November 2020 Review: Everything Is A Teachable Moment

November 2020 was a solid month. After a disappointing October 2020, the S&P 500 and NASDAQ returned 10.8% and 11.8%, respectively. After November's gains, the S&P 500 is up 12% for the year.

Could you have guessed that after being up ~30% in 2019, we'd be up another 12% during the middle of a pandemic? Not me. I would have been glad to have given up 10% of my 2019 gains. It's possible I still could since the year isn't over yet. However, many indicators are pointing to more gains in the future.

It is clear that positive vaccine news and more clarity after the presidential election has helped boost investor sentiment. I'm buying any 1%+ dips.

The theme for this review is, “everything is a teachable moment” because I'm in the thick of parenthood. We adults take for granted how much knowledge we've accumulated over the years and how little our children know. As a result, whenever we spend time with our children, we can teach them something new.

Here's my November 2020 review so my ancestors and I will never forget what life was like during the pandemic.

November 2020 Family (4/5)

Thank goodness for smartphones because the main way I can remember what happened is by scrolling through my picture archives.

Lots Of Outdoor Activities

We had a wonderful time enjoying the California Academy of Sciences, the Japanese Tea Garden, and the Ferris wheel at Golden Gate Park. Living on the less dense west side of San Francisco when you have kids is so much more pleasant.

I wanted us to do everything possible before our city locks down again, which it now has. It seems absurd San Francisco has closed its massive outdoor zoo where folks can easily socially distance.

We just learned that our $400K/year mayor, London Breed, also went to The French Laundry for an 8-person birthday celebration a day after Gavin Newsom. Breed's trip was three days before she announced tighter restaurant restrictions in SF. It's almost like insider trading for dining out.

I played softball once a week and tennis three times a week all month. The weather has been sunny and clear every day with an average daytime temperature of 64 degrees. Being constantly sore feels good because it gives me an excuse to also go to the hot tub. Further, they say vitamin D helps boost your defense against the coronavirus.

Music Class

As a homeschool teacher in the making, I'm responsible for teaching my son one song a month to memorize and sing. By learning to sing 12 songs a year, he will have a wonderful repertoire of songs by the time he's 10.

The music curriculum also helps me practice the guitar, which he might one day play. When I was growing up I was forced to learn the violin, which I hated. The guitar is the perfect instrument because it sounds beautiful, can bring people together, and is fun to play.

I've temporarily moved on from teaching Mandarin songs and back to English songs. The latest song I taught him was Coffee by Beabadoobee. It's a four-chord song that's easy to sing and play. The chorus got picked up by a rapper named Powfu and he created a hit song called Death Bed.

Gardening

My wife and I have taken up the mind-clearing activity of gardening again. The six agave succulents we planted six years ago now all have “pups.” As a result, we dug out 10 pups and planted them in new areas. Six years from now, they will have plenty of pups of their own.

We also finally planted two magnolia trees in front of our rental property courtesy of the Friends of the Urban Forest. I was so psyched because I've been a tree-lover ever since my grandfather introduced me to his fruit farm in Waianae. With so many wildfires in California this year, it also felt good to help repopulate the forest.

I've used the new magnolia trees to teach my son about nature and responsibility. We've got to water the tree once a week for two years so it can establish deep roots. Otherwise, the trees might not make it into adulthood.

My hope is that he'll develop a connection with the trees as they all grow up together. From there, I'll teach him about landscaping, remodeling, and owning rental properties for passive income. Maybe one of these things will interest him.

Dear Daughter

Is it me or is raising a daughter easier during the infant stage? Or maybe it's because we are more confident parents the second time around that raising our daughter seems easier.

I can't figure out whether the challenges we face raising a boy is mostly because he's just 3.6 years old and still developing or whether he has a stronger than normal personality. Let me know your thoughts.

Our daughter has a very pleasant personality and the brightest smile. She's standing and just starting to cruise along the sofa. We are going to love and care for her so much!

This Thanksgiving truly was the best ever because we got to do a video conference call with my parents and sister and also spend time with our children as a family.

Family Got Sick!

One of the downsides of going out more is the increased chances of getting sick. I think my son caught something when we started going back to the science museum. He then gave his cold to my daughter and my wife.

Perhaps not being exposed to as many bacterias and viruses for nine months weakened his immune system. When he started going to the museum again, the viral load may have been too much for him to handle.

On the bright side, the cold was mild and hopefully helps boost all of our immune systems. Luckily, I didn't get sick, which meant I could continue doing a lot of things around the house.

November 2020 Finances (5/5)

Stocks

In October, I wrote in my newsletter that I would be buying more stock and that's what I did. My newsletter has really helped me and hopefully many of you stay on the investing ball this entire year.

Writing the newsletter forces me to decide how to proactively use my cash. Every month, I'm always making the decision between saving, investing, or paying off debt.

The problem I've noticed over the years is that many people end up saving tons of money and never do anything with their cash. The newsletter also encouraged me to update my FS DAIR framework for those of you deciding between investing and paying down debt as well.

Below is a record of my November 2020 stock purchases in one of my taxable brokerage accounts. I mainly bought IVV, an S&P 500 ETF. But I also bought more Netflix because I think it has pricing power, the lowest churn, and will outperform the S&P 500 with a bad winter ahead. I also held my nose and bought more Amazon because it is a devastating monopoly that will likely go unchecked for years. I've owned both positions for years.

Here is a screenshot of my other taxable brokerage account at Citi where I bought another ~$33,000 in ETF, VTI.

Upon further review, I realized I also bought ~$36K more Netflix in my Citi brokerage account as well in November. Therefore, my total public equity investments in November was about $141,000. I helped my wife invest $25K in the S&P 500 and $26K in a couple bond funds as well. My goal is to invest in what I believe. Otherwise, everything is just jibber jabber waste of time.

Rental Properties

All my tenants have continued to pay on time during the pandemic. They are all still gainfully employed.

I saw one of my condo tenants (two roommates) for the first time in three years because they lost the storage key. Her suitcase was in there and she needed to get it before heading back east for the holidays.

Given both roommates are in their prime relationship years, I'm guessing one or both may be moving out soon. However, my tenant said she loved the place and they couldn't be happier with the setup during the pandemic. An awesome park is literally right across the street and they have a deck.

I also haven't raised their rent in three years and don't plan to with condo rents seemingly soft in the city. Not seeing my tenants in three years and only hearing from them once over e-mail until this recent incident is good fortune.

My love for rental properties has grown because the value of steady income has grown with a collapse in interest rates. Hopefully, I didn't just jinx myself.

Real Estate Crowdfunding

I finally got the 2Q2020 quarterly update from my real estate crowdfunding portfolio of 13 remaining properties. 2Q2020 was the worst quarter of the pandemic and I was expecting the worst. However, surprisingly, things weren't as bad as I thought.

Here are some snippets from the 2Q2020 update.

University of Toledo Student Housing: As of 7/31/20, the property
is fully occupied, and 100% pre-leased for the 2020 – 2021 academic year. Rent collections have remained high at 99.4%. Residents seeking rent relief
due to COVID-19 related issues have been minimal and are being tactfully dealt with on a case-by-case basis.

Downtown Minneapolis Office: As of the end of Q2 2020, revenues were 3% below budget and operating expenses were 11% below budget. The
sponsor’s and the building’s new leasing team are continuing their efforts to source prospects for the building’s vacancies, though demand for CBD
office space is presently at a minimum due to the impact of COVID-19.

Not bad right? Unfortunately, and as expected, the Sheraton DFW Airport Hotel equity investment is likely going to be a goose egg. The 2Q2020 occupancy rate was only 15% and they are trying to work things out with their senior lenders.

Hopefully, there has been good improvement since 2Q2020 given everything seems to have rebounded since then. I'll get the 3Q2020 update and 4Q2020 update in 1Q2021 and 2Q2022.

If you are going to invest in real estate syndication deals, I recommend investing in a diversified fund through a platform like Fundrise. Fundrise has more tailored funds that have held up during times of volatility.

Alternatively, if you are an accredited investor, I'd invest in at least five individual projects to spread the risk around. My favorite platform for individual investments is CrowdStreet because they are focused on real estate in lower valuation, higher growth 18-hour cities.

If I had invested only in or mostly hospitality projects, my returns would have taken a real beating due to coronavirus travel restrictions.

Debt Management

Despite investing extra in the stock market in November, I also paid down $14,008 in a rental property mortgage. The rate is only 2.625%. However, it always feels great to pay down some debt.

The 7/1 ARM rate can reset up to 4.625% in 2026 if the LIBOR index increases by 2%+. However, since I refinanced the mortgage in 2019, the LIBOR and Fed Funds rate actually went down further.

My goal is to pay down the entire mortgage by December 31, 2026, which means I've got to pay an extra ~$80,000 a year in principal on top of the regular $2,814.41 monthly mortgage payment ($1,685.59 goes to principal).

With rates so low, I'm going to backend the extra principal payments in years 4, 5, and 6. However, we may buy a new home in Hawaii in 2022 or 2023 . Therefore, I need to manage our liquidity carefully.

Overall Net Worth Growth

Year-to-date, my net worth is up ~14.6% according to my Personal Capital dashboard. My annual net worth growth target is 10%, so I'm very happy with its performance so far. You can sign up to use Personal Capital's financial tools for free to track your net worth, analyze your investments, and better plan for retirement.

Hopefully, I've been conservative enough with my San Francisco properties that my net worth figure is reasonably accurate. Condo prices look to be down this year and I have one condo. However, my condo is in Pacific Heights (prime location) across from a great park. It is also in a small building, unlike the mainly luxury condos in downtown and Mission Bay. Either way, I lowered its value by 7%. I plan to own this condo forever.

On the flip side, the demand for single-family properties on the less dense west-side is strong. I've been tracking property sales every month and feel encouraged. To stay conservative, I've left the values of all my SFHs the same for the past two years.

Below is an example of a home that sold on November 16, 2020 for 35% over asking and 15% over Redfin's estimate of $2.338M. The Redfin estimate is pretty accurate at $1,000/sqft imo. The home is nicely remodeled and was underpriced to generate interest.

However, I was blown away by the $805,000 over-asking price. I'm not sure how the buyer's real estate agent responsibly advised to go so high. That said, with the NASDAQ up over 40% YTD, a lot of wealth has been created in the SF Bay Area.

It is possible that my net worth is up closer to 25% based on potential property prices. However, I'd rather stay conservative and be surprised on the upside.

November 2020 Online Work (4/5)

November is usually one of the quietest months in personal finance. People are winding down, slacking off at work, and getting into the holiday spirit. However, I continued to publish three times a week and write a newsletter once a week.

Burnout Realization

What I'm realizing is that it may not be good to be a strong producer during a slow time period. Since college, I have always had the mentality of doing more during the holidays in order to relax more during normal times.

However, producing more during slow periods not only increases the risk of burnout, it may also make you more frustrated at the people you work with who don't maintain the same intensity. These people might also get frustrated at you!

For example, one editor at a larger publication hasn't responded to me for three weeks after I sent in my draft of a topic she had requested. She actually asked me to write two articles. The editor is likely overwhelmed in her professional and personal life and needs a break. I totally get it. However, it always feels bad to be ignored, especially after someone asks you to do something. I could have used my time writing the article on something else.

I also burned my dad out. He has been editing my posts for years. Finally, one day he got annoyed I kept making the same punctuation errors over and over again. Therefore, to maintain harmony, I gave him four weeks off and now only send him a post to edit every fourth or fifth post.

Instead of constantly grinding it out no matter how difficult life gets, perhaps it's better to just take things easier to be more aligned with the majority of people.

My favorite posts of the month are:

Don't Let Honor And Pride Keep You On Hard Mode Forever – If you're burning out, you should read this. You get zero extra points for doing things the honorable way.

Thankful For Luck: A Phone Call That Changed My Life – It's important to keep reminding ourselves of our lucky breaks to prevent taking life for granted.

How Rich Must You Be To Dine At French Laundry Like Gavin? – We know politicians have a different set of standards than the rest of us. However, I thought it would be fun to explore the world of fine dining. The post gives us little people a chance to dream while being trapped at home.

The Top 10 Worst Times To Retire – When you retire, you don't want to second-guess your decision. Avoid these 10 times and you'll likely be golden.

If there are new topics you'd like to read about, let me know.

Feeling Good About The Future

Overall, November 2020 was good. I'm bullish about the future of the economy, the real estate market, the stock market, our health, and San Francisco. I'll be buying the dips for the foreseeable future.

It's also wild that our daughter will be one year old in December! I clearly remember bringing her home and writing in her honor, Why I Failed At Early Retirement: A Love Story, as if it were yesterday.

Let's review our goals we made at the beginning of the year and finish strong. I plan to really focus on my health for the remaining days.

How did everybody's November 2020 go? What were some of your November 2020 highlights and lowlights? If you are a parent, did you have any cool teachable moments for your kids?