Writings

The Return of the Babysitter

Travis

Yesterday I noticed the across-the-street neighbors’ babysitter was back. I’m sure some folks are judging. I am not.

We’ve been looking for someone to come a couple hours per week ourselves and she just showed up this morning.

Yes, we realize COVID cases are hitting record numbers in the US, there’s no vaccine, and nothing is really better at all. And we’re not Trump supporters, anti-maskers, or deep state believers. We’ve done everything “right” throughout the pandemic.

But our mental health is also at record lows. My wife’s in particular. We’ve been with our (almost) two-year-old and (just turned) four-year-old since March with ZERO help from family. It has been incredibly trying.

We’re at a point where everyone needs to start deciding what their personal risk tolerance is, measured against their other needs. Some people need to provide for their families, so their taking the risk of going back to work. That trade off is easily understood and widely recognized.

But I don’t see as many folks talking about the mental health implications of quarantine and lock downs. It’s easy to judge others because it’s so difficult to empathize with everyone’s individual situation.

I hope everyone continues to hang in there and find ways to cope. Here’s to a better second half of 2020.

Cases and Deaths Decoupling

Travis

For about a week now, Kaitlin and I have been talking about the rising number of COVID-19 cases, but the seemingly steady or declining number of deaths. This is a good thing, obviously.

We’ve speculated that it’s most likely due to increase testing and people recognizing symptoms earlier and therefore getting treatment earlier. Today I saw this thread on Twitter that look at the rising number of cases in Florida, Texas, and California:

Click through to read the thread, but the conclusion is at the end:

I’m hopeful that these trends continue but still concerned we’re not doing enough to protect the most vulnerable. Requiring masks everywhere in public would be a huge win for the latter.

Finally, more people should be looking to sources like this on Twitter for facts and news rather than mainstream media. It’s sad we can’t depend on those channels for rational, data-driven insights like these.

Learning to Ride

Travis

One of Tucker’s gifts the other week was a “big boy” bike. We’ve had him on one of those balance bikes for the last couple summers. The first year he didn’t do much with it, but last summer he really started mastering it.

We figured it was time to level up.

I could believe how fast he took to it. Here’s a clip of the maiden voyage after practicing twice in the yard:

I was beyond thrilled.

Being a parent has it’s challenges (to put it lightly). There are moments, even days, that make you question whether it is all worth it.

Then there are moments like these that make you feel there is nothing else worth doing.

It is amazing to me that our children will grow up with such huge milestones caught on video, forever archived. What a gift.

I hope they look back at them, putting tears in their eyes like they do mine.

Tucker Turns Four

Travis

Four years ago this morning I held our 4.5 pound boy against my bare chest in the NICU, waiting for Kaitlin to arrive via wheelchair. It had been an intense, unexpected night given his due date wasn’t until the end of July.

The hardest part, especially for Kaitlin, was not being able to take him home for over a month. It nearly drove her mad.

Tucker didn’t make it easy on us from the very beginning. He hasn’t changed. He’s a challenging little dude in ways, we’ve found, that only we can really grasp. It’s hard.

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Party Like It’s Pre-COVID

Travis

Everyone is trying to figure out the next move.

You can’t blame them. There’s a lot at stake.

The equity markets have been seesawing in a range. As of today, we’re effectively unchanged in the S&P 500 for the past month.

Real estate investors, agents, and contractors are trying to figure out what’s going to happen with the RE markets next. Anecdotally, I’ve been hearing that things are busier than ever. It was a bit hard to believe, because I’m not in the day-to-day of selling homes. Kaitlin and I have rethought some things, but ultimately we’re proceeding with our plans. That said, we’re not representative of the “average” American.

Then, yesterday, I read this piece from Redfin. The short of it is that demand has now surpassed pre-COVID levels. Here’s the chart porn they include:

Demand is back, but inventory isn’t. The article cites it being down 24% year-over-year. Obviously, this puts upward pressure on price.

It’s too early to say whether this is temporary, pent-up demand, or if it’s sustainable. I have a hard time believing it’s the latter given our country’s failing attempt at properly dealing with COVID. South Korea is making the US look like a third-world country with the way they’re testing, tracing, and handling the virus. Check out this awesome Twitter thread from a journalist visiting the country recently.

Not only are they thoroughly screening travelers, but they’re able to quickly respond/mitigate new outbreaks like the nightclub incident recently experienced.

Meanwhile, the US is attempting to “reopen” without any real measures in place. People are literally out of their minds. Check out this clip from a reporter today:

The thing is… I get it. They should be mad. They should be pissed off. But it SHOULD be directed at Trump and the current administration, because it is THEIR job to be fixing this and they have grossly dropped the ball. Now, local governments are abandoned and left to pick up the slack. It’s disgusting.

I wish I could have each of these people read this thread:

Click through for the full thing. It’s well worth it.

With the way this is all unfolding, I can’t imagine we recover quickly. We could be trapped in this cycle of “reopening”, locking down, “reopening”, locking down for a year or more.

That won’t be good for anyone. It will leave a trail of devastation that will take years to recover from, if ever.

The Weight of Reality

Travis

A week ago I was noting the optimism I was sensing both anecdotally and from general market sentiment. Since then, crude oil traded to negative $40/barrel and is now trading around $17 while broader market indices are almost completely unchanged. We’re seeing chop as the markets look for direction… hope that we’re coming out of this or signs we’re not.

I mentioned the Gilead Sciences remdesivir trial. It was met with great optimism a week ago, but I noted my skepticism. Turns out, we learned today that it’s likely not going to be the silver bullet folks were hoping for.

To me, it really doesn’t feel like markets can hang on much longer here. The S&P 500 looks vulnerable, hanging below resistance and continuing to be rejected by the 50-day SMA:

Meanwhile, in what seems like it would be positive news regarding antibody tests in New York, the market failed to rally and finished slightly down on the day. But to me, all it confirms is there’s a lot more pain to get through if we’re hoping for herd immunity. I think we’d be looking at a death toll 10-15x higher in the US before getting there.

We’re currently sitting just under 50,000 US fatalities:

source: https://www.worldometers.info/coronavirus/

That’s scary. But I don’t think the market is weighing that.

It seems we’re starting to recognize the reality of the economic impact. This article about the “death” of department stores caught my eye yesterday. Yes, the pandemic is accelerating an already clear inevitable. But the speed that it’s happening will be astounding.

The short of it all is stores are canceling orders for merchandise, not paying their bills, and in serious risk of bankruptcy or filing already. What’s the point? Nobody is shopping anyway.

But the bigger implications here are that factories have nothing to fulfill. So when you hear all this talk about “opening up the economy”, ask yourself what orders factories in China are fulfilling…

Meanwhile, I’ve learned that Vegas has an absolute lunatic for a Mayor and MBA students are demanding tuition refunds.

Shit is going to get ugly.

A Crude Joke

Travis

If you weren’t paying attention to crude oil today, you must be living under a rock. The action was nothing short of spectacular as the May futures contract traded at -$40 per barrel. Yes, NEGATIVE $40 per barrel.

That means people were literally paying others to take possession of their crude oil. Bloomberg has a decent, short write up explaining it. There’s an even cooler real-time explanation here.

Here’s the thing… the average, retail trader doesn’t fully grasp what’s going on. The same, poor schmucks in my FB real estate investor group that were advocating buying Carnival and Wynn stock were also figuring out the best way to get long crude oil. They must have thought today was a godsend for their delusions of future riches.

What a bargain they must have thought they were getting as they bought up as much USO as they could muster after now likely being down a hefty margin. But hey, just keep cost averaging, amirite?!

Adam Button does a fantastic job summarizing the pickle retail folks will be in.

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The Wave of Optimism and I Remain Cautious

Travis

The other week I was talking about the pessimism I was seeing through conversations I’d had with neighbors and how they juxtaposed with what I was seeing in the data and other informed conversations.

It seems the market agreed with me.

Since the close of trading the Friday before I wrote that post, April 3rd, the S&P 500 is up 12.5% through yesterday’s close. Impressive.

I’m happy to say I was playing some individual names to the long side and have done well with them. And now, I’m starting to feel the opposite.

It feels like we’re getting too optimistic.

Here’s some anecdotal evidence… The other day, in my FB real estate investor group, someone asked for opinions on how to take ~$100k cash and $70k equity and turn it into seven figures.

There were plenty of hilarious replies. Some practical. Many related to real estate, but a noticeable number of equity related ones. Here are some of the best.

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The Winners Were Obvious

Travis

Way back on February 28th I was writing about what could go right.

Looking back, I was far too early to start thinking about what could go right for the broader market or COVID-19 in general. The S&P 500 bounced in the coming days, but proceeded to dump quite a bit lower after that.

Instead, I should have been paying more attention to this nugget in the final paragraph:

Holed up in our homes, with no commutes, we’ll all be spending more of our attention furiously researching CoVID-19 (Google), staying in touch with friends (Facebook), binge watching more TV (Roku & Netflix), and avoiding unnecessary trips outdoors (Amazon & GrubHub). As time permits maybe we’ll get some work done (Slack and Zoom).

I wish I’d listened to my own sage advice. An equal weighted portfolio of those eight names would be up just over 3% since the first trading day of that post (March 2nd):

The big winners here have been Zoom, Amazon, and Netflix. Surprise factor… zero.

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When in Detroit… Steal Electricity. And Why Out of State Investors Can’t Hang.

Travis

My roofer texted me Friday making sure there was power on at the house we were scheduled to start work on today. I didn’t think too much of it. I’d set electricity up via DTE’s online portal months ago. I’d been in the home since then and mentioned to Kaitlin that the power wasn’t on.

We didn’t think too much of it though considering this happened at Algonac and they were able to switch it on with a simple phone call. Shouldn’t be an issue.

We tried calling Saturday at 2:15pm but their office apparently closes at 2:00pm. OK, Monday (yesterday) it’d have to be.

Well, turns out it wasn’t going to be a simple fix. While on the phone with DTE yesterday morning, we learned that the power line that leads to the main had been cut. I’ve discovered, through the McCarty House, that when occupants don’t pay their bill, DTE shuts them off. Then they tend to steal power and DTE comes and cuts the line.

Unfortunately this results in a major PITA for me. Usually DTE can’t get out for a couple days and they give you a four hour window for when they’ll show up. You have to be there to let them into the house to show it’s properly grounded.

Well, the earliest DTE could get out would be the 23rd of this month. Not OK.

The shingles and roofing material had already been delivered, sitting at the house. So I take off around noon, hoping to knock on a neighbor’s door and see if they’d let us borrow some electricity for today.

Knowing that it’s rare that Detroit homes have exterior outlets, I phoned my electrician on the way in and explained to him the situation. He asked for some photos when I got there to see if he’d be able to help.

Nope. The lines were too far from the main. We were definitely going to need DTE out to resolve it. But he said he’d stop by and take a look anyway and see if there’s anything he could do.

He called me an hour later, “Do you know the people next door in the grey house?”

“No. Never met them.”

“I don’t think anyone is there,” he said. “The power is on. I could tap into their…”

“Do it!”, I said.

“OK. I’ll do it tomorrow before they start.”

“Sounds good. And we can just disconnect it when we’re done. They’ll never know.”

“Yep.”

And so we did. He got it hooked up this morning just before the roofers got to work. They knocked the roof out today, and we’ll be disconnecting it tomorrow.

It cost me $275. But it’s cheaper than eating the dumpster that we already had schedule, and potentially losing our roofing materials to rain and/or theft. So that’s a win.

This is just one of the many reasons why out of state investors get eaten alive in Detroit. First, how could you possibly react to this situation from afar?

You couldn’t. You’d be left trying to cancel the dumpster, likely losing some or all of your roofing materials. Having to re-purchase everything, and waiting multiple weeks to get the roof done.

Ouch.

Maybe you could rent a generator? I have no idea, honestly. Maybe that’s the easiest solution, but it may not be. And renting anything right now in the midst of a statewide lock down can’t be too incredibly easy.

The other side of the coin… how many out of state folks have an electrician that’s bad ass enough to do something like this for them? I’m guessing not many.

And how many have the balls to do it?

Even less.

Detroit is such a unique beast. I love it.