Corona Diary 1 April 2020

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2020-04-01 09.56.05

I had a tough day yesterday.

From 4pm onwards, I started the mantra… “tomorrow will be better” => I was right.

Amazon appears three-weeks backlogged on non-essential shipments for my zipcode. Give thought to what you need for your May lockdown and order this week.

Government assistance => please take it! A global depression is within our range of possible outcomes. Take the money and direct to people who need it.

Here’s a link from Howard Marks that explains the Bull and Bear cases. I see no way through to the bull case, too complex a situation for everything to run according to plan. Bear case makes way more sense to me, especially as I read news about the virus within the US Navy (our ultimate backstop).

Friends considering “hard assets” for safety => an extra month of food supplies strikes me as a hard asset that could prove useful.

2020-04-01 08.44.17

Home School

Teacher, parents and students => we need to LOWER THE STAKES.

If my kids are tripping then all kids are tripping!

Cut your assigned work in half and focus on what is essential.

I think we’re finding our way through => schedule for today. I wrote that last night and it had numerous modifications by 10am.

Four planning meetings for our oldest today: with herself, with me, with her class and with her teacher. Her anxiety is greatly reduced by having a written plan, with times.

Pizza dough was back yesterday afternoon, along with homemade pesto.

We watched all three Descendants movies over the last three nights => Disney+, I think.

When it comes to writing assignments for elementary school kids, my policy is no wrong answers. Write lots => edit later!

2020-03-31 13.43.52.jpg

Above is our youngest’s poem from yesterday.

2020-04-01 06.36.41

Recent financial questions:

What tools do you use for an overall financial plan (e.g., Quicken)?

I built a few spreadsheets/documents: (1) to rebalance across entities; (2) a monthly cash flow tracker by entity; (3) P&L projections so I get tax installments correct; (4) net asset statements for fee-paying entities and to track return on equity over time; (5) a statement of tax IDs/bank accounts/registered addresses/officers; and (6) a single sheet of paper showing every trust, LLC, company and person that touches me.

I have my stuff linked to Mint but that’s more detail than I need. I find that making everything visible is a distraction => my job is to control spending/aspirations, not be a bookkeeper. My watch gets pinged each time money leaves my life as a fraud-prevention measure.

Ideally, you only want to check net assets once a quarter. With recent volatility, that’s not an option. Taleb explains why checking less gives better signal in his first book. => Fooled by Randomness.

Are you aware of any good tools that can include real estate as an asset class?

I built a spreadsheet that takes a gross value through to net realizable cash after all fees, taxes and expenses. The spreadsheet assumes an immediate sale. I make the deferred taxes and fees/expenses very clear to create a bias against selling real estate assets.

The best time to sell quality real estate is never => Buffett, I think.

What are your thoughts of the services offered by Wealth-front, such as:

I use specific ID for all holdings and use tax loss harvesting, occasionally. I don’t use risk parity or smart beta. I could be a lot more aggressive with tax/portfolio strategies but I prefer simplicity.

I have a goal of handing off my work by my 60th. Even keeping it simple, there’s a surprising amount going on.

“You want a system so easy an idiot could run it because, someday, one will.” => not sure who said it first, probably Buffett

Do you think those services are worth 0.25% fees?

In terms of spending money, I think the best money people can spend is an hourly fee relationship with a world class financial advisor, who has nothing to sell you other than sound financial advice.

In terms of making money, stick with the basics, don’t adopt the preferences of others, rarely borrow and fear ruin.

Other things => cultivate inexpensive passions, focus on relationships, get the family thinking about Human Capital (rather than financial capital).

Is your personal strategy as simple as holding ONLY three different ETF’s?

That’s the Vanguard portfolio, yes.

I don’t back my ability to pick stocks, time markets or pick winners as an Angel Investor.

I do a real estate deal every 5 years or so. I like local real estate as it’s a market where I can have superior information and, when I buy, there is limited competition with other players.

Personally, the goal of my portfolio is to support my desire to spend time in nature with my wife and kids. It’s easy to lose track of the larger goal and get wrapped up with small details. I want a strategy that can be largely ignored.

What are your thoughts on Dimensional Funds?  They seem to offer higher returns vs similar index funds, based on (as I understand it) different allocation metrics

I don’t do specialty products as “the house” always skims the excess profit for itself and, as a class, these assets do worse than low-cost index funds, especially when you adjust for blowups and leverage.

I used to work for a world-class private equity firm. The right partnership can make a lot of money for everyone involved. Those sorts of investments are not open to me anymore.

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Virus Stuff

 

Gates wrote an op-ed for Washington Post (link above).

  • Not too late
  • Our open state borders don’t mix well with national virus control
  • Calls for Federal help with shutdown, equipment organization and virus manufacturing
  • Over the weekend, “six-to-ten weeks” has become “ten weeks”

Mexico shut down for April // starting 18 days later than BoCo.

Iceland positives chart paints a picture that makes sense for rate of spread – you’ll need to click to see the chart.

By the time the chart is confirmed, it will be too late for action. Close your schools early, I’m glad we did.

Lexi will be making a mask for Mom to use on her weekly shop. There is near-nil downside from wearing a homemade mask. Click for the graphic.

Stay strong, people!

2020-04-01 05.33.03

Ax looking forward to hitting it with me tomorrow morning.

BJJ black belt coming over to teach PE in two hours!