Kaulapi World

Geocities shut down last week, this was my last post on the kaulapi site:

Probably the last post on this site before Geocities goes poof. I’m just about moved over to the mirror site, although I’m kind of wondering what kind of format this journal should take on from here on. Since I’ve wrapped up school and the bar exam I’ve been keeping pretty busy just enjoying the change of pace. I started my new division at work a few weeks ago, and have been wrapping up my last assignment to make for a smooth transition.

Bar results should be coming out shortly, but with the job market the way it has been, I’m relatively calm as my current job situation will not be changing anytime soon, pass or fail. I’d like to pass the first time and get it over with but I’m fortunate in my situation that there is about zero pressure. Stepping away from the study of law has given me a moment to reflect and reaffirm some of the fatal flaws of our legal education system, which I think can be summed up as 3-4 year long intellectual pissing match between very competitive and bright personality types.

All in all I’m just enjoying life, amazed at just how quickly chapters close, others open. More on this later on the other side. It’s been an interesting decade years on this geocities site. Hopefully be many more.

Pretty quiet for August, still recouping from the mini-marathon that is the July bar exam. Plus I’ve been pretty busy with work. More developments, some good, some just so-so. Meanwhile this past weekend I went up to Wilmington and the Brandywine Valley, saw some gardens, and another part of the country. Drove down the Delaware shore to Rehobeth and Bethany Beach, ate some mean Blue Crabs and Fried Chicken. Burned through several hundred miles of country side.

Finished my last final a few days ago.  It hasn’t sunk in just yet, but barring some suddenly stringent grading policy, I should be a Juris Doctor officially now.  Part of me hasn’t accepted it just yet, thinking that I’ll believe it when I get that diploma in my hand.  In the meantime, I’m just enjoying not having to read any thick red/green/blue/brown books a t least for the time being.

Keeping an eye on the markets today, as I have been a lot lately, and noted that the DOW checked in just about 50% of the peak we saw this past summer 2008.  That’s a pretty significant statistic, 50% down now if your portfolio tracked the major stock indexes.  Before I shutdown my workstation for the day I took a look at a few of my account balances and cringed the thought of what the latest -3% drop might do for some of my long term accounts already in a sea of red for the year.  I’m sure that I’m not alone in this boat, a lot of people I talk to are talking about painful losses, others just don’t bother to check in since they know that its bad bad bad.

All this got me thinking about a possible breaking point for 401k contributions, and the start of what might just be an overall downward trend, if things were to continue going this way.  In breaking point I mean that at some point I could see a significant number of 401k participants might just fold their cards down and refuse to play.  It goes to the statutory structure of 401k deferred tax retirement plans.  You pay a portion of your paycheck tax free into a retirement account that you can’t touch without penalty, until you are of retirement age.  To sweeten the pot, your employer matches a certain percentage (1%, 5%, 10%, 15%, etc.) as part of a benefit package.  Depending on the setup, you can then invest this money into regular securities on the market, or certain designated index funds proscribed by your employer.  The additional benefit is that any gains you make on your account are tax deferred until retirement, at which every withdrawal from your account is subject to income tax.

Logically, there are several benefits to participating in a 401k program, but most powerful are the tax deferred incentive for contributions, and the tax-deferred status for gains.  However both of these benefits are tied to a single assumption that has been challenged in the recent market trends – an aggregate positive rate of return over time.  Everything is fine when the market is appreciating at an exponential rate in boom time, but in prolonged recessions marked by triple digit losses in almost all sectors on consecutive days, weeks, at some point the incentives for contributing to a 401k, will be canceled out by compounding losses in the stock market.

I’m getting a sense that what might be coming up, could be a breaking point for 401k contributions to zero, or at the very least, to the minimum employer match.  Depending on each company’s set up, and fund allocation, we’re most likely looking at a 10%-15% drop on the year so far across the board, given the drops in the major indexes.  With a SWAG estimate of 20%-25% tax rate, you can see that if the mounting losses continue, at some point in the near future they’ll meet or cancel out any tax benefit from a 401k contribution.  If and when this happens, I could see a shift in behavior for those who are able to scraped by to meet the max ($15,500 for 2008, $16,500 for 2009) for the past few years, even despite all the economic turmoil in the markets, to one of cash savings and liquidity.  In other words, things are so bad that even the most aggressive 401k contributors would conform to 401k deposits of 5% or lower.

One would think that a change in investment strategy of this magnitude would surely have a significant affect the overall market, which would indicate an accelerating or a market sell off.  From a very basic sense, I think this makes a lot of sense.  I’ve been looking at what has been happening lately with the markets, and have been feeling more and more discouraged, thinking “whats the point?”  Why save the money for later when it can just depreciate by double digits in a single day?  I’d be better off putting that money into cash, and then eventually into US treasuries or some kind of short term CD.  This might lose against inflation, but at least it wouldn’t go down in value.  Then again, maybe the best strategy for this market in the short term is to simply not play.

Lame disclaimer: I own some publicly traded stocks, bonds, and other securities in the market, some in regular investment accounts, others in tax deferred accounts and others in retirement accounts none of which are doing particularly well so for in 2008 or 2009.  Therefore, none of this commentary is intended to, or should be taken as investment advice in any shape or form, express or implied.  These are all just random thoughts and observations that a novice could do in these interesting financial times.

Got read the riot act so to speak at a bar prep meeting on Friday. Pretty much ruined my looking forward to the weekend, but I guess I needed it with a few months left of the semester, and pre-pre-bar activities coming up around the corner. In some sense it seems like its the usual scare speech for the sleep deprived evening students in the room, but then again it was very necessary to hear the level of work and time commitments that we’ll be embarking on very shortly. My one comment is that I think a lot of this information probably would’ve been helpful like 1, 2, 3 years ago. I guess in some respect many of us would’ve just brushed it off, but still it might’ve been helpful to hear this with some advanced notice instead of all at once on a Friday evening.

Oh well, back to the books. And back to work tomorrow morning. And on to class in the evening.

Reading up on pictures and reports from the aftermath of the hurricane that hit SE Texas this past weekend. It’s amazing at how much damage the storm surge did to taking out entire towns along the coast. One section of Galveston looked like a bomb went off, with just vertical wooden planks standing up, everything else is pretty much swept away.

Events like these serve as a reminder to my own preparations for a natural or man-made disaster. Call it the old scout in me, but I’ve made it a point to make some kind of preparation, although its a modest effort overall. Over the years I’ve accumulated a small cache of supplies, a good supply of canned goods here and there, cooking oil, non-perishable grains (rice, beans, lentils) a butane stove and extra fuel, freeze dried camping food, candles, batteries, a few MREs, and a handful of stack-able water cans. Most recently I’ve added a KAIO shortwave radio equipped with 4 sources of power (AC, batteries, hand-crank, solar). Depending on the prognosis of the disaster when it hit, at least these supplies could last a couple of weeks, maybe longer with rationing.

Its 2AM and Hurricane Ike is battling down on Houston, Galveston, Texas – hope everyone that chose to shelter in place is riding things out ok. Growing up in Hawaii I’ve been conditioned to have a deep respect and fear for mother nature and all of its fury. I’ve had my fair share of hurricanes, earthquakes, tsunamis (well no actual tsunamis, but warnings, anyway), and flash flooding. I’ve also spent my fair share of time in the ocean, riding out riptides, and occasionally eating it on the bigger wave that came out of nowhere. It’s lickings like these that bring a pretty quick slap to the head at how weak and insignificant humans are compared to the elements. This all explains in part why I get a twisted kick at watching all those foolish reporters on TV getting whipped around by the wind and rain. Go inside already you idiots before something heavy and sharp comes flying into your face.

So a few weeks ago I mentioned some blood tests from my trip back home as being kind of a wake-up call. Despite feeling fine and in good shape overall, I found out that some of my blood chemistry was off quite a bit from the normal ranges. They were off enough to cause my folks to sit me down the evening before I was heading back to DC to tell me that I need to slow down a bit with everything and take better care of my health. I think the stress, lack of sleep, (and oh did I mention stress?) of work and night school for the past 3 years has been taking its toll. The fact of the matter is that I’ve been pretty much running on empty since August, 2005 and in some sense I’m amazed that I haven’t lost my mind with all the side adventures and challenges that have come up along the way. The test results were really a second warning. The first warning was earlier this summer when I got my teeth checked out. After not having a single cavity my entire life, my first real cavities ended up being pretty bad requiring some drilling and more drilling, and more filling than I had ever imagined.

All the while I’ve been coming across sobering reports on the state of public health back home, talking about the rise of type 2 (adult onset) diabetes being rampant in Hawaii, especially among Native Hawaiians. Researchers and Doctors are baffled by the fact that the Hawaiians used to be a very lean and fit population, that is, until the overthrow of the monarchy, and the annexation of Hawaii to the United States. Kind of another wake-up nudge to me to keep up with my new health and diet plan.

Honolulu, Moili’ili (X2), Waikiki, Iwalei (X2), Kaneohe and some piece of mind being back home for a bit. Some things change, other things don’t at all.

Few more days and I’ll have a break from school, a few more weeks then I’ll be able take some real annual leave. It seems like the the busy spring went right into a busy summer, almost pau already and my summer course final is knocking on the door coming up next week. Looks like it’ll be late nights at the local coffee shop for me for here on out, looking forward to being finished with what has become a very busy year as a 3E. Looking forward to being a 4E, but more importantly to being almost done with this degree program. It’s been a challenging yet awarding experience.

My Commercial Transactions course this summer has been an example of a challenging course, given the depth of the material and the condensed course schedule down to 8 weeks. This has become another class in an area of law that I seem to have held a interest in that was previously unknown to me when I started school, similar to Corporations and Trust and Estates. I think it helps having a capable professor who can bring it all together quickly and in a way that both challenges you and provokes thought beyond the text and the cases.

Taking more sick leave this week, been a sobering reminder this summer as to how fortunate I am to be gainfully employed and covered by insurance. I’ve been joking with Hana that I should be bringing in lunch for the rest of the year to offset the costs, even after taking into account the insurance coverage. All these appointments have also been a reminder to me on the importance on getting enough sleep on a regular basis and pacing myself for this marathon life schedule I’ve been running for the past few years.

On a side note, I’ve noticed that Meyer’s Brigg temperament has been shifting again, from what was once becoming a solid ENTP to a moderately ENTJ. It has been the P/J split that has been fluctuating throughout my life. If I’m now a J, then it might explain some thoughts and realizations I’ve been having recently, or maybe more. There is something to be said about the temperaments of individuals as well as organizations as to how they can interact. Not sure where my agency would fall under, talking to one of my more experienced co-workers, it could be either an ISTP or INTP. Food for thought.