Blessed by the Potato

My dad killed the lawn recently.

Not killed it in the way I might have killed a lawn, by slow neglect and poor gardening skills, leading to patchy dead spots, thinning grass, or the slow creep of weed infestation. No, he killed the lawn, the entire thing in one fell swoop with some kind of scorched-earth herbicide application.

There was some kind of mumbled reasoning about weeds and starting from scratch in the spring, but to hear my sister tell the tale “No, dad just got angry and killed the lawn.”

It looks so bizarre, because it is not the yellow-brown, patchy-looking thing that you might associate with the natural death of a lawn. Instead it is full of thick blades of grass, all greeny-brown and slimy looking.

The thing that it most closely resembles is the terrain of an undead world in some video game. Indeed, that’s exactly what I think of now when I see that lawn: that if I were to go around to all the houses in the neighbourhood with their green (or ocassionally, yellow) lawns, they would have perfectly ordinary townsfolky things to say, like “nice weather we’re having” or “things were better when the old king was around” or “I heard there’s lost pirate treasure down by the cove, but I’m not brave enough to go looking myself!” But if I went knocking at my parents’ door their video-game-selves would say suspicious things like “what a beautiful lawn we have, it’s just a little undead” or “zombies aren’t so bad once you feed them some brains” or “there’s been a lot of strange sounds coming from the basement lately.” I can only imagine that somewhere down there a portal has opened up, or a secret chamber wherein rules the Lich King.

Is my dad the Lich King???

On our street there’s a little girl who rides her scooter up and down the sidewalk in good weather. Today she knocked on the door and asked Wayfare if she had seen her scooter. It’s silver with black handles, she said.

Wayfare’s response to the situation of someone stealing a little girl’s scooter:

I’m in full-on defer everything thesis mode. Whatever it is, it can wait until after my defence to get handled. Whether it’s cleaning, buying new shoes because my current ones have holes in them now, or restocking household supplies, it can wait. Except I may have cut it too close: I saw that I was down to my last 3 Q-tips, with two days yet to go before my defence. I asked Wayfare to bring a few with her, and “Please don’t tell my mom I nearly ran out of Q-tips. She’d probably let the zombies take me. ”

I thought that was a clever little bit, so I put it on Twitter, to which people asked “…What??” So, for those who don’t know the story of Q-tips:

My mom is a bit of a hoarder. Not in the reality-TV crazy way, but in the she grew up in rural PEI and has at several points experienced what it’s like to be snowed in and isolated from the rest of civilization for a week or two at a stretch way. So she stockpiles things like food and toilet paper and what-not.

We say that our house is one of the most zombie-apocalypse ready ones since we’ve got lots of food and bandaids stockpiled, enough to last months without having to venture out to resupply. Indeed, that’s what we do when we open a cupboard and find 48 cans of soup, or a giant 44-lbs bag of flour in the storage room: we shake our heads and go “well, mom’s ready for when the zombies come”. And as an aside, a 44 lbs bag of flour is seriously impressive to see outside of a bakery. I remember the first time I saw that Wayfare only bought the little one pound bags of flour, and I was like “oh, that’s so cute, it’s like a travel-size thing of flour for when you’re baking on vacation.”

But what really strikes me as bizarre is that more than food, toilet paper, ammo or medicine: my mom stockpiles Q-tips. Q-tips come in boxes of 400, and you probably use about one a day (maybe a few more if you use them for other purposes). So there’s my mom and dad, and sometimes my brother and sister, and she also occasionally uses them to clean out the pets’ ears or face wrinkles. Whatever. A box of 400 Q-tips is still a several month supply. One or two boxes of Q-tips should, realistically, satisfy any normal person’s need to stockpile Q-tips.

But my mom has two or three boxes in the bathroom. Three more in the ensuite. One in the closet. One in the guest bathroom. Two in the kitchen, one in the laundry room, and two more in the basement storage. At any given time, my mom has something like a 3-4 year supply of Q-tips on hand.

So the only explanation we can come to is that more than food or bandages or cricket bats, more than clean water or bottle caps, Q-tips will be needed in the zombie apocalypse. I don’t know if it’s because keeping your ears clean will help prevent infection with the mind-destroying parasite, or if throwing handfuls of them at the undead will lead them to kill themselves by putting one into the brain through the ears, but whatever the reason, they will be needed. And my mom is ready.

Yet there I was, raised in a household that respects the power of the Q-tip, and I nearly let myself run out. So please don’t tell my mom that I nearly ran out of Q-tips.

I finally figured out what the mysterious flashing yellow triangle error message on HP LaserJets means: there’s a mouse in the printer!

I heard him nomming away in there while I was trying to sleep at the cottage. Somehow I got him into a tupperware container, and took him for a little walk down by the water. Wayfare (who is unimpressed that I ran into her room going “I caught a mouse I caught a mouse! Wanna see?” at 5 in the morning) thinks I didn’t take it far enough and that it’ll just come right back in, which is not a bad bet. My parents can deal with the less-sucky more-permanent pest removal methods.

I just do tech support.

I’ll jump on the active vs. passive investing posting spree. To sum up for those that don’t follow a hundred other blogs, there was something negative said about passive investing, in particular that it shouldn’t be attempted in a bear/sideways market. Well, how do we know we’re in a bear/sideways market? Passive investing is, IMHO, still a great choice then, as making that call on market direction is too difficult for most of us to even attempt (not that that stops us). So, good counters by Canadian Capitalist and Michael James.

I’m a bit torn on the whole matter myself. For one thing, I’m not entirely an active or passive investor, having my portfolio split into the active half and the passive half (though the halves aren’t quite equal, with the larger half belonging to the active part).

I completely see the logic of passive investing for the average person, and that’s all I recommend to people who ask what to do with their money. For the majority of people out there it is the right way to go: control your fees, be happy with “average” (though indeed, one can do better than the average investor with a passive approach), use your time to live your life. Or to put it another way, play to not make any errors.

But at some level 1) I think that superior returns can be attained (e.g.: the superinvestors of Graham-and-Doddsville) and 2) I don’t think that I am average, helped in part by 3) the fact that my dad is an active investor who has out-performed. The average investor/mutual fund has a short time horizon, lack of patience, chases returns, trades too much, over-values growth, under-values strong balance sheets, and is emotional. So I don’t think it’s a wonder that the average investor actually underperforms a passive portfolio, and moreover, I think that even a diversified passive portfolio can be improved upon. The problem of course is the Lake Wobegone effect: the average investor believes they are above average, and then makes mistakes that leads to underperformance.

There’s a tough line to walk there: value investors can and do underperform for long periods of time while waiting for the voting machine to turn into a weighing machine, so I want to be patient and stay the course if I have confidence in my analysis even when the market moves against me. But, I don’t want to brush away a lack of skill as a temporary underperformance. So I’ve created a set of rules for myself I call Potato’s Valve:

The money flow for the passive portfolio is like a one-way valve: money only goes in (until retirement). It gets first crack at new savings to at least make the registered account contributions.

The active portfolio started with most of my previous life savings, and can get a portion of ongoing savings as long as it’s performing. When out-performance stops (as it did in the first half of this year) the valve gets turned off and new savings go exclusively to the passive portfolio.

That protects me against the hubris of continuing to think I’m above-average when the evidence says otherwise. The passive portfolio will continue to grow and will be there in the background, a cushion when I fall down, and only a tiny drag if I do make it big. Since I’m still young and very much in the savings/accumulation phase of my investing career, my future contributions will be more than my current portfolio size, so even if I under-perform with my active portfolio (or even blow it up!) it won’t totally kill me, as long as I eventually put most of my assets into a passive portfolio that does work. Potato’s Valve should keep me investing in what has the best chance of giving me good returns in the future: my active portfolio if that continues to do well, or the passive if it doesn’t (assuming that active investing has any kind of chance — if it doesn’t, the valve will keep me from chasing that for very long with very much capital) while protecting me from myself.

Part of this comes back to what Michael James mentioned in the comments: an active investor has to pick a benchmark and compare how well they’re doing, and have some idea of what poor performance is. It makes no sense to spend the time doing active investing just to get a poorer result than you could get with a diversified passive portfolio, and not even know it! More to the point: if you can’t track your own past investment performance, what chance do you have of projecting the performance of companies in the future?

[Yes, this is the first time I’ve ever call that rule that, but I figure with a dumb name it might catch on]