Halloween and the Plague Times

October 29th, 2020 by Potato

Here is me in the Spring of 2020:

Madagascar meme - shut down everything

Now after a long shut-down and with lots of people wearing masks and respecting social distancing, things were getting a bit closer to normal. It was a very tough call, but Blueberry is physically back at school. It’s been a crazy year, with lots of things upended. It’s been especially hard for kids: no birthday parties, no play dates, and months of being way too close to the parents. No funerals for dead grandparents. No trips to the science centre, and even the outdoor playgrounds were taped off through almost all the days of decent weather. We didn’t have a big Thanksgiving get-together (not that kids care about that one), and Christmas will likely have to change a bit (opening gifts should work fine with my siblings together if we wear our masks, though we may retreat to our own homes for separate dinners).

But thankfully, Halloween will happen more-or-less normally (maybe they can’t rove the streets in packs or have Halloween parties, but trick-or-treating is good, right?). Or it briefly seemed that way, until the local health authorities decided to recommend against it in Toronto.

And I’m usually all for listening to the health authorities. We have way too many people who aren’t, and we haven’t been able to join the Maritimers in the covid-free bubble because we just can’t quite get our shit together. The pejorative “mouth breather” has taken on a whole new literal meaning this year with people who only partially wear their masks (“it’s ok, I only breathe through my mouth anyway”).

But the decision against trick-or-treating isn’t one I can get behind. It’s about as safe as we can make a holiday tradition: naturally lending itself to mask-wearing, taking place outside*, very brief interactions, and with a candy chute/tongs/grab-bags lined up on the driveway, it can be even safer. And the kids need something normal this year.

It’s also hard to explain to them why trick-or-treating outside isn’t considered safe, but the kids can go to school in a still somewhat crowded classroom, people can still go inside restaurants to get take-out, and the friggin realtors are back to banging on the door every week asking if we’re interested in listing the house. So why can these other, riskier activities take place but not a super-fun, super-important holiday tradition? Do we want 2020’s November disaster to be the vengeance of the dead?

There is the argument that these other things have economic value to offset the risk — parents can’t effectively get back to work without school and child care, so the higher risk of classrooms is accepted, whereas trick-or-treating isn’t as big an economic force. Ditto for restaurants and stores and what-not (and I guess the terrible realtors going door-to-door?). And there’s a good point in there, but on the idea of risk-benefit: trick-or-treating can be made pretty darn low-risk. (The benefit side is a harder argument: there are non-economic reasons for doing things, and Halloween is the bestest most importantest holiday in the whole spooky calendar, but that’s a slippery slope to people justifying their weddings and thanksgiving dinners and spin classes.

So anyway, I don’t want to be the anarchist guy saying we should ignore the public health authorities at every turn because they sometimes make mistakes. And I don’t want to incite others towards a sugar-fueled covid anarchy… but we will be handing out (dropping down a chute) candy for any kids who want to come to our door. We even up-sized to full-sized Nestle bars ’cause we know the hit rate will be lower for the kids this year.

My one big tip is to keep the mask on the whole time: don’t pull it up and down each time there’s a knock on the door, or as you’re going up the driveway if you’re a kid or roving backup candy hauler.

* – yes, some people live in apartment/condo buildings, which could have been a more targeted message about staying safe for Halloween if you’re not outside.

Covid-19 Thoughts – Raise the Line

March 19th, 2020 by Potato

It’s like the 1918 influenza at the same time as the 1929 stock market crash with 9/11’s grounding of flights, all overseen by Nixon’s paranoia and pettiness. It’s Disaster Voltron.

I’ve been watching the news flow on the coronovirus intently since January. It’s kept me up at night, and made me silently scream that we should be closing the borders. This was not just the flu (though now I think people mostly get that).

There was (and continues to be) a lot of uncertainty, but from where I was sitting the risks looked real enough. I didn’t blog much in part because I’ve fallen out of the habit, and in part because I didn’t want to come across as a fearmonger (and I would definitely have come across that way). I started slowly stocking up through February — an extra bag of oatmeal here, an extra bottle of pasta sauce there, a few extra packs of applesauce — and got a bit of teasing for it from Wayfare. Was nice to not have to panic shop with the crowds when the shutdown order came though. Instead, Blueberry and I hit the library, and turned out to panic-check-out-books, as they made the announcement while we were there at 5:30 that they’d close at 6 and not re-open for 3 weeks.

All through the news out of China shutting down parts of its economy, the market continued to hit new highs. I thought I was on crazy pills, I couldn’t believe it. But I’m mostly a passive investor, and mostly didn’t do anything (something I’m kicking myself over with the benefit of hindsight). As the case counts started climbing outside China, I finally bought a put on the S&P500, expecting that at some point the market would start pricing some risks in (even if the virus itself was contained, the supply chain yada yada).

It was an interesting mental accounting: I didn’t touch my passive portfolio, I didn’t panic sell and liquidate my active portfolio, I just took some money from the gambling pocket and bought this one thing that would pay off if the market went down. That somehow seemed much more reasonable than re-assessing my risk tolerance or making big portfolio moves.

Finally, the market did start going down. When it was down about 10%, I felt relieved. Finally, I thought, people have woken up to this and are taking it seriously. I had no idea what the proper discount on stocks should have been, but I knew it was more than zero. So shortly after that, I sold that single put, making about $2k to offset the much larger losses I was taking elsewhere (and again with the benefit of hindsight, if I had held until today that would have been worth in the neighbourhood of $10k). I felt kinda smart-ish — not Big Short material by any stretch, but hey, I saw some trouble coming and did pretty much the absolute least I could have possibly done to mitigate it. I rebalanced (too early) and bought some stocks in my active portfolio (way, way too early). Then the market fell at an unprecedented rate and, like many of you, I started to feel scared, and sad.

I mean, hey, this is what risk is, and what it feels like. Markets go down sometimes, and I guess it’s better to rip the bandaid off? And there’s no telling if we’re near the bottom, or if the uncertainty and very dark worst-case downsides, combined with just how very, very elevated the market was before this started means that there’s still a lot further to fall ahead of us. On the bright side, I can stop using that metaphor about how it’s hard to explain in words what it feels like to lose real money in investing — there are no more bear market virgins.

Anyway, I was sharing the old “President Madagascar” Shut. Down. EVERYTHING. meme, and I felt some relief when our leaders finally started taking things seriously. By this point, everyone has had “flatten the curve” explained ad nauseam. Schools are out, states of emergency have been declared, and even curling is cancelled.

The question now is what the shutdown gets us and what the plan is going forward. Economically, even a short shutdown will mean 2020 comes in as a recession year. A long one could be a depression (not the Great Depression — but there were economic contractions more severe than recessions before the capital-D Depression, and we may get to re-live that). And that’s part of why the market is still going to have trouble finding bottom.

Healthcare wise, we’re going to flatten the curve and save a bunch of lives. And let’s get one thing straight, we really needed to do this in Ontario. We were already deep in the hole from a capacity standpoint — all of our incredible growth, hundreds and hundreds of new condo towers went up (driving that real estate bubble), and we’ve built um… zero hospitals? Negligible net new beds, anyway (side note: the city’s development charge page lists what development charges pay for, like schools and parks… but hospitals didn’t make the list). We can’t move the surge from Covid-19 into the hallways because we’re already chronically dealing with hallway medicine. We’ve already invented all kinds of tricks to squeeze efficiency out of the system: which, yay, we’re leaders in technology and innovation and have been forced to be by relentless cost-cutting pressures, but it means there’s no margin for something like this.

“Since 1999 overall bed capacity has been virtually constant although the population has increased by 27%.” —OHA Leaders in Efficiency Report

Ok, so we have to flatten the curve.

But then what?

I was hoping we would have a plan to move back to containment mode. Build the testing centres and ramp up our ability to test like, a lot of people. With fast turn-around times. Then find all the existing clusters and do targeted quarantines. Every time a new case shows up, do contact tracing and test everyone, and try to put the genie back in the bottle. Only re-open the borders and flights as we have the capacity to test those who come in (and maybe keep up targeted quarantines for anyone brave enough to fly somewhere). And let everyone else go back to mostly normal activities.

Maybe also do some rapid build-out of hospital surge capacity. Not sure we can match China’s new facility in 10 days, but perhaps we can appropriate a few nearly complete condo towers (or dorms or office towers or whatever space) to add a few tens of thousands of new hospital beds. We still have some domestic industry left — if GM in the states can re-tool to make ventilators on automobile lines, we can possibly get the soon-to-be-mothballed Oshawa plant to do likewise. Another issue there is staffing. I think if we think of this as a true emergency and go on a war footing, we could train up some people to supplement the real health care workers. From what little I know, WW2 field medics had 10-12 weeks of training, from basically a standing start. We have lots of people with some non-specialized health/human anaotomy/medical technology knowledge: researchers, medical physicists, hygienists, technologists, technicians, dentists, veterinarians, as well as medicine & dentistry students and those who are caregivers for chronically ill family members. Given that we know the problem is mostly confined to a single condition, with a ~dozen complications, we could possibly train up some relief for healthcare workers in a few weeks if needed. Some licensing exemptions (or a new emergency licensing standard) would also be needed from the government’s side. But we could probably do it — I think I personally could get up to speed enough to be mostly useful to help the nurses and the other kinds of doctors in a crisis and help them cope with being spread thinner on our expanded number of beds (and also to be ready for the fact that some of them will get sick too).

We need to flatten the curve. And we need to use that time to move the line up. #raisetheline

However, I’m hearing less and less about using this time to get ahead of the need and then open society up again. While the messages are still about temporary closures and postponed events… we don’t seem to be solving the underlying problem. Which means a 3-week school shut-down and province-wide state of emergency will just roll over to a 4, 5, n-week shutdown. Or we pulse it — open things up for a few weeks until we get close to overloading the system, then go on lockdown again to keep things at a simmmer, until we finally get a vaccine or herd immunity. Or we start asking how much lives are worth, really, mostly boomer lives, and just open things and hope that simply rolling past flu season will be enough capacity freed up and, like, see how it works out? Ugh. [If somehow I have missed the plan, someone please link to it in the comments.]

And to circle back to investing, that’s where I get scared. Maybe we can get back to work but just like not cough on each other or lick the elevator buttons? And hope that all the disgusting people we see on the subway and not washing their hands in public restrooms have learned their lesson from a 3-week shut-in and that even with mostly regular activities it’s then slow enough of a spread that we can manage with the system more-or-less as it is? But a lot of people will go bankrupt if we spend the next 6 months in low-power, shelter-in-place mode. A lot of companies will fail, and in that scenario I could likely panic sell everything at the open tomorrow and still come out smelling like roses.

Anyway, it’s not clear. For now, we do what we can to flatten the curve and raise the line and wash our hands and try to stay sane with a 7-year-old bouncing off the walls*.

My one take-away tip is to keep a journal. About the market, about your feelings, about the shut-down in general — write it down. Firstly, it’s an outlet for some very understandable fear. Secondly, it can help you organize your thoughts and stay rational. And thirdly, we are living in what will surely be one for the history books, and you’ll want to remember it.

*And I’ll hodl and reserve the right to continue to kick myself with the benefit of hindsight. Which is really all we can do shy of having better than truly lousy predictive abilities and the lack of a time machine.

Taking Leave

November 2nd, 2019 by Potato

This is a surprisingly hard post to write (I’m also clearly out of practice on the blogging front), so let’s resort to the Q&A format:

Hey Potato, what’s up?

In The Big C 2: Revenge of the C I let you know that my dad’s cancer is back. Now I’m going to take some time off work (planning for 1 year) to spend time with him while I can, and also to take care of Blueberry and give her other grandparents a bit of a break. Today was my last day at work!

This is mostly a personal finance blog — how did you swing a year off work?

I have money saved, so I’m not worried about feeding myself or paying the rent during the year itself. It will mean pushing off retirement by a few years for one year being out of the workforce (lost compounding, spending more than saving, etc., will mean roughly pushing things back by ~3-4 years for taking a year now) but I actually haven’t done a huge, detailed projection. Indeed, I made the decision without really doing much of anything in the way of formal planning — it just felt right (after several weeks of hemming and hawing and sleeping on it), and I knew I could swing it, which I suppose is the point of all the previous planning and saving and investing. In the end, I wrote up a little one-page summary of the plan and implications, and that was that. My emergency fund will cover a year off, especially if I can pick up a few freelance gigs along the way.

So are you available for projects? Can I hire you?

Possibly! I know it’s not going to take 24-7 to take care of my family, so I will be looking to do some work, but only part-time (not being able to swing full-time with a commute is the reason I had to step back from the day job in the first place). However, I don’t know how cool the ol’ HR department will be cutting a cheque to an independent contractor who’s on leave, which means no grant-writing or other consulting for co-workers. Personal finance projects/writing/doing DIY investment workshops/lunch’n’learns, editing (it’s been a while since I’ve had a novel to edit, NaNoWriMo authors…), or science writing for others should be fine. Hit me up here if you’re interested.

What else will you do with your time?

Some have suggested using that time to learn something new or get a certification — pick up my CFP (which has a practical requirement, so it would require some commitment to switching jobs or picking up a more robust side gig), or get a MD or RN ’cause I spend so much of my time taking care of sick people anyway. I am getting dangerously close to having spent more time in the real world than grad school, so maybe it’s time to go back to learning and test-writing just to make sure I’ll never have a normal work-study balance in my lifetime.

I might also use my non-caregiving time to write another PF book — I’ve had an idea poking around for over a year now, but I’m getting more negative on the idea as I go along, and may have to just let it die. But hey, it is NaNoWriMo, so maybe some fiction…

However, other than a few random thoughts I absolutely have no plan. I figured all that could wait until I was actually off work to figure it out.

Isn’t it scary just leaving the workforce for a while with no plan of what you’ll do and no income stream coming in?

Well it is now. But that’s also why I managed to actually make a decision with no real analysis/spreadsheets/pro-con lists/waffling blog posts — I was just too burned out to go through my usual over-thinking routine. So at the moment I’m too tired to be scared.

Horse-Sized Ducks

May 31st, 2018 by Potato

There’s a common internet question: would you rather fight 100 duck-sized horses, or one horse-sized duck? I’m currently just being destroyed by a bunch of small tasks/projects. A single big grant can be a lot of work to put together, with many lost hours of sleep (and potential pounds of weight gained) in the process of getting it done. But though it’s a grind, I don’t feel so completely overwhelmed in the process. Conversely, the cluster of small tasks is draining: there’s always another little bugger ready to sneak up and poke you in the back, and there’s definitely high task-switching costs.

So put me in the horse-sized duck camp. If project A is only 10% the work of project B, 10 project As together end up being way more draining effort (for me) than project B alone.
Blueberry is watching Star Wars now, and it looks like Luke Skywalker is also a horse-sized duck guy: the point where he really starts to falter and look really scared in the fight against Vader in Empire is not in the straight-up lightsaber duel (where Vader is legendary, but admittedly not trying to kill him), but when Vader starts hitting him with Force-thrown objects coming from all sides. And then the rancor is no sweat.

Conversely, my man Obi-wan seems to prefer having a bunch of smaller problems. Battle droids pose no problem for him, and he’s fearless walking alone into the heart of the Death Star, crawling with Stormtroopers. But he has real trouble with one-on-one fights with Jango Fett and Grievous, and Count Dooku WTFpwns him. Twice.

Naked Offers, Jumping off Cliffs, and Life’s Surprises

April 30th, 2018 by Potato

I’ve long lamented the use of so-called “clean” offers common in GTA bidding wars, where people bid massive amounts on a property with no conditions to protect themselves. It felt like the boy who cried wolf — for so long I’ve been warning people not to do that because in in the unlikely event something goes wrong, it can blow up very badly — damages in the hundreds of thousands can break a regular family’s finances. Yet for so long the market just kept going up and lending just kept staying loose and people ignored that advice.

Of course, at the end of the story there really is a wolf. And as the white-hot spring 2017 market cooled a bit, we got a few deals that couldn’t close and some court cases making the news. There’s a Reddit thread with hundreds of comments on this story, and at a quick glance most of them seem to be about the fact that there was no financing condition.

“But all the other offers are without conditions.”

Look, this is as close as you can possibly come to that cliche mom advice: if everyone else jumped off a cliff, would you do it too? If you actually need financing to close the deal, then you need a financing clause. If a rich person who doesn’t need financing or a foolish moister with a realtor whispering in their ear is bidding against you with a naked offer, then accept defeat (and subsequent teasing about being a forever-renter basement-dweller) gracefully, rather than jumping off the cliff with the rest of the lemmings.

I can understand that realtors are in a conflicted position, and are more interested in closing a deal than protecting their clients, so they collectively pushed the herd to this madness of unprotected naked offers becoming the standard, something you “had” to do when making an offer. But hopefully people will heed the warning of the judge in this case and stop that nonsense (though a cooling market may stop it naturally as bidding wars die down and people go back to negotiations with one prospect at a time). A part of me hopes the would-be buyers sue their realtor for pushing them to put in a naked offer when the deal was truly contingent on financing, but I suspect in reality it’s more likely the realtor will sue them for the commission lost when the deal fell apart, adding insult to injury.

And as long as I’m ranting and reminding people that there is risk in real estate: financing of a preconstruction is not guaranteed. If you’re not rich enough to have a substantial cushion to close even if the market value at completion is a fair bit below the price you contracted for (which you still have to pay), you’re not rich enough to play in pre-con.

I haven’t really blogged much about the real estate market: the core rent-vs-buy lesson hasn’t changed, and there isn’t much that happens in real-time to talk about. The 30% year-over-year gains of Spring 2017 have cooled, which not many were surprised at, and it will take years to see how it plays out from here. However, while I know that life is hard (very, very hard) to predict and forecast, there are a number of things that have surprised me:

    1. How fast the turn was, especially in parts of the 905. The market was totally coked-up-banana-pants-insane last spring. Then it wasn’t, and prices started to drop. The Stouffville case at the top of the post is an extreme example, but 10-20% decline in under a year is unheard of. For years when people tried to brush off the US housing bubble experience, one of my main points was that the subprime crisis was mostly an accelerant — even without subprime, we were still vulnerable to a crash, but that it would just happen slower. Instead, Markham is on track to out-crash Pheonix, Miami, and Vegas. Surprise! (Though this one comes with a bit of an asterisk as there was a government intervention in the form of the foreign buyer’s tax).

    2. That condos are holding up while detached prices tank. This one can likely be blamed partly on AirBnB, partly on people buying what they can afford after being priced out of detached houses in the frenzy. But that’s a complete surprise from what many who joked about Toronto’s official bird would have expected to see when the market started to turn.

    3. How many AirBnB units there are. I mean, Toronto wasn’t exactly lacking in hotel space for tourists from what I know. And the model of renting out a condo as a luxury hotel was, by all reports I’ve seen, a rather famous flop at the buildings designed for it (esp. Trump). Yet there are thousands of units in the city, despite being of questionable legality even before additional rules came out.

I’m sure there will be lots more surprises in the years to come.