want to look a little bit more broadly if you go over into the U.K., what over there, let’s see, two-thirds of the population were vaccinated, but a third of the people that were getting hospitalized were vaccinated.
But if you look at it, again, more of the population is fully vaccinated. The same issue that you have in Cape Cod, but you do have a larger sample size there, but you still have the case that the vaccines are not only working, but they’re precluding people from getting hospitalized as high of a rate that they would if they had not gotten vaccinated.
I mean, it’s just basic math. It’s very cool that people are getting into data. I mean, for me, personally, I like data. We talked about a lot of data here on the podcast. Everybody is now a data expert when it comes to COVID, the era of COVID. But you see these bad comparisons, whether it’s from the media or thinking, and then, without really understanding what goes into it.
So, you just got to be really careful not to draw faulty conclusions when comparing different samples or sample sizes. And you don’t want to cherry-pick the data. At least you shouldn’t want to cherry-pick the data. If you do, then you are maybe intentionally trying to mislead somebody, at least you’re informed, but you’re intentionally misleading.
I’ll just give one other example. But you’ve probably heard this one, Walter, or correlation does not equal causation.
Walter Storholt: Causation, yeah.
Kevin Kroskey: So, when I was in grad school, I took several stats classes. And the classic example of this and I had to do this in grad school, too, was basically you go through this data, and then you show that ice cream consumption is highly correlated with increases in the murder rate. So, ice cream sales, increasing ice cream sales are presumably turning people on to a killer.
Walter Storholt: Right.
Kevin Kroskey: Right? So absurd, right?
Walter Storholt: Certainly.
Kevin Kroskey: Maybe if they’re out of your favorite flavor, I’m not sure, but this just doesn’t make sense. So, who knows, some reasons could be, ice cream tends to be sold for so in the summer months, people were more so out and active in the summer months, then maybe when there’s a foot of snow on the ground. We don’t know definitively, but just because they’re correlated does not mean that there’s a causal relationship there.
I’ll give you an investing equivalent. And we had to do this one, too, when I was in grad school. And it was a couple of decades ago, a couple of academics show that there was a very high correlation between the annual level of the S&P 500 and the annual production of butter in Bangladesh.
Walter Storholt: Wow.
Kevin Kroskey: Yes.
Walter Storholt: Butter in Bangladesh.
Kevin Kroskey: It has a nice ring to it, does it? And I don’t know about you, Walter, but I’m a big fan of butter. We have the mo butter, mo better saying on the Kroskey household.
Walter Storholt: Okay, nice.
Kevin Kroskey: And, hey, I mean, it’s congruent with my job, too. I mean, it makes the S&P 500 grow. So, I’m, I guess-
Walter Storholt: Invest in Bangladesh butter.
Kevin Kroskey: So, the correlation over the period that the analyzed from 81 through 93 was about 87%. And correlation again, just means how related are two variables. A perfect positive correlation is one or 100%. And then, the perfect negative correlation is minus one or minus 100%. So, just because-
Walter Storholt: It reminds me of the election stuff, right? We’re about a year out from when that was going on. Didn’t we have some discussions about whenever there’s an election, the market does this or when a Republican occupies the White House, it almost always… it was something about the markets predicts the election or elections predicts the market.
And there was some of that correlation causation conversation around a lot of that. I remember some new stories coming out about that thing.
Kevin Kroskey: If you talk to people that actually do the research, sometimes you’ll hear the phrase torture the data to find statistical links. So, you can look at things and say, well, there’s a saying, “Hey, you sell in Maine, you go away.” That’s the investing strategy.
Just because there’s a past pattern in the data doesn’t mean that it’s a good reason. As it relates to investing anyway, ideally, you want to have a good economic reasoning linked to statistical evidence. And so, you’re trying to find more of a causal relationship. And not just some data, but something that is theoretical and then supported by the evidence.
And this may sound wonky, but I can tell you, I’ve looked at so many investments or new investment strategies over the years, or even just trying to understand historically what has worked. And if you don’t understand this little nuance, and it may sound like a little nuanced. I mean, to me, it’s become more commonplace, because this is what I do and what I’ve done for many, many years.
But the other financial advisor that I mentioned, that gave the 74% Cape Cod story, I’m like, dude, you guys manage a half a billion dollars for your clients, you better understand this because if you’re making investment decisions with that same thinking, I feel sorry for your clients. Maybe that’s me venting again, but maybe I shouldn’t do that. But the point being, I mean, this stuff is important.
Walter Storholt: I allow it, Kevin, go ahead.
Kevin Kroskey: All right. And here’s the close the loop and I’m sure the… I have a family member and she probably doesn’t listen, but, yeah, this would upset her. So, another issue, so I did the issue, and you see this all the time in advertising, too. I mean, I just saw, I was reading a business magazine this morning. It said, companies with PEOs grew 29% faster than companies without PEOs.
The PEO is just a Professional Employee Organization. It’s a way to structure and outsource some of your benefits and HR needs and things like that. But it goes back to that same thing. It’s a correlation thing. It says there’s no causal relationship there. And I doubt if you dug into the data that you could find one, but maybe it makes a good headline for the ad and for the PEO that was trying to support it and sell it.
Something else that’s been pretty prevalent over the last, I don’t know, a couple of decades, back to the vaccines. And this whole thing with autism and the increase in autism and how it was supposedly linked to giving the MMR vaccine, which has been thoroughly debunked. I’m not going to get into that. I’m sure I’m offending a lot of people right now. Sorry, I believe in math.
And just because there’s a correlation there, it’s just like the ice cream and murder rate. It’s been proven now if you can understand the math, that there is no causal relationship there. They’ve actually shown that autism can onset and does, like six to 12 months old even before the MMR is being administered and some other things.
So, that’s I guess maybe my final, take the media or take some advertising, show the issue related to investing, close the loop with the vaccine. So, Walter, I honestly didn’t prepare too much for this one, just like the last one, but it’s been a lot on my mind. So, hopefully, I’m making a coherent argument here.
Walter Storholt: I didn’t prepare with my 18 examples that I have ready to go to illustrate my point today, but I didn’t prepare.
Kevin Kroskey: I didn’t prepare to the level that I’d normally prepare.
Walter Storholt: Well, I’ve got a few for you. So-
Kevin Kroskey: Please.
Walter Storholt: And it’s just because, like so you can take it as, okay, we just have to dig further into the numbers. But it gets even tougher when you realize that people are purposefully then manipulating these things. And it can happen very subtly. And so, there was one example I remember reading about just a couple of months ago, where it was reported, something like, less than 10% of transmission happens outside, outdoors of COVID-19.
And so, you might hear that and go, it was almost written in a positive way of like, okay, less than 10% of transmission, but the 10% still sounds pretty high. And I think that’s where our brains go, oh, it must be nine-point something, right? And, oh, that sounds a lot higher than maybe I would have thought. Well, in reality, it’s actually less than 1% in may even according to some reports be less than 0.1% of transmission happens outdoors.
But yet, the way it was reported and portrayed was less than 10%. So, that’d be like saying there were less than 20,000 shark attacks each year in the United States. And it’s like, oh, does that mean there’s 19,000? That just leaves weight. And it’s just a small manipulation or omission, perhaps, or just an inaccuracy, whatever the reason behind that big gap. You can just see then how that can change attitudes, minds and opinions.
In a non-COVID example, I run a family football, we call it the family football challenge. And it’s just a family pickup game that I’ve done in my family. We’re in season 11 at this point. I’m the manager of the game. It’s just a big thing we do with all of our extended family. But back in the early days of the game, we only had about 11 or 12 people involved, now we’re over 20 at this point, but only 10 or 11 people in the family were playing the game.
And each week, I’d send out what the results were. And as the season would were on, I’d always looked for ways to keep the people who are at the bottom of the standings still excited and interested in the events. And so, I’d make it a big deal when somebody would crack the top 10. So-and-so got off the slot, got off they’re losing ways this past week, and had a really big week and just crack the top 10.
And it makes it sound like it’s this really cool, big thing. Well, there are only 11 people in the game. So, it wasn’t that big of an accomplishment. But I can massage those statistics to say whatever I want them to say. I mean, you can look for positives and negatives in almost any statistic. And that’s what’s just so dangerous in today’s world, because then you combine that social media element that you were talking about, these things can get posted.
And even if they’re completely wrong, the damage is done, because everybody sees it, runs with it, makes up their mind with it already. And they may not see the correction. They may not see the fallout from that being wrong. And so, then it’s just, it’s over at that point, that’s already sunk into their brains. And we as humans have such a tough time of undoing something we’ve already made up our minds on.
And I feel like that’s the trap that we keep falling into here, whether it’s investments, COVID, or some other subject. And that’s just the really tough part. You can do this with the individual stocks, right? You can go and look at the… anybody could go play this game, go pick any stock and look at the chart, and then look at the one-month view of the chart. And you might say, “Man, this stock is awesome. Look at that. It’s just going up and up and up.”
And then expand it out to a three-month view or the six or the year or even better the all-time view. You’re like, oh, wait a second, the stock, that’s $4 that I was like, oh, this thing’s gone up from two. This is fantastic. It used to be $150 back in the day. And now, it crashed for many, many years and has a small resurgence and just tells a completely different story every time you just widen the view out a little bit.
And I feel like we just don’t have the capacity sometimes to absorb all of that with these statistics and information that we hear on a daily basis.
Kevin Kroskey: Well, there was, I don’t know who said it and I’ll paraphrase the quote as I recall it, but what you were just talking about was these Chartists, looking at this chart of some past pattern or something. I believe it was a Nobel laureate, somebody that I would have been reading that I would have been trying to learn from on investing. And he said, “Chartists are similar to astrologists. However, as I see that I’m offending the astrologist,” implying that the Chartists are even worse.
So, it doesn’t really work, I guess is the point there. I guess tangential to this, and I completely agree, there’s like this tribalism, it seems, I’d make up my mind and change my mind. I’m happy to learn from people that are smarter than me, I try to do it all the time. I personally like to listen to there’s something called Intelligence Squared podcast where you’ll have a debate of two educated people on opposing views of the topic, and I like to… it’s pretty cool because you get to hear these informed people argue their point.
They take a poll before the talk is given, and then they take a poll after. Basically, the winner of the debate is the person that sways more of the population towards their view. And I enjoy it. I try to see both sides as best as I can anyway. But, yeah, I mean, social media and this tribalism, I mean, it’s just, I don’t know. To me, I just don’t like to participate in it. So, I had a bit of a fail on that recently. And I will go ahead and abstain from it moving forward.
But I just read a book or I listen to it, it’s called Mine!, M-I-N-E, exclamation point. Two law professors wrote it, and it’s about property rights. I know, if you’re listening all this long that it before you sleep, but it was actually really good, so we’ll-
Walter Storholt: I was not expecting that, by the way.
Kevin Kroskey: One of the questions, for example, it’s all stories, but you get on an airline seat, and you have that reclined button. Let’s say that you’re not on frontier, one of the discount ones. So, who owns the… do you have the right to recline, or does the person behind you have the right to that space?
Walter Storholt: Who owns that airspace, that three inches?
Kevin Kroskey: Who owns two or four inches or whatever it is? And so, it was a really cool story.
Walter Storholt: Or the armrest.
Kevin Kroskey: Yup.
Walter Storholt: Who you divvy up the armrest, right?
Kevin Kroskey: You got it. And it talks about how these property rights really change over time. And it was fascinating. But there’s also the interjected, there’s an economic thinker, I think he’s deceased. Now, Ronald Coase, really smart guy, I’ve heard a lot of different professors use him in some examples, where you look at these competing objectives.
So, for my daughter right now, we would prefer that she wears a mask, and we just precludes her from getting sick. I don’t, I’m not scared if she gets COVID candidly. I know, it’s a very low probability Silicon Valley, and I don’t want her to get the common cold level of COVID. And I don’t want her to pass it around to somebody else that is maybe immunocompromised or something like that, I just don’t think that that’s a responsible thing to do. That’s my value.
But the people that don’t want to wear the mask that say, hey, my body is my temple, you can’t tell me what to do. Well, I mean, I know about you, Walter, but the last time I tried to sell my kidney, one of my spare kidneys, I wasn’t able to sell it. So, there’s, you draw these lines somewhere in society, and you make these choices.
And one of the things that… both of those arguments I think are valid. I do see the choice that I don’t want to go ahead and, I said this in two episodes go, you’ve prefaced the whole, aligning your values, planning your investments with your values, and you said, Kevin’s going to tell us what you should do. And I quickly said I’m not going to shut over you. And I believe that.
So, the person that doesn’t want their breathing restricted, my body is my temple, valid argument. I can’t debate that at all. But also, on the other side of it, what I explained with my daughter, too, and I want her health protected, this delta variant particularly is incredibly contagious. And there’s also some other potential passing on, even the vaccinated people that are immunocompromised or otherwise, and they can get sick.
So, I think both of those arguments are valid. But the reason why I brought up Coase was he has a framework for working through this, and it’s simply, he acknowledges this, and he tries not to go ahead and get into the moral aspect of any of this. But it’s really, if you’re trying to optimize the benefits of the resource, or if you’re just, if there’s maybe not benefits, but you’re trying to minimize the costs, and you just want to do it in which way makes most sense and tilt the scale.
So, while both of those arguments, I see them as valid anyway. I do try to see the other side. I think when you look at it, and you have this conflict and realizing that both are valid, and you have to tip the scale one way or the other. To me, I mean, it’s a no-brainer to go ahead and tip the scale and let’s just wear the mask. One, I want my kids to be in school. I want them to learn. Two, if they have an outbreak, they’re going to be distance learning and school is going to be shut down.
So, I want them to be in school. And if somebody’s immunocompromised, I don’t want them to get sick. I was at a fantasy football draft of my college buddies over the weekend. It was good fun. We do it every year. Get to see about 14 buddies of mine that I haven’t seen that we grew up together, and we still stay in touch. And one of us was not vaccinated. And I knew, they speculated it. And he was my roommate for a couple of years.
And then, there was another friend who’s also a roommate in my junior and senior year, who has Crohn’s disease, and he’s immunocompromised. He’s vaccinated. But he’s the person, when you bring it down to the person level, rather than just talk about some broad statistics, that could get hurt from somebody like my other roommate not getting vaccinated and passing this around.
So, both arguments are valid. I’m not saying they’re not. I don’t want to shut over anybody. But sometimes you have these tough decisions, you have to make a call. To me, it’s a no-brainer to get vaccinated. To me, it’s a no-brainer to wear a mask, particularly since my child is under 12 and doesn’t have the choice to get vaccinated. But, hey, it’s my podcast, I guess I can say that, right, Walter?
Walter Storholt: You have the liberty to say whatever you want, man. I suppose maybe one of the apps could potentially kick us off if they didn’t like something you said. But for the most part, it’s your show.
Kevin Kroskey: All right, that’s true.
Walter Storholt: You own your RSS team.
Kevin Kroskey: Well, that’s a good that book, it’s actually in that book, to your Mine!, it talks about property rights, where possession is nine-tenths of the law in person. But in the digital world, it’s the opposite of that. If you download a book on Kindle, you think it’s your book, but, hey, Amazon may just wipe it clean, and they can do that. So that book, Mine!, it was really interesting. I mean, I know I’m a bit of a nerd in some regard, but I think with the stories, I think a lot of people get a lot out of it.
Walter Storholt: Reviewed by Kevin Kroskey, one of the best property law books of all time. Mine!, go check it out today. Sounds like a, is that how your review would read?
Kevin Kroskey: You got it.
Walter Storholt: Fantastic.
Kevin Kroskey: I’m a top 10-million reviewer on every book.
Walter Storholt: There you go, there you go. Just remember, that seems a little bit of a nod to that 20,000-shark attack stat. That was pretty good. I’m a top 10-million reviewer. That’s fantastic. I will leave you with this. Just remember that 90% of statistics can be made to say whatever you want them to say. That’s the final statistic to share on today’s show. So-
Kevin Kroskey: Walter, I was going to say that, but mine was going to be 98%. But-
Walter Storholt: Well, we just have to look a little bit more into the data. That’s the wiggle, the wiggle factor. There’s a little wiggle factor in some of those stats.
Kevin Kroskey: Yes. I wish that they taught statistics in… well, they do teach it in high school, but you don’t have to take it. But, yeah, I mean, it’s good to understand. And statistics helps you understand, it does. But I don’t know, hopefully, this brought some clarity to people that are open to having it.
Walter Storholt: I think you brought up an important point, too, with the situation, the fantasy football draft and your friends. There’s a necessary element to do both of these things, right? Look at the stats, look at the broader view, but also remember the human element, the personal side, and the individual interactions that we have with people.
So, it’s not one or the other. It’s not the one anecdote that you’ve experienced, and that shapes your worldview. But it’s also not just the broad numbers. I think sometimes you have to look at both of those things, your own real-life experiences and the things you’ve experienced yourself and combining that with what’s happening in the larger numbers that might help shape and put things into the right perspective for you and in some situations, perhaps. So-
Kevin Kroskey: Yeah, and back to them and good old Ronald Coase, minimizing the costs. So, the cost is my daughter wears a mask. I don’t know about you, but I didn’t hear about some big outbreak last school year about all these kids dying off or going to the hospital from wearing masks. Maybe, yeah, sure, it’s more comfortable without having it, but that cost versus the other costs of not being in school, not learning, you’re infecting somebody that’s immunocompromised, spreading it, you name it.
I mean it to me, when I look at this economically, from a cost-benefit perspective, it just becomes a no-brainer.
Walter Storholt: Yeah. Well, thank you for sharing your perspective, for being a little opinionated on today’s show. That’s okay. We can do that every once in a while, here, Kevin. I thought we had the conversation in a respectful way. And hopefully, nobody’s too upset with you on today’s show.
But I thought it was good content, very interesting to listen to your comparisons between this, and then also in the investment world where we see a lot of these statistical, I don’t know if we want to call them anomalies, misinterpretations, errors, bad conclusions, but something in that realm. Interesting to see how those things all play out.
Kevin Kroskey: And I’ll say this to you, Walter, if anybody’s still listening. And you happen to see a headline that doesn’t make statistical or mathematical sense or something. It doesn’t have to be even an article, send it to me, I will… maybe this could be a future segment that we do, because-
Walter Storholt: That would be fun. Yeah.
Kevin Kroskey: No shortage of this that’s out there. But, I mean, I see it all the time. And with a little bit of help from our listener, audience, maybe we can have a little bit of fun with this. And not only just fun but really educate some people to make some better comparisons to do some better thinking.
Walter Storholt: The messed-up stats segment. We’ll have something along those lines.
Kevin Kroskey: Messed up math.
Walter Storholt: Messed up math. There we go, there we go. Messy math, messy math, I think we’ve zeroed in on it. Yeah, that sounds great. If you want to send those to us, please do, you can contact us through the website truewealthdesign.com. That’s truewealthdesign.com. And it’s also where you can schedule a 15-minute call with an experienced financial advisor on the True Wealth team. Just click the “Are we right for you?” button. And you can also call 855-TWD-PLAN.
Kevin, thanks for joining us on the show today. Take a little risk stepping out there and we’ll look forward to chatting with you again on the next episode.
Kevin Kroskey: Appreciate, Walter, thank you.
Walter Storholt: All right, for Kevin and Walter, we’ll see you next time on Retire Smarter.
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