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.
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.
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.
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)
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.
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.
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.
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?
20 thoughts on “November 2020 Review: Everything Is A Teachable Moment”
As a father of a teenage daughter I will tell you that raising a girl is far easier as a toddler/young child. The tide quickly turns once they hit the teenage years. Especially when boys start coming into the picture.
I think boys are just harder to raise. The girls behave so much better at this age (10.) They’re better at school and a lot more mature overall. Boys are so much trouble.
I doubt life will get much better until he goes off to college.
Don’t know about raising a girl. :)
I agree up until age 12, I think girls are far easier to raise hands down. It’s once boys enter the picture that fatherly instincts kick in and makes it much more of a challenge :)
May I ask for examples of the difficulties you’ve had in raising your daughter once she got older? What if the boy who liked her was a great boy?
I have actually been quite fortunate that my daughter is very intelligent (A honor roll) and makes pretty sound decisions. It’s mainly the father part of me that doesn’t trust any teenage boy. They say boys (and men) have one thing on their mind (and I remember that age that I was guilty of that too) so it is hard to accept the fact that she is entering the dating pool now.
Apart from that most things go pretty well for me so I am lucky in that regard.
When you look back at returns, 2020 hasn’t been a bad year for me either.
Are you planning on making more real estate crowdfunding investments? I wonder, for example, if companies will start to break their office leases as they come up for renewal.
I’m avoiding further commercial real estate investments right now because of this.
Hi Sam. Any thoughts on the implications of Prop 19? Lots of estate planning to do before the end of the year, with the Prop 58 parent to child property tax reassessment exclusions coming to an end in February. Absolutely brutal for the next generation inheriting rental property, although it should skyrocket rents of SFR’s in the long run as they are removed from the rental pool. Still time to gift property to a trust before new regulations take effect….and take advantage of current gift/estate tax exclusion amounts.
Great heads up! Well, there’s still a $1 million buffer, so that’s good.
I’m not too worried as rules may change again. Hopefully, our kids will be wealthy enough to pay higher property taxes. Especially if they will be gifted property that had appreciated a lot.
But that stinks on rental properties being added to full market value. How was your November?
“ Proposition 19 replaces Proposition 58 and greatly limits the scope of the parent-child exclusion. Beginning on February 16, 2021, (a) the ability to transfer $1 million of assessed value of other property (i.e., property that is not one’s primary residence) is completely eliminated, and (b) the ability to transfer a primary residence between parent and child without reassessment will not apply unless two conditions are met: (i) the primary residence must also become the recipient’s primary residence, and (ii) the fair market value of the primary residence at the time of transfer cannot exceed the transferor’s assessed value by more than $1 million. If, at the time of transfer, the difference between the assessed value and the fair market value of the home exceeds $1 million, the new assessed value will be the fair market value less $1 million. If the transferor’s primary residence does not become the recipient’s primary residence, then the property will be reassessed to its fair market value.”
Thank you Sam for this November (and 2020 so far) review. I appreciate your willingness to share and be transparent with your stock purchases. Your honesty and openness is what makes your site so interesting and successful. On the subject of transparency, have you disclosed your RE Crowdfunding holdings anywhere. I saw student housing, multifamily and hotel. What asset classes are you looking at and considering now? More student housing or multifamily? Anything else? Any funds? Etc.?
I invested in a fund that made 17 investments in 2016-2017. It is a 5-year target fund, so hopefully more distributions will be made in 2021-2023. Due to Covid-19, there will be 6-12 month delays, which is fine. Good to give these projects time to recover.
I’ve received about $230K out of the $800K invested so far.
How about you? What are you investing in and what? I plan to reinvest about $500K in another fund to keep the passive income going.
Due to my age and financial situation, I’m more toward debt funds mostly senior in the stack. I’m bullish on student housing (have two) but can’t decide which is better to expand between other multifamily or industrial development or, like you, a fund. When you say “fund” what type of fund are you considering (income, growth, balanced, location – east coast, west coast, heartland, DC, LA, etc.? So many choices on different platforms. Difficult decision thus my question. Finally, why a fund rather then a number of individual deals offered a platform like Crowdstreet?
November went by pretty quickly for me. I didn’t do anything significant but had a nice quiet Thanksgiving with my family. I’m hopeful for good things next year and plan to relax more this month and really try and soak up the holidays with my kids. I’m also going to try and do more Facetime with my relatives. I don’t do that often enough. Congrats on your November successes!
About your children: when they turn about 15 years old they will be way smarter than you. Just ask them.
I hope so! And not because they are delusional! Is this what happened with your kids?
Whoa you’re dad is your editor for this site? That is so awesome and wholesome…
Thanks. Figured it was a great way to keep him stimulated in retirement and us connected. He finds joy in correcting my errors, but I wrote too much and burned him out.
I hope my son gives me some fun activities to do that will help him when I’m in my 70s! It would be my honor.
At the end of the day, iPhone on that I just wanna be useful to the people that I love.
Thanks for a fun recap of November! Wow I can’t believe the S&P 500 is up 12% for the year, shocking. I’ll take it!
I like your theme on “everything is a teachable moment.” I watched Tom Hank’s Beautiful Day In This Neighborhood film last night and it reminded me how different the world is through a child’s eyes. There really is so much we can and should teach our children. I’m going to really try and focus on teaching good values to my kids this holiday season and next year.
How fun to be gardening again especially with your son. I like to pull weeds on sunny days to clear my head and see the immediate results. It’s very satisfying.
Very well rounded recap. This reminds me to really try and tackle my outstanding goals for the rest of the year and start thinking about some very specific ones to set for next year.
Touching movie and good reminder To see the world from a child’s perspective and to be patient, present, and kind. I need to work on all these things.
You asked about a new topic. I know you have something similar on your forums but I would love to have a post where your readers and you make the case for their favorite individual stocks. A lot of your regulars don’t comment on the forums but do on Financial Samurai and vice versa. Perhaps a contest with a small prize or trophy for best one year return?
A great idea Bill! Am I responsible for giving awards to the people who win on a quarterly basis? Isn’t winning enough? Bragging rights and profit!
It really is a great idea to help increase activity in the forum and to have fun. I used to do a stock picking contest with the community.
The Samurai Fund has crushed the SP 500 since inception!