The world is a challenging place right now and I wanted to write something a little less somber after the events of the last two weeks*. Matt the Dentist recently put this question out to everyone on Twitter and got some great responses.
I wanted to post my answer in more than 280 words and hope that my dozens of readers will chime in.
What are the best things that happened to me/us as a result of the pandemic?
Discovered gig work. I initially applied to Instacart as a shock reaction to being laid off and watching the market decline. The extra money was nice, but I (and my better half) realized we missed the feeling of productive work. Financial independence turned out to be about control of our schedule more than just early retirement. There’s no full time work in our future, but the ability to sign up for an hour of productive work with a few clicks on an app is pretty cool. I’m getting paid to do something I love anyway, shopping at Costco, and spending other people’s money instead of my own. Speaking of money, the additional pocket money will help me personally in dealing with my scarcity mindset. That set in when I saw 30% of our portfolio evaporate. I trust the 4% rule (er, 3.82% for me) and know it *should* work, but scarcity set in. As they used to say in my old line of work, “happiness is a positive cash flow”.
Learning more about time and spending priorities. Taking away things helps me prioritize time and spending. What did I miss the most when everything was closed? Walking on the beach, the gym, travel, and (for me) the NHL playoffs. I didn’t really miss access to restaurants and had a near zero desire to do takeout food. I slightly missed the ability to tap a few buttons on my phone and pick up a coffee from Starbucks, but wasn’t willing to sit in the drive thru line to get it. This also broke me of reading various factoids about sports teams, which was a surprise. This is a habit I’ve had for twenty years and just didn’t miss it. I think this will help align some of our spending priorities in the future. I’m never cutting a gym membership. Maybe we prioritize a closer proximity to the beach in our next house. Maybe we take a longer trip this coming winter to ensure we get to spend more time near a warm beach.
Lesson on Risk Tolerance: I learned more about my own risk tolerance and hopefully will learn more patience as an investor. This is especially important now that I don’t have the protection of a large salary coming in. I made three avoidable mistakes between the second half of 2019 and into the decline in the first quarter of 2020: I took too much risk in individual companies, showed a lack of patience when investing my bond allocation into equities, and worried too much about taxes when it came to selling things I should sell.
I am a permanent bull and will always own some individual stocks because it brings me joy, but I have to be more disciplined with how much risk I take with one company. A “black swan” event nobody sees coming can hurt even the most recession resistant businesses. Owning $50,000 of a single stock doesn’t bring me that much more incremental excitement than owning $5,000, but $50,000 in one company comes with significant incremental risk to events nobody sees coming. It also creates these pesky tax issues when I do well in a stock in my taxable account then something changes with the company’s business or management (like this issue I had last year). If the investment thesis for owning an individual company has changed, then it is time to sell. Getting to experience this with more money on the line was painful but one hell of a teacher.
What was the best thing that happened to you personally as a result of the pandemic? Please response and leave a comment below.
*I’d encourage folks to consider donating in addition to speaking out to impact change in this country. One way of helping is to help stop the police brutality (that disproportionately effects minority populations) donate to one of the (unlikely alliance of) not for profits across political spectrum fighting against the qualified immunity defense used by law enforcement. Qualified immunity is a danger to everyone’s rights.
“Either everyone matters or no one matters” – Harry Bosch, fictional detective created by Michael Connelly.