February 2022 Update: War, Trend, Hobbies

On February 28, 2022, our net worth stood at $121,069 and €107,904, which represents a -0.09% decline and 0.09% rise in USD and EUR respectively.

Basically, we were flat month over month. However, we were net savers in February, which means that our savings were offset by losses elsewhere. Those losses were in the stock market, where prices bounced around from fear of high valuations, rising interest rates, and war in Ukraine.

Ukraine

I'm not going to expound on the politics of the war beyond my support for the Ukrainians and hope for a swift and just end to the violence. However, since Ukraine is just a long day's drive away from us, the war is felt very keenly here. I have Russian and Ukrainian colleagues, not to mention the many eastern European colleagues who remember Soviet occupation or hegemony. There is panic in the air.

The Ukrainian colleagues are bearing their burdens well, however, their pain is showing. One has family hunkered down in shelters in Kyiv. A Russian colleague made a point of hugging him last week. On the first day of the war, several Russian colleagues called in sick. Who can blame them? Generally, they've been quiet about the war.

A friend's spouse is Russian, and she's very stressed. Her sister is in jail after protesting in Moscow, and they're not sure how they will get the money to get her out, especially now that money transfers are impossible. At the same time, she's losing business from her local Russian customers; their wealth is in rubles, and they both can't transfer it, and the value has crashed.

There is fear of nuclear war. There was one day where, upon reading the news, I became afraid of spiraling escalation and considered dropping everything, grabbing my wife, getting on a plane, and flying someplace remote in the American midwest. Of course, in the case of nuclear war, that probably wouldn't be enough.

My mother is worried about us. I've tried to downplay the risk, but events have proven me wrong.

Trend Following

I've decided to implement a simple trend following strategy in my tax-deferred IRAs. The basic rule is this: if above the 10 month moving average, buy or hold. If below that line, then sell. The "buy" is for a broad based index fund like the Vanguard All World Stock fund.

I got this strategy from Meb Faber, and its major advantage is that it saves an investor from long draw downs. Yes, it will sometimes whip you in and out of positions, but when it saves you from a 2000 or 2008 type crash, it makes up for those mild inefficiencies.

The one challenge is that my account with Vanguard is still based around mutual funds. Their rules prevent me from buying shares within one month of selling them. That means there's a minimum one month wait to rejoin the market, or else I have to choose a different fund.

As of now, I'm not doing this in my taxable account. I may ultimately regret that choice, but I can't decide how I'd logically implement it when some stocks are doing very well (ABBV, BRK.B, ENB), and others are in big drawdowns. I'm not interested in trend following each name individually. So I guess I'll have periods where I just go down with the ship and am forced to watch.

At least I'll have this Charlie Munger clip to keep me company in my bag holding:

Hobbies and the Value of Stuff

I have a few expensive hobbies. Namely, I'm into photography, which is a high cost hobby no matter which way you look at it. Recently, I've decided to switch camera systems due to having a new interest in video, which does demand more cutting edge gear.

This has meant trying to sell my older stuff, which reveals the value - or lack thereof - laden in the object. However, there's always a challenge in doing it with high end stuff, because there might be a lag time, especially if you try to bypass a site like eBay. Perhaps no one in my city needs that specific wide angle lens for that particular camera system.

In any case, I'm sitting on gear that's not valued as part of my net worth, which I'm hoping to transform into cash at some point soon. At the same time, the new gear I bought has most certainly knocked down our net worth. I did manage to sell the camera, but lenses can have a longer lead time before they're purchased.

I will likely have to use eBay in the end with all the risks inherent in that choice.

Forecast

I'm not particularly hopeful right now regarding the economy. Commodity prices are spiking as Russian and Ukrainian exports are closed out of the market. Europe is in a vulnerable spot with their energy supplies. There's risk of not enough food to feed the world.

So far, March has been another difficult month in the stock market, which is where most of my wealth resides. I'm trying to look at it with equanimity, but it's hard. I'm also trying to see market prices declines as an opportunity rather than as a curse to avoid at all costs. Since I'm in a lucky position, I can continue to accumulate cash and/or buy attractively priced shares. Though I'm all spent at this point in the month.

A family emergency has arisen in the US with the health of a family member. It will likely mean a trip to the US by my wife sometime in the near future. This will be a real cost, but there are more important things than money.

Update: January 2021

This one is very late. There was a lot of real life that happened in the first week and a half of February that threw off my normal schedules. With that out of the way...

Our net worth shrank in January by 3.02% in USD and 1.72% in EUR to $121,177 and €107,809 respectively.

The main drivers were the stock market and some personal spending. Anyone who's exposed to the tech sector has experienced a good amount of pain recently. January had a sharp decline and a reversal at the end of the month that eased the pain a little, otherwise our numbers would have been worse.

On the spending side, I'm re-jiggering my cameras (I like photography and, increasingly, video). That means, I'm buying cameras and trying to sell my older cameras. That will impact the January and February numbers.

On the upside, our incomes are improving as normal working life resumes post-pandemic, and we received our German tax refund. Score.

That's it for this month. February so far has also been a rough stock month, so I expect losses. Thankfully that will be mitigated by our incomes somewhat, but it won't be enough, I expect, to totally offset this volatility.

Stay healthy. Until next time.

De-Identifying With Your Profession

I've been questioning my sense of identity recently, and the foundation for that questioning was thrown in sharp relief this weekend. A lot of my personal self-worth is tied up in my job and my relative position within the job, and I've had some recent experiences that show me just how unhealthy that is.

Basically, if I had a good day, my ego would get puffed up with an inflated sense of self-worth. If I had a bad day (whether it was my fault or not) I'd feel bad about myself and wonder where I went wrong and what I could do to get back in the good graces of anyone who seemed anything less than 100% thrilled with me. This would seep into the rest of my life.

This last weekend drove the point home. I got a phone call that reinforced my importance to the company. A phone call a few hours later left me in despair. I have the same job today that I had on Friday, but over the weekend I went through an emotional boom and bust cycle.

The reliance on a profession is a terrible base for self-identity, because professions are so subject to the influence of others' whims. Since I'm not my own boss, the decisions my immediate bosses make about my life have an incredible effect. But those decisions are based on factors almost totally, like 98%, out of my control. If I base my self-worth on those decisions, I'm only setting myself up for disappointment.

But I think we're all more or less under that delusion. Our economic value to the world is encouraged as a form of self-identification. We get it as kids with the question, "What do you want to be when you grow up?" and we see it in TV shows and movies when a job is the focal point of the hero's story. A lot of hobbies are essentially jobs in disguise, and a lot of creative encouragement and artist celebration is essentially just job celebration. "Look how important they are. You want to be important too, right?" or "Your current job might not fulfill you but maybe this other one over here will, so you'd better get cracking."

Which is not to say there's no joy in jobs or any kind of job stand-ins. It's the self-identification that's risky. And the sheer fact of the collective effort at this form of self-identification should give us pause. Why so much effort?

One reason I save money is to further distance myself from my profession and to emotionally insulate myself. I want to be able to walk away should someone ever truly emotionally destructive appear at my job.

But should I ever really reach some kind of financial independence where I could leave my job, I'll have to go through a final de-identification, because, despite everything, I do identify with my job and my profession. The day I leave it will be a very strange day. After all, I moved across the Atlantic ocean for it, and that fact certainly means I'm more vulnerable to major identity disruption by disturbances to my professional life.

But I've left parts of myself in the past before, and I'll have to do it again. We all will at some point.

This is the part where I should offer an alternative for healthy self-identification, but I can't. Any external base of self-identification also opens you up to disappointment and forced reappraisal. Some kind of internal mental work has to be done over time, but what shape that takes is individual.