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Wednesday, December 6, 2023

The Pandemic Was An Experience In Hedging Your Life

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One of the main reasons why I retired at age 34 was to hedge against an early death.

When I was nine, my grandfather died from cancer and I clearly remember seeing my mother distraught for months. Then when I was 13, my 15-year-old friend died in a car accident. Here today, gone tomorrow is a jolting experience.

When I was 24, the Twin Towers went down. I had been at the Windows Of The World restaurant, situated at the top of the north tower earlier that year. Then on November 26, 2008, terrorists attacked the Oberoi Hotel in Mumbai, where I had just stayed a week earlier for a conference.

When the global financial crisis destroyed the world economy, I knew I had to make a change. I didn’t want to regret spending the best years of my life doing something that no longer brought me joy.

The closer you come to death, the more you will appreciate life.

Now that the Public Health Emergency For COVID-19 is lifted, I want to review what I did right and what I did wrong. Just like forest fires, another crisis is inevitably coming. Learning from our mistakes is how we can better survive the next calamity.

Early Days Of The Pandemic

I clearly remember Friday afternoon, March 27, 2020. San Francisco was in its second week of lockdown and my son (three at the time) and I had cabin fever.

The city had closed off public playgrounds during the pandemic, but I decided to have a look anyway. We used to go to the playground five days a week. But we had resorted to drawing slides with chalk in our backyard as a temporary solution. It was both heartwarming and sad.

The Pandemic Was An Experience In Hedging Your Life - drawing a playground slide structure with chalk

When we arrived at Vicente playground, we saw its 30-inch high fence was chained. Given nobody was at the playground, I decided to enter. Carefully, I lifted him over the fence and away he went screaming for joy.

An Unfriendly Welcome

As we climbed to the top of the main playground structure, we heard an older man who was walking around the park yell at us, “Get out of there! You’re not supposed to be there!”

I smiled and waved back at him, but he kept on barking. So I told my son to wait for me as I needed to have a conversation with him.

As I approached the man, I asked him why he had a problem with me and my son playing at an empty playground. Why not continue enjoying his stroll? Instead of responding, he scurried away. I guess he didn’t like to be confronted.

Moments later, a park ranger drove by to speak to a foursome at the picnic table near the playground. He then looked our way. I waived and he waived back.

But for a moment there, I thought he was going to come over and hand me a ticket or something. Instead, he seemed happy that a father and son were able to enjoy the outdoors.

Difficult Decisions For Parents Of Young Children In 2020

From that moment forward, I realized all of us had to decide whether to conform to the government’s rules or live our lives the way we saw fit. I’m sure some of you believe I was arse for entering an empty playground with my three-year-old.

But I decided to risk it because nobody was around. At least we wore our masks like obedient soldiers. Three-year-olds need to be outside playing, at least my kid did.

Eventually, I decided the public scrutiny of others walking or jogging around the park wasn’t worth it. So we went to another playground which was unfenced. At “fighter jet playground,” we felt more free.

park closure during the pandemic

The uncomfortable feeling of always being monitored reminded me of my days working in finance. My e-mails were always monitored. And if I stepped away from my desk for more than ten minutes, people would start questioning my whereabouts.

By 2020, I had already experienced eight years of financial freedom. As a result, I had adopted a defiant attitude about government restrictions, especially, those surrounding public spaces outdoors. I knew the government regularly makes carte blanche decisions to protect the minority who can’t properly take care of themselves.

Eventually, other parents agreed restricting playgrounds was extreme. More and more families came out in defiance of city rules, which put a smile on my face every time I drove by an occupied playground.

2020 was an especially difficult situation for parents of young kids. It’s one thing to be concerned about your own health and safety. It’s another level of stress to think about your children’s health and safety. Every move we made involving our children involved taking calculated risks.

Examples of decisions parents had to make in 2020 include:

  • Taking kids to the playground (low risk of getting COVID, so we went regularly)
  • Sending children to preschool (medium risk, so we homeschooled our son for 18 months)
  • Going to a packed grocery store (medium risk, so we ordered delivery or I went late at night)
  • Riding on an airplane (medium risk, so we didn’t fly, but drove)
  • Going to the doctor’s office (low-to-medium risk, we went for all regular checkups)

In 2020 and the first half of 2021, nobody knew exactly what to do. Staying inside our homes forever was not an option. So we did the best we could with the information we had at the time.

Working With Imperfect Information Is Difficult

After about three months post lockdowns, I realized if I completely shut down our lifestyles for who knew how long, I might end up extremely bitter about this unfortunate event. At the same time, I didn’t want anybody to get sick or die.

Since I hadn’t experienced COVID yet, I was working with incomplete information. If I read the negatively-biased news, then I believed COVID had a high chance of killing us or causing long-term problems. If I talked to people who got COVID, I got feedback that it was similar to getting the flu or common cold.

Making decisions with imperfect information is hard. But we do our best to weigh the pros and cons. Thinking we would have done this or that if we could rewind the past is unhelpful, however, because it is unlikely we would have done anything differently.

The Main Negative Impacts Of The Pandemic

The main thing that impacted our lives was pulling our son from a preschool he had just started five months earlier in September 2019. Getting into preschool is a big ordeal in San Francisco. And now we had to quit? Ugh.

He was starting to really enjoy his teachers and friends. His social skills were developing too. The holiday party, where he and his classmates sang for us and his grandparents, was a magical moment.

The second thing about the pandemic that hurt us was not being able to see my parents for the next 22 months. They understandably didn’t want to fly to San Francisco from Honolulu in 2020. And we didn’t want to fly two unvaccinated young kids with nascent immune systems to see them either. The pandemic took away one or two precious visits with grandparents and grandkids.

In the end, I decided to fly to see my parents in November 2021, so at least I could say I saw them once a year in 2020 and 2021. Fortunately, they had visited from December 2019 to January 2020 for the birth of our daughter.

The final negative impact of the pandemic was not being able to better check in with more relatives. My aunt in Hawaii suddenly passed away in 2020 while home alone. If there was no pandemic, my family in Hawaii would have seen her more often over meals.

Hedging Our Lives During The Pandemic

Here’s how I hedged my life from future regret and misery during the pandemic.

1) We had a second child so we went all-in being stay-at-home parents.

Having a baby in December 2019, right before the pandemic, was completely random. In retrospect, one of the best times to have a baby is during a pandemic.

With a baby, you’re ideally always home and looking after them for their comfort and safety. We didn’t plan to travel for at least two years after having her anyway.

For those parents who were able to work from home, it was a struggle to work and provide childcare at the same time. But it provided lower risk of infection than having to go into work and drop your baby off at daycare.

Having a baby during lockdowns is like reading your favorite personal finance book during a flight delay. Since you would happily read the book at any time, you might as well read the book during an inconvenient time.

2) We bought a nicer house

Even though we had just purchased a house in April 2019, we bought another house in June 2020. The 2019 house we purchased was a fixer that was taking longer than I had expected to remodel due to the lockdowns.

As a result, when a completely remodeled house came to market in April 2020, I decided to make a move. At the time, the decision was a risky one that had me sweating bullets during the escrow period.

We negotiated for months and I almost backed out when the seller didn’t give me a price concession. In the end, I decided if we were going to stay home longer, we needed a better layout and more space. Even if we ended up losing money on the home, at least we would have a more comfortable lifestyle during shelter-in-place.

The longer we stay in this home, the better the hedge. I’m not quite convinced this is our forever home. But I could easily raise my kids in this house for ten years.

It is doubtful we would have purchased our existing home had it not been for the pandemic.

3) We homeschooled our son.

Although missing out on social development was a disappointment, the silver lining of the pandemic was being able to homeschool our son in Mandarin and English for the next year and a half.

As homeschooling parents, we learned a lot about his interests and learning styles. We offered better accommodations that helped accelerate his learning. We also learned much about ourselves. Young children will test your patience. And we both quickly found our limits.

Saving about $2,000 a month in preschool tuition due to homeschooling was another benefit.

Now that he’s been back in school for almost two years, we realize how much more he learned at home than while at school. The things he’s learning in kindergarten today were things he learned two years ago. But the social aspects of in-person learning have been great and something he really enjoys.

Since we were homeschool teachers for 18 months, we’re confident we can do it again if there’s ever another pandemic or if we decide to long-travel.

4) Lost some weight.

The CDC and the media kept telling us that overweight people were more negatively impacted by COVID than non-overweight people. Given I didn’t want to get really sick or die, I decided to watch what I ate a little more carefully. Further, I decided to play a lot more tennis and softball during the pandemic.

Overall, I lost about three pounds, which doesn’t sound like a lot. But I had initially gained about five pounds during the first three months of the pandemic. In fact, plenty of my softball friends gained between 10 – 25 pounds during the pandemic.

A pandemic plus a new baby is not a good combination for fitness. But I kept seeing images of morbidly obese folks sadly passing away from COVID. So the mass media kept me focused.

5) We made and then lost some money.

After the initial shock of the pandemic in 1H 2020, one of the main things that made the pandemic more palatable was a rise in risk asset values. Stocks, real estate, cryptocurrency, fine art, farmland, venture capital, and venture debt all started performing very well by 2H 2020.

2021 was an especially strong year for all asset classes. Too bad the stock market gave back most of its 2021 gains in 2022. However, overall, most investors are much wealthier today than at the beginning of 2020.

I used the pandemic to write posts such as How To Predict A Stock Market Bottom Like Nostradamus and Real Estate Buying Strategies During COVID-19. These posts propelled me to take more risks that have ultimately paid off so far.

Since I was spending more time at home, I also decided to focus more on making money online. As a result, I built more business relationships. Today, I feel more comfortable taking care of my family because we accumulated a larger financial buffer.

6) Wrote a bestselling book.

After having our daughter in December 2019, I neither had the desire nor the time to write a book. But when lockdowns began on March 18, 2020, I decided I had to make the most of a difficult situation.

I pretended I was a college professor on a two-year sabbatical to write Buy This, Not That. After two years, I was either going to succeed or fail.

When my grandkids or kids ask me in 10-30 years what I was during between 2020-2022, I can proudly tell them dad/grandad spent countless hours writing, editing, and marketing the best personal finance book he could write.

It’s one thing to tell stories about what you did. It’s another thing to have actual physical proof of what you did. They can even hear an audio version and listen to all my podcasts as well.

Biggest Regrets During The Pandemic

Now that I’ve shared the actions I took to hedge my life against regret, here are some things I regret not doing.

1) Didn’t move to Oahu in 2019 or early 2020

I wish I had moved my family to Oahu so I could have spent a good two years with my parents. I’ve been considering moving to Oahu since 2016, but could never make the move for multiple reasons.

You can read my post called, A Race Against Time: Buying A Dream Home With My Parents to see where my mind was. Seven years have gone by in an instant and I still haven’t taken action!

Luxury home prices were gradually coming down since 2016. But then the pandemic created an influx of new Hawaii homebuyers and pushed prices back up. What bad timing.

Although we have less time, at least I called my parents almost every day during the pandemic. For Thanksgiving 2022, I convinced them to visit us in San Francisco. I’m also flying them over this summer again.

house in Hawaii during the pandemic

2) Didn’t fly more often.

In retrospect, the best time to fly to Hawaii or anywhere was in 2020 and 2021. Fares were cheaper, the planes and airports were less crowded, and the entire state was on lockdown.

But back in 2020 and 2021, anybody who traveled without a good reason was seen as selfish. Most of us were trying to contain the spread as much as possible.

I felt irresponsible to travel if my parents didn’t need me. Further, I didn’t want to risk bringing back a virus to my family or risk my young kids traveling with me.

But if a pandemic happens again, we are going to fly to Hawaii so I can take care of my parents. We’ll homeschool and figure things out once we land.

Flying to Asia wasn’t feasible due to two-week quarantines in hotel rooms for countries that let in international travelers. But if we didn’t have kids, we would likely have been more adventurous.

3) Should have owned a vacation single-family home, instead of a vacation condo

What made the pandemic more livable for some friends was that they owned second homes in Napa Valley, Sonoma County, Stinson Beach, and Lake Tahoe. These places are between 1.5 – 3.5 hours driving away.

We, on the other hand, owned a vacation condo at Everline Resort in Palisades Tahoe. It would have been great to go up there, but the hotel shut down for months! Not only could we not go up to our place, but we couldn’t earn any rental income either.

When the resort finally opened up at the end of 2020, we still didn’t want to be around lots of people. If we had a single-family vacation home with a pool, hot tub, and lots of land, however, we would have had more variety in the day-to-day mundaneness of 2020 and 2021.

Now that things are back to normal, we are glad we have a vacation condo at a resort with massive amounts of space and amenities. I asked both kids which they prefer better, a single-family mansion vacation home or a vacation condo, and they both prefer our vacation condo.

4) Should have speculated more

The pandemic provided another great opportunity to make gobs of money in speculative assets. With everybody stuck at home, people spent more time looking for investments online and putting capital to work.

If there is another pandemic, I will earmark at least $100,000 in capital to punt on “greater fool” assets like NFTs. Then once there’s another vaccine and signs of people returning to normal life, I will take some profits. I know I won’t get the bottom or top right. But I will leg in and leg out.

Making big money requires intentionality. So not only will I earmark $100,000 to speculative assets, but I will also spend an hour a day hunting for speculative assets.

5) Should have sold more stocks at the end of 2021

So many of my tech high flyers came crashing down in 2022.

Although I got a little more conservative by selling some stocks at the beginning of 2022, I didn’t do enough to sell names like Netflix (I should have sold when Squid Games came out), Amazon, Tesla, Redfin, and DocuSign.

These stocks did so well for so long that I figured I’d just let them ride. It all felt like funny money! But when you treat your stocks too much like funny money, and not enough like assets that could be converted into buying stuff for a better life, you sometimes hold them for too long.

I also didn’t want to experience investing FOMO given I didn’t work in tech, despite living in San Francisco. My tech investments are my main way of participating in the boom.

In the future, I will be more disciplined in selling down expensive stocks that have risen far beyond their fundamentals.

Hedged My Life In A Pandemic By Taking Action

The longer you live, the more good and bad things will happen to you.

Please also don’t wait for anybody to save you. If you do, you might be waiting forever. Everybody is too busy dealing with their own battles to help you with yours. Therefore, you must take calculated risks in order to improve your life.

Take a moment to add up how many good years you have left to live. Ask yourself what you will regret not doing. Now methodically complete those things you’ve been putting off.

I’m glad the pandemic is over. Hopefully, we’ll all be better prepared for the next one.

Reader Questions And Recommendations

Readers, how did you make the most of the pandemic? What were some of the things you did during the pandemic to minimize regret? What were some things you wish you did during the pandemic?

For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail.

If you enjoy podcasts, you can subscribe to The Financial Samurai podcast on Apple, Google, or Spotify. I discuss pertinent topics that make the most impact in our lives.


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