Monthly Archives: May 2020

Corona Diary 6 May 2020

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2020-05-05 13.54.37

New thing => lockdown jiu-jitsu in the front yard!

Daddy G’s School of Self-Defense will roll through the summer, with support from our neighborhood black belt.

The pieces are coming together for our summer Basic Week.

I want our quality of life to be independent of the county’s ability to lock us down, again.

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Boulder County announced they were going to let us join the safer-at-home order on Saturday. Phase One opening for Boulder starts this weekend. Tweens, teens and adults must wear masks in stores and wherever social distancing isn’t possible.

At the State level, positives continue at >400 per day. Against this background, the testing positivity rate is trending down and the folks in the hospital with COVID-19 are well down.

Colorado didn’t see the sharp drop in positives that other geographies have experienced. We are far more loose than Hong Kong, a place where I have friends and family.

Cinco de Mayo Taco Tuesday was fun.

2020-05-05 17.59.26-1

EXPERTS

I’ve been around world-class practitioners for 30+ years.

  1. I pay attention to people with experience doing. Practitioners, ideally with multiple successful outcomes. The best people rarely come across as smooth. I am biased towards smoothness in presentation.
  2. I pay attention to advice within the practitioner’s domain. For example, Taleb on risk (defer to him) vs Taleb on nutrition (defer to my experience). When we have a positive opinion of someone there is massive cognitive pressure to agree “with everything.” Therefore, I publicly state, often, it is OK to disagree.
  3. I need to remember blindspots and past errors. I have a rich history of these things! Unfortunately, I am hardwired to attribute my mistakes to others. However, what is really happening… my process fails and I repeat a past error.
  4. Decision making needs to be driven by a process that slows me down and makes my errors visible. Every important decision I make is run past 2-5 people. Emotionally, I am looking for approval => another unfortunate hardwiring! At my best, I am open to reasons to avoid taking action.

My life is more sensitive to the impact of a poor decision than another good one.

Something I learned from Charlie Munger, each change is an opportunity for error to enter the system.

Can you explain your decision making process to a child?

It’s a good test of the system.

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OTHER PEOPLE

Related to creating a system to reduce bias…

I apply effort to remind myself that people, who disagree with me, aren’t stupid.

My mind likes to downplay, denigrate and disregard my adversaries, both real and imagined.

When a “bozo” makes a good point, I share with my wife.

Similar to parenting => better outcomes by seeking to increase positive vs negative interactions (inside your head)…

It takes effort to find the good in all people.

Corona Diary 5 May 2020

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2020-05-04 10.14.02

Write a kid, it will do you good.

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“If you want to determine the nature of anything, entrust it to time: when the sea is stormy, you can see nothing clearly.” Seneca — Daily Stoic (@dailystoic) May 5, 2020

I noticed that Buffett sold out of airlines, completely. Elsewhere, I read about his concern about being an owner of businesses that consumed cash.

The quote above is another Buffett/Munger point => how difficult it is to wait, watch and be patient.

The challenge of no-action, waiting for the sea to calm => made easier by a combination of cash-generative assets and cash.

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I was asked for my opinion about inflation/deflation.

Before offering thoughts I want to share a portfolio. The ratios can be tailored to your personal situation.

  • Net Cash Generative Real Estate [See Note 1, below] => 2 years core cost of living
  • Equities => 3 years core cost of living
  • Bonds/Cash => 2 years core cost of living
  • Recourse Leverage => none

(a) I like to think in terms of “years” because it provides a big incentive to keep my spending aspirations modest. (b) The 3:2 ratio, above, implies a 60:40 equity/bond portfolio. (c) Core cost of living => cash it takes you to survive one year.

Pause and think about the above portfolio in deflationary, as well as, inflationary environments.

  1. The portfolio is not optimized for any scenario, there are aspects that will get hit hard. This is OK and to be expected.
  2. The portfolio can survive different scenarios.
  3. You can spend a lot of time tinkering at the efficient frontier but it won’t get you much in the real world.
  4. Get yourself to a position that’s “good enough” and lets you sleep at night => then go out and focus on living your life as best you can.
  5. Pay careful attention to decisions that impact time, rather than money => time you have in your week, time you have in your life, the quality of your time and what you will spend your time thinking about.

The portfolio need not contain solely financial assets: education, time, youth and other options are important sources of family wealth.

About the likelihood of hyperinflation and depression-style deflation…

  • …the levers being pulled have no historical precedent => from this morning, US Federal Government borrowing $1 Trillion per month this quarter
  • …the levers are being pulled different directions by governments, corporations, consumers and central banks
  • …the levers impact the price of goods, services and capital in different ways

The system is complex and opaque, with feedback loops, 2nd and 3rd order effects => the system is fundamentally unknowable => I should constantly remind myself of the truth of unknowability and avoid people who have a vested interest in impairing my thinking.

In lockdown…

  • my most challenging work is increasing human capital via home school, while modeling a strong marriage for my kids; and
  • not decrease human capital by becoming a casualty, myself!

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I’ll end with a picture of what I saw when I came downstairs this morning.

Our youngest, mirroring what she sees around her.

Warms my heart!

2020-05-05 06.39.53

[Note 1] Real estate that is a net cash drain can be a source of stress (for you) and fragility (for your family).

One of the two best investment decisions I made in the last 24 months was renting in Vail. The other solid decision was not redeveloping a site, at a time when people were making (on paper) $1 million per flip with high-end renovations.

Capital, used wisely, gives you to ability to not-act and be comfortable sitting in an enviable position.

2020-05-05 06.39.56

Corona Diary 4 May 2020

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2020-05-01 13.34.16

Day 50 lockdown party was a hit.

Kids say they’re looking forward to going BIG for day 100…

2020-05-02 11.38.20

For COVID_19, I am the most vulnerable person in my household.

What would be useful => reliable information on how likely I am to get messed up by the virus. Not killed, not hospitalized, but permanently damaged.

Just like insurance, it’s easier to assess death than permanent disability.

Think I’ll ask my medical mentor.

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What tipped me off, that antibody testing might not be all that reliable… it was rolled out by the local “anti-aging” docs at $250 per test.

As with supplements, many forms of elective surgery, low-T… if there is a demand then it will be filled.

We’re going to wait.

2020-05-04 08.33.58

More on Singapore – what gets my attention is how seriously they are taking lockdown given the very limited community spread outside of the dorms.

Saw a couple articles on Friday about no adult transmission from kids. Struck me as magical thinking. I catch everything, and anything, from my kids.

Mitigation hasn’t worked as I expected in Colorado, or elsewhere. We’re still reporting >400 positives a day at the state level.

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Never miss an opportunity to use a crisis to further your agenda.

  • Obama => healthcare, environment, climate
  • Current => tax cuts, immigration, deregulation

When you look, it is easy to see at the State and Federal level. That said, most people spend too much energy thinking about remote issues.

How are you using this opportunity at your household, family and firm level?

The virus gives you an opening to implement necessary change, with yourself and others.

2020-05-04 12.10.57

Bears are back in town and they are hungry! They’re knocking over my compost bin, which they usually ignore.

Saturday marked the return of the hummingbirds, and the first time I’ve had to use glasses to read my workout! Milestones, of a sort.

My injuries have disappeared and I’ve been pain free for two days. So nice! I feel like I’m on happy drugs from the removal of chronic pain.

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Want to help a personal trainer?

Help them create an outdoor gym.

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I read about parts of Europe opening their public spaces for restaurants to serve outdoors.

We should do the same here, especially if we’re going to mandate restaurants to operate at 50% indoor capacity.

Use public outdoor spaces to create safe working environments so our communities can get back to work.

Corona Diary 1 May 2020

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2020-04-30 08.06.29

I wrote myself a note and stuck it on my monitor…

If you keep an open mind then you won’t have to struggle to change it later

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A friend recommended the writing of Primo Levi. I’m almost through, If This Is A Man.

Excellent reading for perspective in lockdown.

2020-04-30 15.06.57

Life has a way of humbling me.

I pulled my recovery days forward to yesterday/today. Going to get back on my program Saturday/Sunday then take another two days off to start next week.

One of the best lessons of my 30s was, “it takes about six weeks for an overuse injury to become apparent.” I even warned you, and myself (!), about it at the end of March.

I made it six weeks and three days. I was miserable, and not much use to my family, earlier this week.

Anyhow, the lesson of “beware the 45-day mark” applies across more domains than physical training. Most anybody can keep an initiative rolling for a month, or so.

Dalio says it takes 500 days to create a habit, the point at which whatever you’re trying to do flows on autopilot.

2020-04-29 19.38.41

Came up with a list of stay-at-home projects for the weekend:

  • Bake a carrot cake with Monica to celebrate Day 50 of lockdown
  • Weed whack the alley with my son
  • Make my own mask under the instruction of my oldest daughter
  • Craft sock puppets with my youngest daughter
  • Clean all outdoor furniture and pull cushions out of storage

2020-04-29 19.37.39

Ax-man said it was time to hand out feathers and give some recognition to the family. Pics above and below.

2020-04-29 19.37.57

Latest corona news is worries about re-infection might be misplaced.

Vaccine timelines bouncing between 9 months and 2 years.

No clear information on what happens if the virus doesn’t kill you – impact on lungs and other organs.

Bankruptcies are starting with large retail chains preparing for Chapter 11.

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I play “what is cheap” with myself quite a bit.

Neighbors put their house on the market. Listed for $2 million, which is pre-Corona, no rush to sell, asking price.

Building is ~3,000 sq ft with internal garage. I’d estimate $750K for the lot, $250 per sq ft (depreciated) for the house. So ~$1.5 million virus value. Subtract $250K for a margin of safety and my price to buy is $1.25 million.

My calculation tells me there is a huge gap between sellers and investment buyers.

I’m usually priced out of a market, but not always.

When I would run these figures in 2009/2010, asking prices got as low as 35% under my valuation. In this case, the asking price is 60% over my valuation.

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Leaves are coming on the trees.

Flowers all around the neighborhood.

Days are long and pleasant.