March 2020 will be a month we all remember for the rest of our lives and I imagine we all had watershed moments when we realized “this is serious”. For me, that watershed moment was the NBA outright cancelling the remainder of the season. I’m not an NBA fan and only a casual sports fan, but at that moment I realized Covid19 was really serious. Over the next few days, every major sporting event was cancelled, colleges and schools were closed, and various non-essential business closures or outright lockdowns were issued. 75% or more of what we filled our day with is now closed and the early retirement portfolio has taken quite a beating. I’m sure everyone will have that moment they remember from the Month.
Favorite Content from the Web:
I think staying the course during a time of panic is important. We should all take lessons from the market moves, write notes for changes to your investment policy statement in the future, but not make major changes during these times. Clipping Chains reminds us of the absurd headlines from the Great Recession.
I’ve been suffering from some writer’s block and enjoying writing about personal finance and investing. I don’t think it has suddenly become unenjoyable, but instead it is difficult to fill a screen with content that doesn’t seem immediately important in the midst of a pandemic and millions of people being laid off.. Fritz and The Retirement Manifesto had many of these same thoughts and recently wrote When Money Doesn’t Matter. I couldn’t agree more.
Mr. Money Mustache wrote this post this past week (technically an early April post) and I am convinced his optimism gun is stronger than ever. Even though things feel bad now, No You Did Not Just Loose Your Retirement Savings, and humanity will win and prosper in the future.
What I’ve Been Reading:
With various recreation shutting down in my area, it left more time to finish a backlog of books from the library.
Red Notice by Bill Browder: This was the best non-fiction / business story I’ve read in the past few years. It is up there with Barbarians at the Gate and Den of Thieves for me. The story following Bill Browder and Hermitage Capital’s experience investing in Russia after the Soviet Union fell is a storyline that a fiction writer would struggle to come up with. The turns in the book are shocking and it reveals the “prison yard” culture of Russian business and politics. This book was written in 2015, but for those of you that are politically inclined, you can also figure out why Vladimir Putin may have wanted retribution against the former Secretary of State in 2016. There was a certain act the Secretary of State in a prior administration was unable to kill thanks to the hard work of a number of people on both sides of the aisle.
Fooled by Randomness by Nicholas Taleb: This book had been referenced repeatedly between memos from Howard Marks and one of my recent reads, Thinking in Bets. This was a more academic read that felt a bit like being captain hindsight since I was reading it in the middle of a market crash. Taleb spends a good amount of time talking about investors being lulled into security and confidence by a strategy, only to get crushed in the future and realize their success was largely random. The author wrote this book in 2001 and it was a watershed moment for the finance industry in understanding how prevalent survivorship bias is in evaluating investment performance. Those who fail drop out of the numbers! Taleb has gone on to write a number of other books I’ll pick up once our library reopens.
House Hacking by Craig Curlop: I received a copy of this book from a friend and was pretty skeptical at first. There’s a good side to house hacking, but I was always concerned about people in their 20s encouraging folks to get a 97.5% mortgage then talking about property appreciation as profit. These individuals did not experience the risk side of the equation like I did, having a 90% mortgage on a home then having it fall 30% in value.
I was pleasantly surprised because Craig spent a lot of time talking about price discipline, as ultimately “house hacking” is about buying a rental property at a price where its underlying rental value is below the price paid for the house. I expected the ideas of having roommates, buying a duplex, or doing an AirBNB to be in the book (and they were), but was also impressed with the person they profiled who bought a house then moved a travel trailer on to the property to live in while renting the house out. It opened the idea up to me to eventually get a property with an accessory dwelling unit on the premise to supplement the cost of living in the area I’d like to live in. I would recommend this book for anyone in their 20s or as a gift to give to a new college graduate.
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