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Six Figure FIRE Update: Day 6

Job search, investing performance, and BTC reFIREment plan

So here I am writing at night again today, as getting up early just hasn’t been my thing lately. The girls are enjoying the quarantine bubble that we’ve formed with the family down the street, and they spent most of the day outside playing today. It was the most productive day I’ve had in a long while.

I applied to two jobs the past two nights, one, a fast-growing firm that provides AI-enabled insights for customer data, Outlier.AI, and a startup trying to “cancel the endless cycles of extractive capitalism,” Good Money.

Outlier is a rather large firm that has an office nearby and meets my salary requirements; Good Money is an unknown, but it’s a startup and the culture looks so awesome. I’ll keep applying to my dream list over the next few days: Square, GitLab, Stripe, Twilio. I’m also continuing my consulting gigs, but I don’t know that I can grow that fast enough to reach my goal. We shall see.

Other good news today is that the retirement account hit a new all time high. I was finally able to figure out my actual account performance by looking at my cost basis gains.

SecurityOpen dateClose dateGain(%)
APPLE INC (AAPL)12/26/201310/5/2018170.64
AMBARELLA, INC. (AMBA)12/26/20139/19/201819.05
AMBARELLA, INC. (AMBA)9/3/20159/19/2018(55.98)
AMBARELLA, INC. (AMBA)11/4/20159/19/2018(40.97)
AMAZON COM INC (AMZN)12/26/20139/6/2018383.27
AMAZON COM INC (AMZN)2/20/20149/6/2018457.70
ACTIVISION BLIZZARD INC (ATVI)12/1/201410/10/2018248.63
BAUSCH HEALTH COMPANIES INC (BHC)12/26/20139/13/2018(80.58)
8POINT3 ENERGY PARTNERS LP (CAFD)8/5/20156/21/2018(20.48)
8POINT3 ENERGY PARTNERS LP (CAFD)8/3/20166/21/2018(25.19)
3D SYSTEMS CORP (DDD)2/20/20149/5/2018(75.12)
3D SYSTEMS CORP (DDD)2/18/20159/5/2018(38.07)
FORTINET INC (FTNT)5/4/20179/5/2018112.83
NVIDIA CORPORATION (NVDA)2/10/201610/8/2018917.65
OCEANEERING INTL INC (OII)12/26/20139/18/2018(68.84)
Total:93.58
2018 Realized Gain/Loss

Obviously Amazon and NVidia were the big dogs here. My portfolio was imbalanced with the sheer amount that I was holding there, and I had a bad feeling about the economy. I wanted cash in hand, so I sold about half my position via a trailing stop. It looks like genius in hindsight.

2019 wasn’t too great from a gains perspective. On paper it’s only about 4%, but realistically it should be more since I was covering positions, covering my initial capital investment while retaining the rest of the position, risk free. I was able to take profits on GBTC, Paypal, RestoreBio, and Yext, but lost most of it in Aurora Cannabis and Cronos Group when weed stocks collapsed. I also got stopped out trying to play a very volatile penny stock involved in Bitcoin mining operations.

2020 hasn’t seen any major sells, my trading is automated now via my value averaging protocols. Very low volume, so to speak, and a modest 4.7 percent realized gains. My unrealized gains, however, are sitting at a whopping 38.54 percent! Most of that is Amazon (2014), NVidia (2016-17), GBTC, (2019-20; about one-third of my total portfolio,) and Netflix (2013). Major losers include Sierra Wireless, Hive Blockchain Technologies, FireEye, Overstock, and 3D Systems Corp. I’m currently holding thirty-one positions in all, seven of which I’m currently value averaging into.

Before I go tooting my own horn too much, though, I’ve got to acknowledge a bit of cherry picking here in the results. Due to my original brokerage being acquired, I don’t have access to my full trade history prior to the last four years. I’m sure it’s ugly. It’s not really fair to cout gains on positions I’ve held since 2013 while tossing out the ones I lost on during that time frame. I also closed out my traditional brokerage account, about one-fifth of my IRA at the time, and put it into bitcoin in 2017, before it broke 10K.

I am obviously putting my money where my mouth is with Bitcoin. Between my hardwallet and GBTC holdings, I have well more than half of my liquid net worth in the big orange coin, and a smaller bit more in Ethereum and other tokens. I’ve done the calculations and am looking at a BTC price target of $67K, at which point I will have more than enough to pay off all mortgage and student loan debt and establish my financial independence. My target date is sometime before the next halving, which I based off of the stock to flow model, which predicts BTC ranging above $100K before then.

There are lot of details to be worked out before we get there though. Obviously taxes is going to be the big one. I assume we’ll be looking at long term capital gains in the case of Bitcoin. GBTC gains in my IRA are untaxed, but withdrawing anything will be subject to income tax plus 10% early withdrawal penalty. So the best strategy right now is to continue to accumulate and hodl. Since I think BTC is going to accumulate price much faster than my four percent loans, it makes more sense for me to continue to accumulate BTC while making the regular payments.

One change I will be making moving forward is that I am going to resume contributions to my IRA, which I suspended in favor of buying bitcoin directly the past few years. I am missing out on the tax savings from my contributions, which is going to be a big factor next April given my expected increase in income. Once we’ve topped that bucket off, I can make a final decision on where my additional savings will go.

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The Simple Path To Wealth, by JL Collins

This book has been highly recommended by the FIRE community, and my wife wanted to read it, so I got it for her birthday. I picked it up Sunday morning and read through most of its hundred and fifty or so pages in under two hours, so here’s a bit of what I took away.

A good portion of the book reiterates the benefits of having financial independence, or F-you money, and relates Collins’s personal history getting there. This book, which originated as advice to his daughter, who didn’t want to have to time working about making her money work for her, basically boils down to a few simple pieces of advice: keep your spending low, keep your savings rate high, and throw everything into a low-fee, broad market index fund. The market has always gone up, and always will, he advises, and claims that his strategy is fool-proof over the long run.

And for people that can stick to the plan, it likely is. I’ll not argue against the merits of aiming for financial independence, nor the fact that aggressive savings with no debt will get one there fast.

I had a few quibbles reading the book, which likely stem from my own bias. I realize that my financial situation right now gives me no authority to argue with Collin’s assumptions, and I lack the personal data to prove things otherwise. If I had been more vigilant with record keeping over the years I could compute my own personal returns over the past twenty years. A quick look at my IRA’s total balance from January 2017 to today (up one hundred percent) versus the VTI during that period, up about fourteen, looks good to me, but there’s rollovers and contributions to factor in that make a direct comparison useless. Anyways, the book isn’t intended for someone like me, that likes spending time on financial investing and taking measured risks. It’s target for people that want the simple path.

Index funds, index funds, index funds: Collins says stock picking is a fools errand and recommends buying broad index funds, specifically Vangard’s total market index, the VTI. He spends a good deal of time on this, beating it into the reader over the course of the book. You’re not Warren Buffet, he says, and notes that the reason the Sage of Omaha and people like him are revered is because they’re so rare. He cites statistics on fund manager performance over the year, and shows that the only thing they’re good at doing is earning fees from their clients. He likewise disdains financial advisers, for similar reasons. Like stock picking, Collins thinks market timing is impossible. He notes that doing so successfully requires being right twice.

As noted, I’m heavily biased against following this advice. It may be that I need a good knock on the head, and I might be a bit arrogant from getting lucky with some tech plays when I was younger. It may be that Bitcoin has corrupted my brain. I’m totally willing to examine my cognitive biases and try to prove myself wrong. Granted, I’ve lost money on some foolish trades over the years as well, but I think that I’ve also tempered my panic response, and don’t sell when things go south. That’s what stop limits and trailing stops are for! I didn’t panic sell when the Corona pandemic hit the markets, I had cashed out some of my larger positions when the market fell off a year ago, and started buying when things crashed and started rebounding.

And I’ve been buying bitcoin almost every week for the entire bear market. And I have a plan on when to start selling that, also. But enough about that.

The market always goes up: Collins makes a great point about upside risk here. Since he recommends buying the entire market, it makes a lot of sense. Bankrupt companies stock can only go to zero, but the upside on those that survive is unlimited. It’s a great point that can be adapted to lots of other things as well. Just a few days ago I told my wife that if a take a new job with a traditional firm, my upside is only going to be whatever my salary will be, but if I do some entrepreneurial advising for equity stakes, my upside is unlimited. And Jason Calacanis, like other angel investors, likes to point out that venture investing only requires you to be right three times out of a hundred. Two of them to pay for the other ninety-seven, and the last one to be your unicorn.

Having the discipline to do something like that is an entirely different story, and is neither easy nor simple. And it’s easy to piss on the concept of perpetual growth when it seems like we’re living through the fall of the Roman empire.

Other advice: Collins gets into a lot of tax strategy, and goes over the various savings and retirement account available here in the United States. And the idea of a Roth conversion ladder fascinates me. There’s a lot that I skimmed over quickly, like the section on bonds, and retirement withdrawal suggestions, that just didn’t interest or apply to me.

Do I recommend this book to others? Absolutely, especially if they’re just getting started on the FIRE journey. Will I be practicing it myself? Probably not. I’m too fascinated by cryptocurrency, DeFi, LendingClub and venture/entrepreneurial opportunities to just park my money in an index and let it ride. I may start thinking differently in the future, and I do need to go back and look at the opportunity cost of the investments that I’ve made over the years to know for sure.

For me, my simple path to wealth is via Bitcoin. The next two years will show whether it’s the wrong one or not.

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Nothing punny today: Quarantine day 42

So we’ve begun week six. Writing has proved difficult recently, as I’ve been getting up roughly the same time as the girls and have been unable to focus on writing until later in the day, after my day seems to have filled up with tasks. Saturday marked the first real bit of restlessness I’ve felt since we started the lockdown, a bit of ennui and listlessness about what to do.

We’ve rearranged the room over the garage. My wife’s desk is setup and she’s able to telework. I took one of my old workstations and set it up for Elder. I tried using Wine for the first time, but had trouble with some fonts and wound up wiping it an installing Windows 10. I’m hoping she’ll take interest in computer art or music production, but she’s mainly interested in playing Roblox. I gave her a free pass yesterday and asked her what she wanted to learn about. She said “music”, so I threw on a YouTube video lesson for children.

She’s been accepted by the gifted program and will be going to the city’s gifted center for third grade. Her teacher called me Sunday to ask if I would be interested in letting her be part of a small group in the class that would be doing more advanced math, and of course I said yes. I’ve managed to get her to do piano without too much fuss, but I haven’t pushed too much. I can’t say for sure, but it seems that there’s been fewer tantrums.

We’ve discovered Amazon Music and that it has Trolls and Disney music, so the girls have been playing that a lot.

I’m in the midst of my final exam for my numerical methods class, and have been getting my solvers working. Right now the Gaussian elimination is the only one working, and I’ve got 3 more days to get the others working. The professor wants us to generate surface plots in Excel, of all things, and to turn those in for our answers. Since all the solvers are supposed to return the same results, I could just turn in the answers I’ve generated thus far, but I still need to turn the solvers in for assignment credit. The problem here is that I’ve built a large build and test suite in CLion, and my professor just wants a single CPP file that he can run in CodeBlocks. I’ve painted myself into a corner, but I’m not concerned with grades since I think the professor is going to grade on a massive curve.

One of the graduation requirements is financial aid counseling, and I got the first look at my student aid totals in a long time: over fifty-seven thousand dollars. There seems to be some discrepancies that I’ll need to review, but this is obviously a lot more than I was expecting. I hurt myself by taking cash payouts for personal expenses. These went to pay credit cards, and quite a bit to bitcoin. I’ve already accrued five grand in interest charges. It puts my post-graduation plans in a bit more context. The status quo will not hold.

I’ve got until next year before I’m expected to start paying these loans back, but the interest is well over four percent, so the first thing I’ll be looking to do is refinance.

I’ve decided that I need a proper professional presence online, so I’ve registered a few domains and started setting up a new CV site. This blog will remain separate for now, but I’ve started reposting some articles on Medium, and will be linking to my Github repo on it. I’ll worry about the ramifications of a recruiter seeing my Tweets and blog posts later. For now, the only thing that comes up when you Google my real name is my political work, so I’ve got to work on changing that.

I’ve also started trying to use LinkedIn more. There are a lot of jobs for software developers and engineers lately. About twenty new ones a day. I’m not saying I can take my pick, but there’s been about one or two each time I look that I’d be interested in. Not that I would necessarily be qualified for, but once I get through my exam and independent study requirements, I’ll be finishing up my resume and applying to some. Not that I really have any desire to work for another firm full time, but I doubt I would turn down an eighty thousand dollar a year position right now.

Or would I?

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Ternia Blockcard: pre-paid crypto credit card

The Devil’s in the details: fees, murky exchange rates and other issues mar what should be a promising crypto to fiat instrument

This sponsored tweet has been coming up in my feed a lot:

I’ve been very interested in crypto-backed credit cards for some time now, (remember TenX, anyone?) and thought I would take a deeper look at this. And since my wife and I are no longer that interested in hacking frequent flyer miles, I’m very interested in something that advertises six percent back in rewards. So I signed up for a BlockCard account and did some testing with it. Let’s just say there’s a couple hiccups with it.

The Blockcard is basically a pre-paid Visa card. You can deposit funds from 13 different tokens including BTC, ETH, LTC, and others, and while they say you can “stay in crypto” until you need to spend your funds, all deposits are converted to the Ternio utility token, TERN, upon deposit. What is TERN, you ask? That’s what I wondered as well, so I took a look at the whitepaper.

Ternio background

The paper, published sometime prior to the TERN token sale in April of 2018, describes it as “built to transform and ultimately disrupt the $224 billion per year digital advertising approach.” Basically, they’re building a platform to connect advertisers, publishers and users, providing scalability, auditing, and payments. Of course, TERN tokens are used for the payments, and must be front-loaded to participants accounts. According to the whitepaper, Ternio relies on an internal blockchain called Lexicon, a modified version of IBM’s Hyperledger protocol, and the public token, TERN, on the Stellar network. Lexicon purportedly runs over a million transactions a second, and was accepted by Amazon as an AWS Advanced Technology Partner a little over a year ago.

The rest of the whitepaper describes the projected use case for the Ternio netowork, token sale and airdrop and social bounty program. The BlockCard is also described. That said, the Ternio team seems to have dropped their focus on advertising, and now seem to be focused primarily on building a payment network and driving adoption of the BlockCard.

Using the BlockCard

The Fees

I signed up for an account a few days ago and was immediately struck by the fee disclosure. First off there’s a $5 monthly “subscription” fee if you don’t spend at least $750/ month. Deposits, withdrawals, and point of sale (swipe) transactions are free, but using the card as a debit, with a PIN transaction, will cost you, as will any ATM cash transactions, even declined withdrawals. They also charge ten dollars for a physical card, or you can get a metal one for fifty.

Source: BlockCard FAQ page.

To BlockCard’s credit, they claim that theses fees are required by their banking partners.

Conversion confusion

I needed to load at least ten dollars on the card to make it usable, so I sent eleven dollars of BTC over from Ethos wallet when I ran into what seems to be BlockCard’s biggest problem. BlockCard undervalued my deposit. I was surprised when the transaction completed and my card only had a total balance of $9.37. The transaction history actually showed the value at a more reasonable $10.71, but it still showed an inexplicable deposit amount of 1.52 BTC (I wish!) instead of the actual 0.00156. This still left me with sixty cents under the ten dollar threshold, so I went ahead and sent a transaction in ETH. There seemed to be less lost on the conversion, $9.98 sent versus $9.85 deposited.

In total, I deposited $20.99 cents to my account (not including on-chain transaction fees), after which my account showed a $17.99. This was quite concerning, but after a few more minutes the balance updated to show $20.56. Less dramatic, perhaps, but still a problem if one is expected to spend $750 a month on the card. That’s a lot of slippage, likely more than a $5 monthly membership charge. On top of all this, the UI for the website seems to be extremely slow to update the conversion. I noticed several times when I logged in and the balance didn’t update for almost fifteen minutes.

A few days after my initial deposit and my balance flipped back to eighteen. I’m not sure if this is the buggy UI or just fluctuation in the price of TERN. The FAQ indicates that the value of TERN is pegged against the USDD stablecoin and is “tied to TERN on the BlockCard ecosystem”, independent of trading on any other exchanges. “As users deposit on BlockCard, the value of TERN increases.  As people spend, the value decreases. TERN is never issued at less than $0.008”

This is all very problematic from a transparency standpoint and seems very ripe for abuse, especially since their use agreement allow up to 36 hours for deposits to clear. Without any clear exchange rates as part of the deposit process, users are basically at the mercy of BlockCard to treat them fairly. With no clear indication of the TERN/USDD price, users are left to do the math to make sure they’re not getting ripped off. Even by my own calculations, my current balance is being valued at 0.0069.

17.699 / 2570.33 = 0.006999, an immediate loss of 14% value on deposit.

So does this mean that incoming transactions are converted to TERN at the 0.008 exchange rate, but then immediately lose value upon being credited to a user’s account? If this is accurate, it seems like a very bad deal for users.

Rewards?

The marketing for BlockCard touts the six percent rewards on spending. While on the surface, this seems like a deal, until you find out that these reward levels depend on staking TERN.

Source: BlockCard Rewards Page

At the base rate of $0.008 TERN/USDD, that’s a minimum of $240 worth of TERN for the bottom tier, and almost twelve hundred dollars required for the top. Granted, one might be able to cut that quite a bit if one is able to acquire TERN at a discount on a exchange, but given the hype that BlockCard is putting on the rewards aspect of their card, it’s disingenuous not to mention the staking requirements on their marketing.

The main exchange market for TERN is BitMart, ranked 24th on CoinMarketCap and based out of the Caymans. Source: BitMart, Apr 22, 15:34EST

Conclusion

There’s other issues with BlockCard as well that are worth mentioning. For one, I’ve been unable to use the card since I don’t have the option to complete KYC on my account. I’m guessing I have to request a physical card to do that, but I’m hesitant to do so since it’ll cost me ten dollars. I’ll likely reach out to BlockCard for confirmation on this, and just to be fair I’ll give BlockCard’s CEO Ian Kane a chance to respond to this article and address any inaccuracies.

The last issue is related to taxes. Sending depositing crypto to your BlockCard account and automatically converting it to TERN qualifies as a taxable event. Spending the funds on the card does as well. Kane said in a tweet that they plan on adding CSV export for transactions, but for now users will have to copy and paste the details manually.

Finally, I want to be clear that this post is not just meant to be a complete dump on the work that Kane and the BlockCard team have done. They’ve done well so far to put together this link between cryptocurrency and traditional payments system. While I’ve yet to use BlockCard for a payment, it does seem to be one of the fastest ways to spend crypto to fiat. My concerns are mainly with the execution of the crypto components of the system. Using TERN as an intermediary currency, without clear indications of how either deposit or balance calculations are converted, is especially troublesome. And the prospects of their so-called rewards system is completely offset by the staking risk, which is again compounded with the lack of transparency in the exchange value.

For now, I’m going to hold off further judgement on BlockCard until they’ve had a chance to respond.

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Choose FI: Financial Independence

My wife and I don’t usually read too many of the same books. Beside some sci-fi and fantasy novels, our non-fiction reading preferences don’t overlap too much. She likes trashy novels and I stick to political, business, and technological based non-fiction. She recently discovered the FIRE movement, a group of people trying to build freedom from wage-slavery through financial independence. She picked up ChooseFI a few months ago, and has been listening to the related podcasts regularly. Since being able to redefine work has been of great interest to me, I decided to make a trade with her: I would read this book and she could read one of mine. I’m looking forward to her upcoming review of The Future Is Faster Than You Think — as soon as I finish it.

ChooseFI is an introduction to the financial independence movement. The last two letters of FIRE are for retire early, which the authors acknowledge is a bit of a misnomer, as many who have achieved FIRE continue to work. The general idea behind the system is to lower expenses and save up enough money to be able to fund your lifestyle via the interest earned on these savings. The first step is determining your magic number. By taking one’s annual expenses and multiplying it by twenty-five, you will have the amount needed to be able to maintain that lifestyle off of a four percent rate on those savings. These concepts are given as the rules of twenty five and four percent.

Determining this number and thinking about spending in terms of twenty five times (or three hundred if you’re talking about monthly expenses) can produce a dramatic shift in mindset. A simple example: spending three dollars a day on an energy drink or coffee each workday might cost you fifteen hundred dollars a year just to purchase, but maintaining that level of spending from savings income will require a whopping thirty seven thousand dollars in the bank. Another example: we’ve had a housekeeper come by our home twice a month, at $130 a visit. That’s over three grand a year, in direct expenses, over seventy eight grand to maintain during retirement. Putting these costs in this perspective creates a stark shift in priorities.

Of course the goal of living FIRE isn’t to live life as an an ascetic, it’s about prioritizing the things that one wants out of life. As a self-help book, Choose FI does a good job of laying the ground work toward setting priorities, developing a growth mindset, and mapping out the path to get there. There’s chapters on US tax savings, advice on college, career and networking, and investment tips that focus on real estate and house hacking, investing in index funds, and building a business.

As someone who’s taken a hands-on approach to managing my retirement and stock accounts much of my adult life, I found the chapter on index funds to be the weakest. I understand that for most people, picking a low-fee Vanguard index makes the most sense, but reading the following passage in the days following the worst daily drop in the S&P since the Great Depression struck me as ironic:

Buying an index fund means making a bet that the system continue to grow and prosper. Some will argue that this will not always be the case. After all, societies and economies have collapsed in the past. While this is true, I’m not basing my plan around a worst-case scenario that may never come.

Choose FI, pp. 229

Whoops.

To be fair, the authors have acknowledged the current pandemic and situation in the markets in their recent podcasts. From what I’ve heard, it sounds like they are exercising caution and urging listeners not to jump at the current fire sale prices. This is probably wise advice for most people.

The book is perhaps a bit longer than it needs to be, and I found myself skimming through the book the more I reached through the end. There are lot of personal stories from both the authors and many of the chapters showcase others that the authors have met or interviewed on their podcasts. I suppose it’s to be expected in an introductory book like this. The chapters on tax strategies and real estate investing were of the most interest to me, and the author’s point to other resources where readers can find more comprehensive resources.

That said, the authors deserve credit for the community building that they’ve built. I hesitate to use the term ‘media empire’, but I did experience a tinge of jealousy at some points during the some points, reading about how they quit their day jobs to focus on their Choose FI company, or others who were able to retire at thirty five based on their real estate holdings.

My wife and I may have seen the light a bit later in life, but we both understand that our parents path of working a nine-to-five for fifty years is not the way for us. We’ve got a long way to go until we’re in the position where we’ll have the freedom to work when and where we please. If anything ChooseFI has given us a similar perspective and opportunity to discuss and define what that life would look like.

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World on FIRE

It seems almost impossible to think about long-term finances in the midst of a global pandemic, however, we have to assume that we’re not headed for complete and utter global collapse. My wife has been obsessed with the FIRE (financial independence, retire early) movement for some time, and while I’ve been with her in spirit, I haven’t been really focusing on it. For one, I’ve considered my finances very tight, and haven’t seen much room for cutting back in my budget. Two, I’m focused more on investments and entrepreneurial opportunity, and this FIRE movement is something a bit new for her. That said, I’ve been anticipating a recessionary event for over a year now, and have been trying to escape what some call “wage slavery” for even longer. So the ideas of the FIRE movement aren’t foreign to me to begin with.

Being home in self-isolation these past two weeks or so has led my wife and I to question everything about our current situation. Our biggest liability right now is our home. We’d already come to the conclusion that we’ve got too much house, and have long term plans to downsize as a way to save money. She still owns her starter home, which she rents through a property management company, and will have fully paid off this month. She’ll be completely debt free. Me, not so much. I’ve got less than ten grand left on a car loan, plus more than twenty in student loans that I’ve accumulated.

We’d been discussing getting rid of my car; her’s is fully paid off. And while I’m currently near break even with regard to the value of the car and the loan, something tells me it’s going to be very hard to unload my car right now. I’m assuming a private sale is going to be damn near impossible, and selling to a dealership will pretty much guarantee me a balance on my loan.

The FIRE community likes to talk about the rule of 25. It states that you need 25 times your annual expenses in order to maintain your current standard of living. It assumes a four percent growth rate of savings to use as income. When you break that down by month, that’s three hundred times. When you think about each dollar of recurring expenses, it really puts things in perspective. So we cut our Hulu and Netflix subscriptions, and cancelled our Amazon Prime subscriptions to cut down on impulse shopping.

We canceled our housekeeper (a sure sign we’ve got too much house!) last week because we were isolating. (We paid her anyways.)They normally come twice a month, at $135 a pop. That’s $6750 of savings we’d need to maintain. Since we were all home last week, we went on a cleaning rampage to straighten up the house. It might have just been cabin fever, but if we can keep it up through this week I may be able to convince my wife to cut that expense.

Besides our mortgage expense, our largest recurring expense is childcare. We’re currently spending over $300 a week on daycare for our two kids, somewhere around eighteen thousand a year. There’s a bit of tax savings from my wife’s TSP and childcare credits, but we’ll leave that aside for the moment. When our state closed the schools, we decided to pull the kids out of daycare for two weeks, anticipating that the pandemic would escalate and they would be forced to close the day cares. Last week was my wife was home with me on leave, but this week it’ll be just me with the girls all day long. It’s going to be tough, but if things work out this week we’ll likely cancel daycare altogether so we can save that money.

There are a lot of risks to this strategy, but I think it’s going to work out. I’ll have more time to spend with the kids, and have more of a direct impact on their studies and behavior. We’ll save lots of money, and it will force me into a complete work from home lifestyle. I just won’t be available for remote service calls, which will force my employer into making some changes to the way we operate, mainly by eliminating my commute times. On the flip side, it could backfire. Getting actual time for deep work like I’ve been accustomed to will prove hard to do with the kids in the house. Of course, if work fails and I’m forced to take a traditional corporate job with a lot of face time, we’ll have lost our holding spot in day care and have to go back on the wait list.

The financial upside is just too great not to try though. If I can manage to maintain my current hours for my day job, which is likely, my wife and I will not only be able to save a lot of money, but I should have more time overall to spend with my kids, and be able to stay home and focus on my side projects. It’s the equivalent of a large raise, and could work out very well if I can hold my day job.

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Quarantine incoming

I hate to write about COVID-19 again, but it’s probably one of the most important things to happen in my lifetime at this point, so I might as well go on about it. Hopefully I’ll be able to look back on these posts in a few years and … reminisce?

Bitcoin has lost around fifty percent of its value in the past few days. Equities markets are in free fall as well. Not even the NYSE’s circuit breakers nor a 1.5 trillion dollar promise from the Fed this morning could stop it. I think I’m handling it extremely calmly. I expected an end to this bull run for some time, so I’ve been sitting on some cash, in my IRA, and have been taking a large position in GBTC. I must admit BTC’s fall has me a bit taken.

Two hour chart for BTC. A year of gains wiped out in a day.

Right now I’m not changing any plans, as far as investing goes. I’ll continue my DCA targets, including buying some BTC tomorrow for the cold wallets, as well as my daily buy orders for the few stocks I’m scaling into. More GBTC on Monday as well. Thankfully, I decided to allocate some short term savings to my upcoming bills, so rent, car note and credit card payments will be good for the next month.

Beyond that, who knows. My wife has some security with her Federal job, and I can work from home, but I don’t think my boss can stay in business much longer. We’ve had too many clients get bought out in the last few months, and it’s been a while since we signed a new account. It’s time to update my resume and find something to do.

One of my clients is a pediatric dental office, and they said they’re running out of face masks, and are unable to procure more. Can you imagine? Doing dentistry without a face mask? I don’t know who that’s worse for, the hygienists or the patients.

Watching all this unfold on Twitter has been crazy. Trump’s failure will likely go down in history next to Nero’s fiddling, and it appears that he’s sick as well. Last night he caused chaos by announcing a travel ban to the EU, but then had to issue corrections to he speech in the hours after.

There’s still a segment of the population that is in denial about this. I’ve got a small sample size to go on, but most of the people that I’ve interacted with lately are ho-hum about this thing right now. My wife, my youngest, and myself have all been nursing various symptoms over the past week, runny noses, sneezing, coughing, low fever, you name it. I’d say it was just a cold if I wasn’t naive. All I can do right now is make them wash their hands everytime we get in our out of the car and keep them away from old people.

I had to run errands today. After I went to do a job at the aforementioned dentist, (no patients, thankfully), I stopped by the grocery store to stock up again. I’ve spent about six hundred over the last two or three weeks, stocking up. After I got home I had to run to the tire store to fix a flat. I took my youngest, home sick, to give my wife a break for a few hours. We picked up her sister and went to the playground to let them blow off some steam, and the library to stock up on books. I feel slightly guilty about it, but I have to choose my battles. It’s not time to lock down yet, and when it is, it’s going to be hard enough.

My university, and most of the others around the state, have extended Spring Break another week and will be going to all online classes. The local school divisions haven’t done anything other than cancel sporting activities. The governor has declared a State of Emergency. There are several confirmed cases in the region, but I don’t think we’ll be seeing the brunt of it for another week.

My wife and I seem to be in a detached state of inevitability about things. It’s like we’ve prepared for a hurricane that’s bearing down on us, but even that metaphor falls flat. the next couple weeks will be very, very difficult for a lot of people. I don’t know how bad it will get for us; I imagine the financial repercussions will be more severe than any health issues. I just hope we don’t lose anyone we know.

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Bitcoin vs. Coronavirus

It’s no secret that I am a huge bitcoin bull. For all my worries about risk and capital management with my financial investments, both equities and cryptocurrencies, I have thrown caution to the wind as far as bitcoin is concerned. I’d say that roughly two thirds of my total net worth is invested in either bitcoin or GBTC right now. Most of that is held directly in BTC in a hard wallet, and the rest via GBTC in my IRA.

About two months ago I started implementing a value averaging protocol to purchase GBTC. Each Monday, I would gauge the value of my GBTC holdings against a predetermined value, one-twentieth total capital times the number of weeks, and then place a buy or sell order, depending on whether I was above or below the target. The total capital that I planned for this deployment was about a third of my entire portfolio. I had set stops on several of my larger positions to gain cash, many of which triggered during the general market dip in 2019.

For the first fifteen weeks it was straight buy orders. I calculated the price that would trigger my max sell order, and on week eighteen, during the January run up, it triggered. Then the following week, I had a sell order. The last two weeks, as the price oscilated around the $10,000 mark, I was right on target, and didn’t have to place any large orders. During these few weeks, doubt began to creep and I found myself questioning the plan.

What if this was the start of the bull run to $50,000 or higher? Why would I sell? I questioned whether to break the plan and re-enter, or go even further and allocate even more than I had planned originally. I was able to squash this FOMO, and held firm. I had taken some profits, my position was up, and I would have at least another month to buy back in, as my profit taking had decreased my cost basis below my original target.

Weekly chart over the course of value averaging. Blue arrows indicate sell orders. Overall cost basis for period is 9.77/share.

And good thing I did. Effects of the Coronavirus caused a selloff in the markets, and bitcoin has fallen with it, about fifteen percent. I’m still holding to the plan, and will wait until Monday to buy back in. Patience, patience.

Also, I continue to accumulate BTC on a weekly basis, although on a much smaller scale. I’ve written a Python script to purchase a small amount through Gemini and transfer it to my hardware wallet. I’ve got one address for myself, and one for each of my children. The script alternates between them each week, placing buy orders and sending the proceeds to each of our addresses.

I plan on sharing this script via a Git gist or something shortly. It’s part of a larger trade planning library that I’m working on, and I’ve got to triple check that I’m not disclosing anything that shouldn’t be made public. I’ll do the same with the GBTC value averaging results, but that will be more difficult to scrub.

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Firms I’m thinking about applying to

A recent Medium post on 2020 IPOs got me thinking about places that I’d like to work. Part of me has no desire to go back to work for a large company, I did four years with a Fortune 500 company, and while it was good for a while, the environment became toxic and I wound up self-destructing util they fired me. I haven’t had the best track record with any jobs up until my present position, to be honest. The place I’m at now isn’t ideal, but I guess I’d rather be a big fish in a small pond, so to say.

Now while I have no desire to go work for a retailer, or an exploitative company like Instacart, if I was to go back to work at a large firm and trade my freedom for a hefty package, these are some of the ones I would be interested in.

GitLab

One of the first companies on the list was GitLab. I’ve been a fan of theirs and have been using them over GitHub for the past few months. My university has an internal instance, and I’ve been using it a lot, figuring out how to use their CI/CD pipelines. They apparently have a culture of radical transparency, and have all of their guidebooks up online. Their interview and selection critiera are there, along with job responsibilities and performance metrics. Based on the compensation calculator, it looks like even a basic support position would be a step up from where I’m at today. It seems really appealing.

Stripe

Stripe has been doing very well in the payments space. They’ve got no plans to go public, but have a crazy valuation. They’ve got a lot of remote technical opportunities that could be interesting. On the downside, they recently discontinued support for Bitcoin payments, although the CEO remains optimistic about cryptocurrency in general.

Square

Not on the IPO since they went public in 2016. (Man did I miss that one…) Another payments company with several remote positions, as well as jobs in Atlanta, Denver, and Austin. Several front-end positions that I could qualify for, even with my limited experience. And the Cash App does Bitcoin, so it seems like it may be a good fit.

Asana

I used to be an advocate for Asana, but stopped using their software in favor of Basecamp. I originally skipped over them in consideration but just took a look at their job board. Nothing remote. I have no desire to move to San Fransisco, but if I wanted to move the family to Iceland it might be worth considering. I like how they have their values listed on their job postings, as well as this Day in the Life featuring one of their engineers.

Robinhood

I’m not a customer — get IRAs already! — but have been following them for some time and respect the efforts they’re doing to make investing more accessible. Fractional shares investing is a really good idea. And they offer crypto trading as well. No remote jobs available, but Denver is starting to sound like a good place to live. Go Broncos!

TDAmeritrade

Not on the original list, but I’m adding it here after hearing Junayna Tuteja, TD’s Head of Digital Assets and DLT on the On The Brink podcast. She makes it seem like a really great place to work. A quick look at their job board, however doesn’t match anything crypto-related. There’s a couple contract positions in Omaha and New Jersey, not two places I have any interest in moving to.

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More economic and political news

The big news today seems to be a three percent pullback in the stock market due to Coronavirus fears, or the threat of a Sanders presidency, depending on who you ask. I wrote yesterday that Trump’s obsession with a health economy leading up to the election was leading forcing the Fed to inject liquidity into the markets, and that efforts were likely to fail at some point and lead us into a recession. What goes up, as they say… I also noted that the Coronavirus might be a big monkey wrench that throws us into global recession sooner than later. And while I haven’t bought face masks for my family yet, I am thinking about it.

$250,000 BTC?

This interview with Bitcoin bull Tim Draper was really interesting. The first two minutes are slow cause he just keeps repeating that the market’s are “frothy”, but then he gets into talking about bitcoin for several minutes. At one point he repeats his $250,000 price target for 2024, and is asked how much of his net worth is in crypto and he refuses to answer.

His point about the credit card fees versus Bitcoin is well-made also, as well as his arguments about banks in general. He throws out OpenNode as an example. Taking a quick look at it, they charge less than one percent per transaction, and even process the first $10,000 free of charge. They also have plugins for Shopify and WooCommerce. Neat!

Social Democracy vs. Unfettered Capitalism

I’ve been using Basecamp for several months lately, and have been using it with several clients lately. One of the founders, Jason Fried, has been on the Peter Attia pod a couple times since he started and I really appreciated the approach they take to running a business, work-life balance, and success. It really seemed like a breath of fresh air and a really healthy outlook.

A little over a year ago I participated in my first startup competition, and Angel investor Jason Calacanis was one of the keynotes. Afterward I got a bit caught up in the prospects and started listening to his The Week In Startups pod, but quickly burned out on it due to the number of episodes they put out and some general antipathy to the culture in general. So when I saw Fried’s co-founder, David Heinemeier Hasson, was a guest on TWIS, I added it to my feed and listened to it earlier today. I was not expecting what I heard.

Hasson is from Denmark, and the conversation quickly went to discussion about how America can “get to Denmark”, this is, providing citizens with basic services like healthcare and education for free. And Hasson is a pretty strong advocate for social democracy, and a fierce critic of exploitative capitalism, especially gig economy firms like Uber, of which Calacanis is an early-stage investor in. This was a really interesting conversation, and one that I will be sharing quite a bit with people in the run up to the Democratic primary here next week.