Cannonball Run
I drove across the country this week. Really.
In 1933, factory worker-turned-vaudevillian-turned racer Erwin George “Cannonball” Baker, later commissioner of NASCAR, drove from New York to Los Angeles by car in a supercharged Graham-Paige Blue Streak in 53.5 hours and, in the process, created a record that stood for nearly 40 years and inspired the “Cannonball Baker Sea-To-Shining-Sea Memorial Trophy Dash,” better known as the “The Cannonball Run.” The unsanctioned race traditionally starts from New York City’s Red Ball Garage and continues to the Portofino Hotel in Redondo Beach, California, covers about 2,900 miles, has inspired at least five movies, and has made an indelible mark on American pop culture.
The current record – set in May 2020 using a tricked out silver Audi S6 disguised as a Ford Taurus Police Interceptor during the height of the recent pandemic, when roads were generally deserted – is 25 hours 39 minutes. The winners hit speeds of up to 175 miles per hour and averaged about 112 MPH (110 after the five pit stops are factored in) for the trip.
My darling bride and I barely missed Baker’s original record this week in our own Cannonball Run, of sorts, from Washington DC to our home in San Diego, California. How and why we did it are the subjects of this week’s TBL.
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Cannonball Run
Regular TBL readers will be aware that my darling bride and I have three grown children. Each of those three is married and each couple has three children. All live within about a square mile in northern Virginia. You won’t be surprised to learn that holiday scheduling can be difficult. Christmas for us has come to be divided into two periods: The week leading up to Christmas and the week between Christmas and New Year’s. We get one week, and the various in-laws get the other. We alternate weeks.
This year, our crowd was to gather here in San Diego on Christmas night and spend a week here. But, we got a bonus. Our oldest’s in-laws, also from San Diego (the kids met in 6th grade), have moved to NOVA. They had other family commitments here in SD leading up to Christmas, which created an opening. Our oldest and his wife needed childcare that week and my much better half was out of school (she teaches fifth grade) then, which created an opportunity.
We agreed to fly east to provide childcare – I worked there, mostly on my annual investment outlook for work – and get bonus time with their three boys. Win-win!
We flew Southwest for the trip, as usual (Southwest has by far the most flights in and out of San Diego). Our flight east went well – as usual. But, while we were there, we began hearing about Southwest’s difficulties, including many delayed and cancelled flights. Fearing that we might not fly as scheduled on Christmas afternoon, we obtained an additional flight early on the 26th.
Christmas afternoon, our oldest dropped us off at Reagan National Airport before he and his family headed to Dulles to fly west on American. Our flight was delayed and kept getting pushed back. Southwest was still telling us our flight would leave when our second leg (out of Oklahoma City) was cancelled. Since it was already clear that we wouldn’t get out of OKC anytime soon, even if we got there, we changed our tickets to a direct flight through Austin, Texas. Our thinking was we’d have a better shot since we wouldn’t have to change planes.
That flight was also delayed and kept getting pushed back. Meanwhile, our children and their families – none flying Southwest – were already at our house (their childhood home) in San Diego.
After midnight, when Christmas had turned to Boxing Day, our Austin flight was called but the second leg, Austin to San Diego, was cancelled. Nobody at Southwest was willing to advise us, but it seemed clear to us that we wouldn’t get out of Austin soon if we got on the plane. A Southwest supervisor later confirmed as much. So, we changed our Austin flight to one out of BWI on the afternoon of the 26th, in case our early morning flight – direct to SD through Dallas – didn’t pan out. We then headed to a hotel for a few hours of sleep before our 6:55am flight.
We took an Uber to the hotel and were hit for a $37 fare for the three-mile ride. The Southwest debacle meant much more rider demand than Uber supply. My darling bride crawled into bed at about 1:30am while I checked our morning flight one more time. It was cancelled. I was not allowed to book a new flight on-line, so I called the Southwest service line. I waited nearly two hours on hold to be told there were no flights available for at least five days and that I should wait for the airline to rebook us the next day.
After a couple hours of sleep, we got up, took a more reasonably priced Uber to Union Station in Washington, DC, and a train up to BWI to try to rebook our latest cancelled flight, if necessary, and for our afternoon flight (wishful thinking on our part). While on the train, I tried to rebook the cancelled morning flight. Nothing doing.
At BWI, after a long line, a service agent booked us on the next (allegedly) available flight – five days later. Meanwhile, our afternoon flight was already showing as delayed. While we waited, we checked for alternatives. Other flights were outrageously expensive; a private jet service offered to get us home for less than $60,000. All trains were sold out or cancelled. Ditto for buses. There were no rental cars available between Philadelphia and Charlotte (not that we could get there if there were).
That left two options. The first was to trust Southwest and wait for the weekend. That was unacceptable. Obviously, we wanted to celebrate the holidays with our family and see as much of them as possible. More than that, however, we had purchased tickets for Disneyland for everyone for Wednesday. We wanted to go! That left the other option: Our own Cannonball Run.
We had kept an old 2011 Honda for us to use when we’re east. We checked the maps, did the math, and determined that, if all went well, we could drive from BWI to San Diego in about 40 hours of driving time. If we alternated driving and sleeping, kept pit stops to a minimum, and ate while driving, Disneyland might just we possible. So, at about 2pm on Monday, we set out on a cross-country adventure across 14 states, from sea to shining sea.
We had a passenger for the first part of the trip. Our son-in-law’s mother was in the same predicament we were in. So, we gave her a lift. We dropped her off in Missouri about 16 hours in, early Tuesday morning. On schedule.
In western Kansas (about 20 total hours in, although it seemed like we’d spent about a week-and-a-half on the prairie), we had a decision to make. We decided to take a northern route through Denver because it was faster – Disneyland was still in sight – despite it being a bit longer in distance than a southern route through Flagstaff. Our kids fired up their computers to help us do the analysis while we drove, and we decided to head toward Denver. It is important, for reasons that will quickly become apparent, to note that the weather forecasts were similar either way.
When we got to the Vail Pass, after Denver, we were surprised by bad blizzard conditions. The forecast called only for modest winds and some wintry mix with no significant accumulation of snow.
Very wrong. The section of the trip, through the Pass, that should have taken four hours of driving time took ten. That alone might not have scuttled Disneyland but brake failure precipitating (pardon the pun) a skid and the sideswipe of a concrete guardrail caused further delays that dashed our hopes and our plans.
Lying in bed in a Colorado hotel room on Wednesday morning, I realized that our adventure was a pretty good metaphor for 2022 in the markets and offered some helpful insights for the markets and for life. I’ll get to those forthwith.
Meanwhile, we ended up spending Wednesday finishing our trip instead of watching our children and grandchildren enjoy Disneyland.
We got home in about 45 hours of driving time – through rain, sleet, snow, hail, fog, and gloom of night – without breaking many speed limits. We could comfortably drive 75 MHP almost everywhere west of the Mississippi and enjoyed an 80 MPH speed limit in Utah. Our 45-hour trek was more than eight hours faster than Cannonball Baker’s original record and our total time didn’t miss by much.
Earlier today, after over an hour on hold (because Southwest wouldn’t allow it to be done on-line), I was finally able to cancel our two remaining flights and get refunds.
It was quite the adventure and quite the ordeal.
My top insights from this adventure follow. Most are generally applicable to the markets, business in general, and our personal lives.
Stuff happens. Markets tank, sometimes almost all at once. Flights get cancelled. Systems melt down. Plans change. People exercise their agency. Some of this stuff happens on account of our choices, some of it is random.
Sometimes our luck is good, as when the San Antonio Spurs opened a game by making 14 straight three-point shots. Sometimes our luck is bad, as when the Houston Rockets missed 27 straight three-pointers with a trip to the NBA Finals on the line. Or needed flights get cancelled and keep getting cancelled. Sometimes life is both lucky and unlucky at the same time.
Our lives are incessantly messy.
There’s no accounting for timing, either. As the saying goes (often falsely attributed to Lenin), there are decades where nothing happens, and there are weeks where decades happen. I may not have just lived through one of those decade-weeks, but it sure felt like much more than a week.
During a crisis, it’s much easier than usual to recognize that our lives are inherently uncertain. That means we should try to prepare for uncertainty as best we can. It also means we should take greater care to consider who and what we can depend on. Lots of us have discovered or rediscovered that our lives, our livelihoods, our wealth, our comforts, and our relationships are more fragile and contingent than we thought. I did this week.
Plans – even great plans – get blown up. We generally project our fanciful and self-serving renderings forward with the idea that the future can somehow be managed — and perhaps controlled — despite the lack of any actual historical support for the notion.
As John Lennon explained, “Life is what happens to you while you’re busy making other plans.”
We had some great plans this week. They didn’t turn out the way we hoped. Nobody’s financial plan had a good 2022. And Southwest and its employees had a pretty bad week.
Make adjustments. We expect every fairy tale to come real. That’s unrealistic. We need to adjust accordingly. I can’t say it any better than Kansas Joe McCoy and Memphis Minnie (most famously recorded by Led Zeppelin and performed here by Led Zeppelin lead singer Robert Plant (8) and Alison Krauss (27), 35 Grammys between them).
“When the levee breaks, mama, you got to move.”
It didn’t work out the way we hoped, but we got in the car. We adjusted.
Similarly, the key to scientific advance is trial, error, and adjusting accordingly.
It’s not a one-time thing, either. Our adjustments will usually need adjusting. In science, in business, and in life, adjustments will have to keep being made. Ruthlessly. Relentlessly.
Of course, it isn’t as easy as it might seem.
It’s usually worse than you expect, but better than you fear. We are overly optimistic generally, often wildly so.
Most of us think we are significantly better than average at most things (also known as illusory superiority). Charles Darwin nailed it: “ignorance more frequently begets confidence than does knowledge.”
In one classic study, for example, 94 percent of professors rated themselves above average relative to their peers. Where were they when I was in college? In another, 93 percent of American drivers rated themselves above average. I saw very few of them on American interstates this week.
Conversely, we all tend to think that our s*** doesn’t stink – figuratively and literally. ASAPScience confirmed in a blind smell test that we do indeed like the smell of our own because the bacteria which creates the smell is unique to each person. On the other hand, when you smell someone else’s, your brain detects it as something that is trying to harm you.
It wasn’t hard to see this proclivity at work at Southwest this week. We were overly hopeful about what we could accomplish, too.
On the other hand, we are risk averse, which means we feel loses about twice as strongly as we feel gains.As Jeremy Siegel explained, “Fear has a greater grasp on human action than does the impressive weight of historical evidence.” Thus, PGA Tour golfers expend more effort on par putts than on birdie putts and, controlling for distance, have greater success with par putts.
As Tom Petty poignantly sang, “Yeah, and it’s over before you know it / It all goes by so fast / Yeah, the bad nights last forever / And the good nights don’t ever seem to last.”
Andre Agassi explained it well: “A win doesn’t feel as good as a loss feels bad, and the good feeling doesn’t last as long as the bad. Not even close.” David Letterman did too: “Maybe life is the hard way, I don’t know. When the show was great, it was never as enjoyable as the misery of the show being bad.”
Because we innately prefer safe to sorry, we often choose secure over sensational, leaving us both sorry and safe. That’s loss aversion.
Margin of safety. Redundancies (like an emergency fund or a diversified supply chain) matter more than efficiency in crisis. Safer investment portfolio options – such as bonds or guaranteed income – matter more in a crisis, too. Southwest put its entire enterprise at risk by creating and relying upon a system with too little margin for error and failing to invest in technological infrastructure that could deal with the sorts of crises that are deemed highly unlikely but which all too often turn out to be pretty likely after all.
Communication is indispensable. Financial advisors are prone to ducking telephone calls in a crisis. Southwest pretended its situation wasn’t really all that bad and gave its people limited or just plain bad information to convey to the public.
Wrong. Wrong. Wrong.
Solid, straightforward communication is always vital.
In a crisis, it’s the most important thing. Without it, trust is lost, and trust is almost impossible to recover when lost.
Context is crucial. Maybe inflation (or something else) will bury us. Maybe this time it really will be different.
But a bear market and an existential threat are very different things. I’m betting on America, the best long-term bet in history.
Moreover, in context, my lousy week wasn’t all that bad. First World problems and all that.
I’m betting the sun will come up tomorrow. Your mileage may vary.
Worrying is a serious offense. I was in Scotland some years ago for a wonderful holiday with my lovely bride. We got up one morning and, quite typically, it was about 50 degrees and windy, with rain coming down sideways. In other words, it was summer beach weather in Scotland. Accordingly, my much better half decided we would visit one of Scotland’s great beaches. (That sounded to me like visiting one of the great ski slopes at home in San Diego, but I digress.)
So off we went.
Happily, by the time we wound our way to the appropriate spot on the tiny roads of the Scottish Highlands, the rain had stopped. However, getting to our destination would require a three and one-half mile one-way trek across pasture, moor, and dunes. But, our reward was indeed a beautiful beach.
My point relates to the pasture. There was a gate that allowed us to access and cross the pasture on our way to the beach, on which was posted a prominent sign. The owner of the property was very clear that dogs needed to be kept on leads due to the threat of “worrying” the farm animals and that offending dogs would be shot.
Note the key final phrase: “Worrying is a serious offense.”
That statement is similarly true in the investment world even though its meaning is slightly different.
When we worry about our investments, we tend to look at our statements more. When that happens, we see losses more often (only about 53 percent of trading days are positive for stocks even though the S&P 500, for example, has returned roughly ten percent per year since inception) and thus trade too often. We chase performance to our detriment. The net result of this worrying is substantially lower returns.
In years like 2022, or in situations like this week for me, the worrying is worse.
For most of us, most of the time, worrying will surely be counterproductive. It is always counterproductive to “borrow trouble” — to worry about stuff we cannot control. Doing so leads to bad decisions and poor returns. So please, remember, worrying is a serious offense.
Totally Worth It
Feel free to contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright) and let me know what you like, what you don’t like, what you’d like to see changed, and what you’d add. Praise, condemnation, and feedback are always welcome.
Errata: Driving across the USA in 45 hours may have been a mistake, but that’s not the sort of mistake I’m talking about here. Two weeks ago, I mistakenly misattributed “I rob banks because that’s where the money is” (paraphrased) and failed to credit Willie Sutton. My apologies. And thanks to the TBL readers who pointed it out. Also in that issue, I relied upon some research by Hendrik Bessembinder. My friend, Drew Dickson, makes some powerful arguments opposing Bessembindser (see here and here), with which I largely agree. I don’t think Drew’s arguments undercut my broad conclusions, but I encourage you to read more and decide for yourself.
The estimated value of unwanted Christmas gifts is $15.2 billion per year, with about 61 percent of Americans receiving a present they don’t like. At 23 percent, friends are the biggest source of unwanted gifts. In-laws take the second spot at 14 percent and parents come in third at 7 percent.
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This is the best thing I read this week; this is the best thing I saw. The loveliest. The wildest. The saddest. The sweetest. The silliest. The funniest, unless it was this, this, or this (from someone I wouldn’t have pegged as particularly humorous). The most peaceful. The most inspiring. The most ridiculous. The least surprising, unless it was this. The best quiz. True. King tides. Never too old. World Cup game theory of a different sort. RIP, Pele. How Would You Prove That God Performed a Miracle?
Please send me your nominations for this space to rpseawright [at] gmail [dot] com or via Twitter (@rpseawright).
The TBL Spotify playlist, made up of the songs featured here, now includes more than 240 songs and about 17 hours of great music. The TBL Christmas playlist is here. Whichever one you listen to, I urge you to listen in, sing along, and turn up the volume.
Don McLean might be America’s most underrated songwriter. Here is another reason why.
Benediction
Happily, it isn’t too late to commemorate Christmas.
To those of us prone to wander, to those who are broken, to those who flee and fight in fear – which is every last lost one of us – there is One who offers grace and hope. And may love have the last word. Now and forever.
Finally, as we bid adieu to 2022, here’s a stunningly beautiful Gaelic blessing.
May it be so, even now, throughout 2023, and forevermore.
Amen.
Thanks for reading.
Issue 135 (December 30, 2022)