Corona To Do – Write a letter to your Future Financial Self

2020-03-24 13.00.09

It’s not possible to simulate what we are experiencing with this crisis.

Now is the best time to pay attention to how you are feeling, write it down and teach your future self.

Here’s an outline of how I get my future self to take action and avoid repeating my past mistakes.

First, I thought this tweet was excellent:

A good overall position has you OK with a range of outcomes.

Don’t waste energy predicting an outcome.

Rather, consider your life across a range of outcomes.

“OK with outcome” can mean a lot of things.

Sleep well at night. I address everything that screws up my sleep patterns.

No risk with Core Capital. There is no amount of potential upside that can entice me to gamble with my ability to control my schedule and spend time in nature. You need to set ego, and the preferences of others, to one side to pull this off. Ego likes to borrow.

Core capital is money you can’t afford to lose. I learned this the hard way in 2008. From 2009 to 2013, I rebuilt my life(style) due to excessive concentration in non-yielding assets, largely purchased for ego.

Taleb makes a great point that everyone has an “uncle point” where we capitulate and crystalize losses. Life can make you uncle (divorce, disease), emotions can make you uncle (fear, sadness, panic), leverage makes it easier to hit our limits… our uncle point is always closer than we think.

Avoid uncle, avoid ruin.

The above are why holding a traditionally “underperforming” asset (like bonds, or cash) can make sense. Sleep better, lifestyle preservation in bear markets, move uncle away and push the chance of ruin well away.

So… where am I at => I wrote about this March 12th – oh so long ago.

Peak SP500 portfolio was 40/20/40 (VTSAX/VTIAX/VBTLX), 60% equities and 40% bonds.

As we set new lows, I leaned into the drops and am now 46/23/31 (69% equity and 31% bonds). I’ve wanted to do this for YEARS but didn’t believe in my ability to time the market. So I set a strategy where the market would time me (see March 12th post).

Some of the bond allocation is sitting in money market funds => money I am likely to need to live on => 90 days worth of core living expenses are in my checking account.

I look at my bond allocation as a reserve for medium term living expenses and to dampen the volatility in my overall portfolio. I don’t want to be a forced seller in a down market.

What do I mean by dampen the volatility?

This comes back to Taleb’s uncle point. The true-optimal portfolio is more conservative than the “optimal portfolio you think you could hold” in a downturn.

Why? Because downturns are more savage than we can imagine.

When I look at assets, I look at everything, including real estate. It helps me manage my emotions.

The real estate market is probably closed. I have a limited ability to sell at a price I would be willing to accept. I continue to hold my real estate assets at an old value. This “old” value made sense 45 days ago (!), crazy how fast the door slammed shut. I always say this!

Cash, bonds, illiquid real estate (held at an inflated value)… mean that my overall balance sheet might be down 10%, in an environment where the headlines are blasting DOW DROPS GREATEST POINTS IN HISTORY.

There is a clear disconnect, which you should point out to yourself in written form, between reality and the headlines.

This makes bad news easier to bear and helps me take the actions I wished for myself in happier times (say, last year).

Other sources of wealth you should point out:

Time => I’m 51, if you are younger than me than you have more of my most precious resource, time! I get around this by re-framing to, “what’s best for my children?”

Options => so many forms of options and many are free (exercise, friends). Turn off your TV and study Taleb => his writing is loaded with option ideas.


I don’t back my ability to think straight right now => nor should you.

We are under a lot of stress.

If you can execute your 2019 plan then you’ll end up better than everyone that’s going to be shouting uncle, and going bust, around you.

If you really have your back against the wall then write-it-down! Please, write it down.

We are going to come out of this and nearly everyone will forget how they feel “right now.”

The reason I’m not in a jam, today, is because I was in a HUGE jam in 2008, wrote it down and learned from it.

It would have been easy to lever up and buy non-yielding assets. I came very close to the following in 2018/2019:

  • 40-year old condo in Vail with large monthly HOA
  • vacant downtown Boulder multi-unit property with a renovation strategy stuck in city planning, currently closed due to Corona

You might have your own list of misses, and near misses. Write them down!

Sometimes the best decisions are the ones you choose not to do.


Turn that TV off => it is not helping you do what needs to be done.

We need to feel safe to think clearly.

2020-03-24 14.18.58

PS – the kids and Monica finished the Safari Collage. It is awesome!