I was watching On The Waterfront, a 1954 film about labor unions, longshoreman, corruption, and standing up for what is right – irregardless of the cost – and found some of the dialogue very interesting.
The excerpt below is from a speech Father Barry, a catholic priest played by Karl Malden, gave on a ship after the “accidental” death of Kayo Doogan, a longshoreman who was set to testify about his knowledge of the union leaders participation in the murder of Joey Doyle. I have lightly edited it by including some of the onscreen actions in brackets as well as omitting some dialogue that is not particularly important to get the gist of what Father Barry was trying to communicate.
FATHER BARRY
I came down here to keep a promise. I gave Kayo my word that if he stood up to the mob I’d stand up with him all the way. Now Kayo Doogan is dead. He was one of those fellows who had the gift of getting up. But this time they fixed him good — unless it was an accident like Big Mac says.
Some people think the Crucifixion only took place on Calvary. They better wise up. Taking Joey Doyle’s life to stop him from testifying is a crucifixion — Dropping a sling on Kayo Doogan because he was ready to spill his guts tomorrow — that’s a crucifixion. Every time the mob puts the crusher on a good man — tries to stop him from doing his duty as a citizen — it’s a crucifixion.
And anybody who sits around and lets it happen, keeps silent about something he knows has happened — shares the guilt of it just as much as the Roman soldier who pierced the flesh of Our Lord to see if He was dead.
{fruit flies from off screen at Father Barry}
CORRUPT LONGSHOREMAN
Go back to your church, Father.
FATHER BARRY
{looking up at and pointing to the ship}
Boys, this is my church. If you don’t think Christ is here on the waterfront, you got another guess coming. And who do you think He lines up with —
ANOTHER CORRUPT LONGSHOREMAN
Get off the dock, Father.
{fruit flies, hits Father Barry on the shoulder. he ignores it and continues}
FATHER BARRY
Every morning when the hiring boss blows his whistle, Jesus stands alongside you in the shape-up.
He sees why some of you get picked and some of you get passed over. He sees the family men worrying about getting their rent and getting food in the house for the wife and kids. He sees you selling your souls to the mob for a day’s pay.
{a tin can strikes Father Barry on the head and blood etches his forehead. a member of the crowd says something. then the father continues}
What does Christ think of the easy-money boys who do none of the work and take all of the gravy? And how does He feel about the fellows wearing hundred-and-fifty-dollar suits and diamond rings — on your union dues and your kickback money? And how does He, who spoke up without fear against every evil, feel about your silence?
THE MAIN CORRUPT LONGSHOREMAN
Shut up about that!
FATHER BARRY
You want to know what’s wrong with our waterfront? It’s love of a lousy buck. It’s making love of a buck — the cushy job — more important than the love of man. It’s forgetting that every fellow down here is your brother in Christ.
But remember Christ is always with you — Christ is in the shape-up, He’s in the hatch — He’s in the union hall— He’s kneeling here beside Doogan. And He’s saying with all of you, “If you do it to the least of mine, you do it to me!” What they did to Joey, what they did to Doogan, they’re doing to you. And you. And YOU. And only you, only you with God’s help, have the power to knock ‘em off for good!
There are a lot of challenging things in what this fictional Father had to say. He demands:
- Fair employment practices
- Fair compensation based upon production and usefulness
- Complete intolerance of wickedness
- A proper prioritization of the welfare of others
I think that these are important things for us to consider during these tough economic times. Will we as a people be remembered for our character, our decency, and our love for others? Or will we degrade into self-serving, soul-starving selfishness that enriches our lives (and maybe even those of our particular tribe) but leaves those around us worse off than they were yesterday?
More was decided on November 4, 2008 than who would be the next President of the United States: pay day loans also came under fire in two states, Arizona and Ohio. Just to make things clear, I think these types of loans are the absolute worst. They have extremely high effective interest rates (up to 391% APY!) and prey upon the economically disadvantaged and poorest of the American poor. A cash advance, as they are sometimes referred to, are often one way tickets to a life trapped in debt.
Imagine having thousands of dollars in this type of loan with an interest rate of 391% per year. The interest on a loan of $1000 would be $3910 for the year, so having even $2000 of this type of debt can be crippling to you and your family’s financial health! Even if you took out $2000 worth of pay day loans and paid them back as soon as you could, you could expect to pay something around $300 for the “privileged.” This unconscionable and needs some serious smack-downage.
Which brings us to the 2008 elections. Both Ohio and Arizona had propositions on their state ballots that directly relate to these types of predatory loans. What follows is some of the background information on what was on the ballot and how voters in each respective State handled these measures.
Ohio and the Ohio Payday Loan Referendum
Pay day loans in Ohio came under fire when the State Legislature passed HB 545 in the Spring of 2008. In this law the egregious interest rates pay day loans charge were capped at 28%, still very high but significantly lower than the 391% allowed by law at the time. In response to this, the cash advance industry mobilized an effort to put the section 3 of HB 545 on the ballot for Ohio voters to make their voices heard about this measure.
Interestingly enough, there were voices not associated with the pay day loan industry that wanted Section 3 of HB 545 to be repealed. The following quotes are taken from the Ballotpedia article on this ballot referendum (found here):
- C.O.A.S.T. (Coalition Opposed to Additional Spending and Taxes) states, “This weird law takes state government to a new level of creepy interference with our lives.” This is a reference to the measure requiring a borrower who takes two pay day advances in 90 days to be required to take a state-mandated education program that encourages value perspectives of the government. The consumer is charged a $250 for the class.
- The Ohio Chamber of Commerce wrote in a letter to Members of the Ohio House on April 30, 2008 “The payday advance industry provides a legitimate service that is responsibly used by thousands of Ohioans with short-term financial needs. The industry also provides over 6,000 Ohioans with good-paying jobs and many include health insurance and other benefits.” (Source)
- Ohio Grocer’s Association also gave their support to a repeal of section three by saying, “If payday lending businesses cease to exist in Ohio, which is likely if H.B. 545 is enacted, OGA’s members could be hurt through an increased number of bounced checks, fraudulent checks and even theft.”
- And finally, the national Spokerperson for the Congress of Racial Equality, Niger Innis, supported the place of the pay day loan industry in providing immediate cash to people in need – just like he and his organization did in Washington and Georgia in previous bouts between they “legal loan sharks” and state legislators.
I found these supporters of pay day advances surprising to say least. No practice that preys on the economically disadvantaged should have any part in our financial or economic system, even if it does create jobs and meet the need of an individual in dire financial circumstances. Instead of charging these people up the whazoo, we should be seeking to educate them and help them overcome the economic disadvantages that have created the situation that makes legal loan sharking necessary.
Fortunately, 66% of Ohio voters agreed that payday cash advances suck and need the very serious limits imposed on the interest rates by HB 545. Pay day loans, 0, the American people (of Ohio), 1.
Arizona and the Arizona Payday Loan Reform Act
The Arizona Payday Loan Reform Act was a misleading title to Arizona Proposition 200. Just read the description filed with the Arizona Secretary of State’s office [bold text is my added emphasis]:
Arizonans use payday lending services everyday to meet unforeseen expenses and financial emergencies. The payday lending industry is set to be eliminated and the Arizona Legislature refuses to enact reforms to benefit borrowers while preserving this important financial option. This measure will bring dramatic pro-consumer reform to payday lending and preserve consumer choice. It includes a substantial rate cut, eliminates rolling-over principal to extend a loan, creates a repayment plan at no cost to customers that can’t meet their obligations, and inhibits a borrower’s ability to obtain more than one loan at a time.
As you can see, Prop 200 would keep the payday lenders in business. As far as I am concerned, that is not real reform. Taking a closer look at what Prop 200 would have done if passed by the voters we find that:
- The cash advance industry, which would be eliminated in 2010 after the current enabling laws expire, would have been able to give loans indefinitely
- The maximum fee that can be charged with these loans would have fallen from $17.65 to $15 on a $100, two-week loan – an APY of 391%
- Lenders would not have been allowed to roll over the principal into extended loans and would have had to offer consumers repayment plans
This would not have been any reform at all.
Luckily, the voters in Arizona realized what was going on with the Arizona Payday Loan Reform Act and defeated it on November 4th. Pay day loans, 0, the American people (of Ohio and of Arizona), 2.
Whether or not you liked the outcome of the presidential elections or the countless other local races and issues that were presented to the American people just a few short weeks ago, you have to admit that this blow to the usurious and hazardous payday loan industry is an excellent thing for America.
I have definitely been thinking about dollar cost averaging as an investment strategy a bit these days. My last post about Dollar Cost Averaging In A Declining Market and the discussion in the comments has really helped me get my thoughts together and crystallize just exactly what I was thinking and trying to communicate. Add to that a post that I found over at All Financial Matters (via Get Rich Slowly) and I think I have come up with a much better way to demonstrate what I was trying to communicate in my previous post.
As a reminder, I think that dollar cost averaging in a declining market is not a good strategy (long term or short term) – especially when one dollar cost averages into mutual or index funds. I still hold this position and here is some more information that has helped me stay here.
JLP wrote a post titled Dollar-Cost Average Your Way Through The Depression in which he compared the returns generated from lump sum investing and DCA. Here are his assumptions:
A lump sum investment of $1,840 on the last day of September, 1929 and $10 per month ($1,840 over 184 months) invested on the last day of each month from September, 1929 through January, 1945.
With these assumptions, DCA outperforms lump sum investing handily as this graph that JLP produced deftly demonstrates:
A Better Investing Strategy?
It is incontrovertible that dollar cost averaging absolutely destroys lump sum investing given these criteria, but what happens when we add three more scenarios to the mix? In addition to JLP’s two scenarios I want to add three of my own to the mix: Wait 12 Months, Wait 18 Months, and Wait 24 Months. The assumptions for each of these is that the investor dollar cost averages into the market up until they realize the crash is for real – let’s say 6 months after the crash in October 1929. So after their last investment in March 1930, they hold on to their money and wait to invest in the market until they see signs of some recovery. One person waits 12 months and then invests the $120 that they saved, the next person waits 18 months and invests the $180 that they saved, and the next person waits 24 months and then invests the $240 that they saved. Here is some of the data that I found:
Important note: I was unable to determine how to calculate dividend payments on this “index” fund based upon the prices of the DOW Jones Industrial Average so such payments have been completely left out. All numbers below represent the market value of “shares” only. This will help explain to those careful chart readers the differences between my graphs and the one produced by JLP. If you happen to know how to include dividends in this analysis please let me know.
Also, I assume that all this occurs in the world of zero cost trades, zero expense ratios, and zero taxes. Wouldn’t that be a great world!
Waiting 12 Months
If a person stopped their dollar cost averaging strategy 6 months into the great depression and held off investing for 12 months they would have generated returns that were essentially equal to those of the DCA strategy, minus the difference in one year’s worth of the additional dividends from the DCA strategy. I assume this difference between the DCA strategy and my modified DCA strategy is negligible, so I think that it would be fair to say that the returns are essentially equal.
Dollar Cost Averaging Strategy Returns: $2369.29
Dollar Cost Averaging Strategy Returns with 12 month pause: $2372.37
Difference: 0.13%
Waiting 18 Months
Waiting 18 months would have made this theoretical investor very happy. Because he waited to invest his money, he was better poised to take advantage of the eventual rise in the DOW as the country slowly dragged itself out of the Great Depression.
Dollar Cost Averaging Strategy Returns: $2369.29
Dollar Cost Averaging Strategy Returns with 18 month pause: $2520.95
Difference: 6.40%
Waiting 24 Months
This is by far the best of the three, but when you look at the graph you will definitely see why – the 24 months lines up with the very bottom of the stock market during the Great Depression. This was a coincidence and is very unlikely in real life, but interesting for our example nonetheless.
Dollar Cost Averaging Strategy Returns: $2369.29
Dollar Cost Averaging Strategy Returns with 24 month pause: $2854.95
Difference: 20.50%
To Dollar Cost Average Or Not To Dollar Cost Average In A Declining Market
Ultimately, the choice of what an individual does with his or her investments is entirely up to them. I am not a financial adviser, stock broker, or even the slightest bit experienced with the stock market. So just because I put up some numbers and graphs on a website does not mean that I should be listened too. In fact, there are probably very many people who think I don’t know what I am talking about when it comes to dollar cost averaging.
I think my choice is clear, I would hold off on a dollar-cost averaging strategy until I felt like I had signals from the market that things were okay now. Since I am not a very serious investor (read no money to invest) I have not done due diligence to see if the market is at bottom or is going to drop further. I would that my hunch is that it will go down farther – but then again, what do I know.
This does highlight something very important about investing in general: if you are going to invest your money make sure that you are educated about what you are doing and have done some of your own analysis. This goes for a Dollar Cost Averaging investing strategy or a stick-it-under-the-mattress strategy.
This morning on my way to work I pedaled my 1000th mile bike commuting. According to my official numbers (which are probably a few miles below actual) I have ridden 1005.2 miles since I started my journey toward extreme fuel efficiency. Not all those miles have been easy for me, and riding these miles has taught me a thing or two about cycling and life.
The first: if you stick with it, things will get better if you work on them. I remember distinctly traveling one 3.8 mile stretch early on in my bike commuting days and my legs where sore, they were burning, I was hot, and my backpack felt extremely heavy. I remember thinking to myself, “I can’t wait until this is easy!” While things haven’t gotten as easy as I would like, riding has become much more natural and my body has really become much, much better at handling the 100+ mile weekly commute. My legs still have some achy-ness come Friday, but they are generally strong throughout the week and take hills much quicker than when I started. By sticking with it and working through the discomfort and fatigue I have been slowly conditioning my body to accept my new mode of transportation. My body is becoming my slave.
Walmart and Kmart are not a bike shops. This is a no brainer now, but when I first started out I just wanted to buy what I needed quickly and at a cheap price. This was definitely a mistake. I bought two pumps (one for home and one for traveling), several tubes, and two tires from these establishments. I use none of them now. Both pumps are now broken and the tubes kept getting holes in them which I blamed on my Walmart tires. In total I probably spent between $50 and $100 on these items – a heck of a lot considering that it was essentially wasted money. I plan on not making this mistake again any time soon.
I am still really competitive. I knew that I was competative, but it has been a long time since I have done very much physically. Sure, I play the occassional game of dodge ball with kids that I know, but I really haven’t had a consistent vehicle to test my mettle against past performance and against other performers. Cycling has given me this again. I am already having thoughts of participating in grueling endurance events, taking on some sort of fitness goal, or playing in some sort of adult league. Bike commuting may be enough, but we will see where this takes me now that my appetite has been wetted.
Early mornings are a great time to be up and outside. I have always liked early morning physical activity, but I have really grown to love it since bike commuting. The color of the sky, the feeling of the air, the crisp surprise of dipping into a canyon, the way that the sun settles on the brush – all these make me feel alive and fill me with a wonder at the beauty of creation. Isn’t it great to be alive?
Car insurance costs drop dramatically when you don’t drive to work. We have finally contacted our insurance provider to do some switching around of our insurance plan. Now that we only have one car and that car is not used for commuting purposes our premiums have seen a very dramatic drop. If everything stays the same, in 2009 my wife and I will pay less than $600 for car insurance. That is less than $50 a month. Currently we save $140 a month for insurance expenses. Bike commuting has reduced our car insurance costs by over 60% – not too shabby if you ask me.
As of today, my bike commuting has cost me $321.85 or $0.32 per mile. One of these days I am going to have to do a more indepth cost analysis between car commuting, bus commuting, and bike commuting to see exactly how much these different modes of transportation affect my bottom line. I am pretty confident that cycling is all around cheaper, but looking at the hard numbers objectively will help me decide if I am really being frugal in cycling to work or not.