Saturday Linkage


  1. Best 50-day rally ever (LPL Financial); Review of 2020, its up & downs and the surprising climb for the last 50 days.
  2. Why is the market doing well lately? (oblivious investor); “The value of the stock market at any given time is essentially the market’s consensus as to the present value of the expected future earnings of publicly traded companies”.
  3. What happens if everyone starts saving more? (Simple dollar); Critique of article in CNN business warning of economic fallout if people stop spending and start saving.
  4. How personal finance blogs make money(Retire before Dad); Ever wonder how the finance blogs make money? Good article explains how
  5. Three Months to retirement: Are my global travel plans changing? (A purple life); Maybe….the virus and economy may change plans to travel immediately after retirement.
  6. Adventures in retitling our real estate and other assets (Costa Rica Fire); Updating estate plans, wills, trusts,  etc. and its effect on asset titles.
  7. Stop listening to “Them” (Freedom is Groovy); We are constantly being asked to believe in credentialed “experts” who seem to be more and more wrong every time, from housing design, to choice of schools, a lot of the conventional wisdom of the last 40+ years is wrong.
  8. What I’ve learned from two years of retirement (Retirement Manifesto); Two years of lessons, including “Retirement is fluid – embrace the fluidity”
  9. How I created a profitable website in 9 months (Four pillar finance); step-by-step how he did it, including writing plan, content plan, traffic growth, etc.
  10. Holidaying at home (Just baggage enough); taking a week off while under quarantine at home.

Investment Update June 2020 – what is up with the stock market?

We’ve had three months of lockdown in the US, where the economy has been throttled, followed by a week of people trying to burn the major blue cities to the ground (and doing significant economic damage to those cities). GDP is supposed to take a beating for 2nd quarter in the US. Yet the markets keep shooting up, and they are close to returning to their all time highs of late December. What the heck?

If there was ever a time which showed that the stock market is not the economy. The economy is going to be hurt for 2020, but it appears the market may rebound.

I have my own personal theories on this, which include:

  1. Everyone who can continue to work is, and they have automatic deposits set for their 401Ks, IRAs, etc. The result is that money continues to flow into the market no matter what, driving the prices up.
  2. A lot of folks sold off and dropped to the sidelines and cash, but with the US Federal Reserve dropping rates, they aren’t getting anything for their money is the “safe harbors” of savings or bonds. They are being forced (kicking & screaming?) back into the market

Either way, the markets continue to jump up, even as the overall economy appears to suffer. We will see how that goes in the months ahead. For now, May was as kind to our investments as April – things appear to have rebounded nicely.

As you know, the allocation for my retirement accounts (IRAs, 401K, etc) is pretty much index funds, spread out between the  S&P 500, small-cap, international, REITs and bonds. Due to this allocation, I didn’t get hit as hard as some folks in March or in late 2018 – but I also didn’t get as big an “upside” in 2019 either. It all depends on your risk tolerance.

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

My 401K doesn’t have REIT option, so its just 25% for each.

Growth for May

  • S&P500: +4.8%
  • Small Cap: +7.7%
  • International: +4.8%
  • REITs: +1.7%
  • Bonds: +0.5%

My dividend account new allocation (as of Jan 2020) was:

  • 50% Dividend Stocks
  • 50% REITs

I had to switch my dividend account from my bank (USAA) over to Vanguard, as the bank was shifting it to Schwab, and I really didn’t feel like having my investments split to a third bank. Luckily I was able to make that move at the end of May with no real effects. Overall the dividend account was up 1.3% on average, with stocks being the big drivers up and REITs sort of staying still. June will be dividend payout month, so I’ll get a better idea of overall quarterly performance then. I’m planning on some of these companies cutting dividends due to the economy.

My brokerage account at my bank was shut down (they were moving it to Schwab and I don’t want to have three large firms with our investments) so I shut it down and invested it all into Vanguard Value Index average fund, to try and chase some value stocks. It was up 5.1% in April, once the change was made.

My Vanguard value fund (where I’m keeping my “fun money” right now was up about 3% for May.

Overall, I was up 3.4% for May, though I am still down -8.03% for the year. I tracked it back, and my investments are back to where they were in early October 2019. Like many of you, I intend to “stay the course” rather than make any radical moves, though I am considering changing my allocation when I rebalance in early July. I think low interest rates will be killing bonds, and I’m not so sure about REITs in the post-Chinese Virus world. I’ll let you know my thoughts on that later.

Hope everyone is healthy and your June turns our well!

Read more hidden text

Read more

Mr. 39 Months

Saturday Linkage

May 30, 2020

  1. Its Memorial Day (5am Joel); Honor and remember those who gave their lives for your freedom.  
  2. What its like not having to work on Monday (Clipping Chains); What its like to finally achieve FIRE.
  3. Master Delayed Gratification to achieve FI (Accidental Fire); How  the folks who have mastered delayed gratification are on their way; it’s the first step towards achieving financial independence.
  4. Are we facing a retirement crisis? (Retirement Manifesto); He goes through the dismal numbers of so many folks who have not saved or prepared for retirement. I’d also lump in the fact that the government pension systems in so many states is in dismal shape due to decades of underfunding.
  5. No one ever got rich by being frugal (Retire by 40); Another article that states individuals need to focus not just on being frugal, but on increasing their income, via raises, side hustles, etc. Can’t argue with it.
  6. For Long term investors, stocks are the only option (evidence investor); Similar to my early posting, the article notes that “bonds pay nothing” and “cash is trash.” Only stocks may assist you with the potential of inflation.
  7. How to negotiate a mini-retirement (millennial money); Some things don’t fit into a 2-week vacation. How to go about negotiating an extended time off of work
  8. Three retirement needs you must satisfy (ESI Money); Talks about the three “needs” that jobs inadvertently fill that we need for retirement – structure, purpose, sense of community.
  9. Here comes inflation or deflation (full time finance); Discussion on the potential and resulting situations based on inflation or deflation in the economy.
  10. What to do when the novelty of frugality wears off (The simple dollar); Something in line with the FIRE burnout article I wrote about previously. People should not be so frugal that they forget to live their lives as they pursue FI.

Are you suffering from “FIRE Exhaustion?”

I was recently listening to the May 25th edition of the Stacking Benjamins Podcast, and they had on as their guest the host of the Marriage, Kids & Money Podcast, Andy Hill. For those unfamiliar, Andy also does a podcast where he “explores personal finance topics to strengthen your family tree and live financially free.” I’ve listened to a few, and they are fine podcasts, as is the Stacking Benjamins show. Please do not take the comments below as any criticism of any of the individuals involved.

As the interview progressed, it appeared that Andy filled in many of the perceptions a lot of folks (including Mrs. 39 Months) have of the FIRE movement. Both Andy and his wife had high-paying jobs almost from the beginning, and took the opportunity to maximize their savings. While Andy noted that they did spend money to live their life (moved to larger home, etc.) they also saved a massive amount of money. Even when his wife left her job to raise the kids, they had enough with his six-figure salary to continue to fund their lifestyle and sock away cash.

After reviewing the situation (Andy’s wife wasn’t completely on board with FIRE concepts) they realized they could take their savings and the extra money they made, and pay off their mortgage quickly vs. using that to move to a larger house. Fast forward less than four years, and they were mortgage free! Congratulations to them, and its great that they can share that story to the world.

The problem is that the vast majority of folks will never make six figures, or even have a combined salary of six figures. Because of that, it is almost impossible for them to see the lessons provided here as applying to them (even though a lot of people could benefit from the frugality and savings lessons). Because a lot of FIRE folks are like Andy and his family, it seems like that is what the FIRE story is all about – take your massive income, be frugal, and get independent in your early years.

It seems to me that a lot of the blog posts I read in the community are similar to this, and I’m starting to suffer from “FIRE blog exhaustion.” A lot of the same stories, told by similar people. I long to read more blog postings of folks in the lower middle-class, working and suffering as they slowly move towards FI. I think a lot more people would commiserate with the community if they could read stories like that. It would provide them with lessons they could see themselves learning from.

I know I’m not one to talk. As an engineer in his 50s, I’m earning a very good salary, and since my mid-30s, we have had more than enough that we didn’t have to struggle and could put away money in greater amounts every year. Still, I’ll be on the lookout in the months ahead, and hope to update my blog roll with some of this.

Read more

Mr. 39 Months

Saturday Linkage

  1. The Amazing tax benefits of early retirement (Can I retire yet); Goes through the tax implications of the last few years leading up to retirement, and how its possible to pay very limited taxes in retirement – even early retirement!
  2. Make Do & use what you have (the three year experiment); Interesting article about using the items you already have and fixing them instead of always buying something new.
  3. Why liquid net worth is so important for your finances (of dollars and data); The majority of net worth for most Americans is tied up in their homes – but you can’t eat your homes. You need to have a significant portion of your net worth is assets you can spend, especially as you move towards retirement.
  4. Low bond returns are nothing new (a wealth of common sense); Article details that bond returns, measured against inflation, were not very good from 1940-1979. The current bond returns appear to be historical.
  5. Revenge of the Latte Factor (Monevator); Arguments against “false –frugality” of David Bach’s Latte Factor
  6. Could the Coronavirus led to larger homes and office spaces (; My take is that all this working from home will lead to smaller office spaces, more hoteling, etc.
  7. Getting my wife on board with the FIRE lifestyle (Budgets are sexy); The eternal issue of one part of a relationship “taking the red pill,” and then having to convince the other to go along.
  8. What is most important – Earning more, spending less, or investing? (Life outside the Maze); Interesting run down of the numbers
  9. Buying into a Bear Market (Retirment Manifesto); Goes through his strategy of buying over the last several months as the market dropped – and its result.

What to do for the potential of hyper-inflation in the US?

For some folks in the US (including myself) there is a major concern with the size and scope of the US deficit (now over $20T and approaching 100% of GDP). The latest round of “stimulus” put us another $2Trillion in debt, further pushing the day of reckoning up. At some point, the US is going to find that it can’t get people to buy their debt. When that happens – look out!

Wheelbarrow of marks to buy bread

A lot of folks are not that worried, because the cost of borrowing for the US is incredibly low In one of their recent podcasts, Stacking Benjamins talked about how the cost of borrowing for the US government is incredibly low (0.68% for the latest round of bonds recently) – so why not borrow at this incredible rate? The concern I have is that, no matter what the rate is, we are still borrowing a crapload of money, and that will need to be paid! It may be 10 years, 20 years, 30 years from now, but we are going to have to pay it off – or put out new bonds. What happens when the rate on those bonds is 4%? 6%? 8%? Each of those rates have been paid at some point by the US government.

The FIRE community is all about generating cash flow and using debt strategically. This isn’t strategic. So what is a person to do when their government is addicted to debt, and you can see the train wreck coming? Over the next several weeks, I’m going to go through some periods of history where countries had this happen, and what were the areas where someone could have at least done some items in advance to mitigate it. Maybe we can do some of these now to prepare.

The issues with Germany’s 1923 financial collapse starts at the beginning of World War I. While Britain had large financial resources, and France imposed their first income tax to pay for the war, Germany “decided to fund the war entirely by borrowing.” The idea was to pay for the war from the spoils of war, gained from France, Russia, etc. At the start of the war, the mark (German currency) was valued at 4.2 marks to the dollar, but as the war progressed without success, it dropped down to 7.9 marks per dollar.

As we all know, German eventually lost the war, with one of the reasons being the economic collapse of the country. By 1919, the mark was valued at around 48 to the dollar. For the next several years, the mark slowly drifted down, as Germany tried to come out of the war, eventually landing around 90 marks to the dollar by 1921. Germany’s industry hadn’t been damaged during the war (unlike France) but the reparations decision in 1921 ordered Germany to pay their reparations in gold or foreign currency (not cheaper marks). While there were arguments about this, eventually Germany had to comply, which led to more and more devaluations of the German mark. By 1922, the mark was valued at 320 to the dollar.

Germany tried to work out a better reparations method (including working with J.P. Morgan Jr) but it failed, and hyper-inflation was kicked off, with the mark falling to 7,400 to the dollar by the end of 1922. When Germany couldn’t pay reparations, Belgium and France occupied the Ruhr Valley industrial area. In trying to work this out, Germany printed more and more notes, further devaluing the currency. “A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923. By November 1923, the US dollar was worth 4,210,500,000,000 German marks.”

In late 1923, Germany issued a new currency, backed by bonds indexed to the market price of gold – based on the same price of marks-to-gold as it was pre-war. The central bank was no longer allowed to discount government treasury bills. The new marks were allowed to be exchanged with the old marks (at a rate of 1-trillion paper marks to one new Reichmark). By 1924, one dollar was the equivalent of 4.2 of the new marks (i.e. back to pre-war levels)

So what were the lessons we can learn from this experience?
• The link to a real asset, gold, was broken at the beginning of the war, unleashing inflation. Since the US got off the gold standard, inflation has eaten up 80% of its buying power, as of 1971. There are numerous tradeoffs that the gold standard has created, so that is a topic for another time
• When you lose a war, the victors can be very punitive (see Versailles 1919).
• Political Fragility and infighting can prevent a positive solution to the problem (anyone see that as an issue in the US today?)
• Hyperinflation destroys savings and fixed return assets (bonds). Since a large number of people save this way, hyperinflation can lead to riots and societal collapse
• All these issues can easily lead to the creation of a dictatorship or rule-by-decree. People will do anything to lessen the pain
• The items that maintained (somewhat) their value were good quality company stocks and real assets (gold, real estate, etc.) For those concerned about hyperinflation, invest wisely, start growing some of your own food, and be prepared for society to go through some rough spots.

My plan is to look at other historical issues in the past to get some guidance for long-term planning in the US

Read more

Mr. 39 Months

Saturday Linkage

Sorry its a day late. Was a little busy yesterday and didn’t get it posted.

  • Retiring in times of extremely low interest rates (Can I retire yet); Goes through the historical usage of bonds as retirement assets, and how the current low interest environment is changing the “perceived wisdom” in this regard.
  • Goals vs Systems (Scott Adams Says): The inventor of Dilbert discusses how goal setting is the wrong way to improve – you should create systems in your life that are self-perpetuating (i.e.  instead of “lose weight” set up a system to go to the gym every day).
  • Autumn Spring Cleaning & Lockdown changes (Just Baggage Enough): Things to do while on “lock down” and discussions of how their state is handling the “opening up.
  • The case against value investing (The irrelevant investor): Good argument on why value stocks have not delivered over the last 15 years – not really since the bubble burst.
  • Potential Problems with Starting a Business in a Crisis (full Time finance); Discussion on some of the reasons you may not want to start a new business during this Corona Virus.  t we do instead (Costa Rica Fire): They don’t budget in advance of spending, but they do track expenses – and adjust as it goes. They are also enthusiastic savers.
  • Is the rise of Indexing bad for corporate governance (Evidence investor); The article lays out how passive investing has been accused of passive corporate governance, letting top 500 company’s directors get away with stuff – but the evidence does not bear this accusation out 

Marketing and Sales with TKD Woodworking

In my timeline for TKD woodworking, May is when I needed to start doing some research on potential e-Commerce and marketing/selling my product on the web. This is in addition to the potential of attending local craft shows and selling my wares face-to-face with customers.

For woodworking craft items (picture frames, boxes, etc.) the standard online sites are Etsy, Shopify and potentially e-Bay. Some other options include Squarespace, Wix.xom, and Woocommerce. There are pluses and minuses to each, and the internet it filled with commentary on which is best (and what are some other options). Do a search, read and make some decisions.

For me, I wanted to look at my sales plan for 2020 (items I expect to sell in 2020, in what quantities, and the associated marketing & sales costs for each option. So what are the costs for each option?

  • Etsy: Etsy has a $0.20 fee for 4 months for each item, a 5% transaction fee, and a 3% + $0.25 payment process for each sale
  • Shopify: Shopify costs $29 per month, with a 2.9% +$0.30 payment processing fee, and a 2% cost for using payment other than Shopify payment system (note: this is the cost for the basic plan)
  • E-Bay: Ebay costs a $1 “insertion fee” (i.e. cost to publish for bid) and 8.75% for sale

I proceeded to take each of my items and the expected quantity sold, assumed each item would be “listed” twice in six months, and that I’d use the website’s payment system (and hence get charged their transaction fees). Based on this, I came up with the following results:

ProjectTotal Selling PriceTotal Sales for 2020Etsy Cost to sellShopify Cost to sellEbay Cost to sell
Live Edge Cutting Board$77.003$19.53$12.22$23.21
EndGrain Cutting Board$89.383$27.29$14.04$26.46
Breadboard Ends Cutting Board$127.883$31.74$19.70$36.57
Japanese Picture Frame$70.233$21.35$11.22$21.43
Small Standing picture Frame$25.823$9.14$4.69$9.78
Tery’s Tea box$174.163$49.12$26.50$48.72
Arts & Crafts Bookshelf$297.503$72.45$44.63$81.09
Campaign Collapsable bookshelf$249.733$67.26$37.61$68.55
Custom cutting boards – face grain$36.173$13.17$6.22$12.49
Keyed, Mitered Box$137.123$40.23$21.06$38.99
Low Tech Box with Insert$77.803$19.72$12.34$23.42
Monthly Fee$0.00  $174.00 

It appears the selling & marketing costs are pretty close. I’ve heard that Shopify is the easiest to get started, but I’m not sure it’s the first place folks go to purchase. Most folks can type in, and start shopping – but its not as easy to find product on Shopify unless you know what you are looking for.  

Based on this, I think I’ll need to do more research in the realm of marketing and which is the best source to get my product out in front of people. I’ll let folks know how its going further on.

Read more

Mr. 39 Months

Saturday Linkage

I’ve been doing a lot of reading (like so many others) during the Corona Virus lockdown, and I’ve decided to start a regular Saturday post in which I share the articles and posts from the previous week that interested me. Enjoy!