Month: January 2021

On GameStop and other hyped investments and specifically the military.

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A certain investment on everyone’s lips around the office. A “sure bet” to make 10x your money. News picking it up everywhere and social media buzzing on how much everyone has made (or is going to!). No, I’m not talking about GameStop going “to Mars”, I am talking about the crypto-currency madness that was the end of ’17 and the beginning of ’18. And despite making some people a lot of money, it left just as many (and perhaps more) losing out on thousands.

Fast forward to 2020 and the COVID crash. The initial numbers were staggering, and with the elderly seemingly far more effected, I started hearing people talking about perhaps the largest transfer of wealth in history. Oil futures hit negative numbers and people piled into Robinhood for more “sure bets” that the market will collapse soon. People were talking nonstop about buying puts on some industries and calls on others, but a month or so after, it all was quiet as the market largely resumed what it was doing in regards to many industries. Those that screamed loudest about the next “sure thing” nonstop just a day ago would suddenly not engage me in conversations about investing at all. Just like the time period above, some active investors made money and many did not.

So, 2021 is upon us and we are off to yet another “sure bet” as history keeps repeating itself, this time with GameStop, BlackBerry, AMC, and a few others. Another “sure thing” and “we’re all going to be rich!” mixed in with some “screw Wall Street!” sentiment and pictures of people making money, quickly followed by outrage and frustration of certain trading apps refusing trades and seeing plenty of pictures and stories of people buying at $450+ the other day and panic selling around $300 as it closed the week at ~$310 after hours. I actually just finished reading this post from someone who lost $7 MILLION, his family, house, everything… went to rehab and is now back to playing with options:

All of this, to me, is a fascinating look on the psychology of money and a time where I just have to put in my two cents. It’s not new that people largely want instant gratification over the long term slog. It’s witnessed in diets, finances, substance use and abuse, social media (ping! here comes the dopamine), and many other facets of our lives. On top of instant gratification is the term that is getting more and more familiar – FOMO (Fear Of Missing Out). None of this has really been new in the world, but there is a particular statistic that pops up with FOMO. The people affected by FOMO most are by far millennials, who experience and let it dictate their life in some way at a staggering ~70% from the various surveys that have been done in the last decade!

So what does any of this have to do with the military?

The military force is overwhelmingly filled with millennials, especially at the “first line supervisor” levels who are in a position to be extremely influential to their troops. Keep in mind that many times these troops are seeing absolute independence for the first time in their lives and a paycheck that is 100% disposable income as the food/housing requirements are covered by the government. So all in all, you have the perfect storm of young adults that are more impulsive and are usually under-educated in finances, immediate leadership that is still just as impulsive AND has a proven response to FOMO (and is likely under-educated in finances as well), money to burn, and the desire for instant gratification.

It has been a little sad watching people throw money into this “cause” with no research at all. To me though, it is even MORE upsetting that these same people often talk up how they doubled their entirety of savings (typically somewhere around a $1K investment) and now they can do X, Y, Z that they could not do before. I even heard someone go on a 10 minute+ rant about the situation where Robinhood restricted trades and how he lost out on a “free $60” that you would think from how he went on, was a life or death situation for him. All this brings me to my final point…

I truly hope that nobody in the military in normal circumstances is out there in a position where $1-5K makes such a staggering difference in their lives, especially after they have been in a while. The military essentially gives us the NBA equivalent of a 3-1 lead when it comes to finances where outside of specific and awful situations, we got this in the bag! We don’t have to pay for any healthcare related expenses, get housing either provided or paid for, and have either a free food option on base, or money given to us specifically for food expenses. Our actual base pay is 100% discretionary and in nearly every locale beats the median income (after accounting for housing/food allowances, but NOT counting the free healthcare or tax free statuses of those “allowances”) as a 5-6 year E-5 – which is not a tough thing to achieve.

If you are going to be throwing money into something high risk like crypto, GME, and whatever else is inherently risky and speculative, make sure it is money you are 100% comfortable losing and teach those you supervise to be similarly conservative. Looking at this whole fiasco, I was actually tempted to join in after last weekend (when GME closed at approx $60), but seeing it jump to over $100 pre-market discouraged me from doing so. Even had I gone in with $1-2K of play money, I likely would have sold it after seeing 25%+ gains over a day. Had I held for any reason and had the luck to sell it off at the peak (of nearly 500) I would have turned my $2K into $10K – minus taxes. So what does this actually do for me long term? Well, personally, I’m somewhere between 10-14 years from my retirement and at a 7% increase, it would have turned to somewhere between $20-25K… nearly meaningless in the grand scheme of things. So please, do not miss the forest that is TSP/IRA maxing goals for the trees of a couple thousand dollars overnight.

January, a month in review.

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A little background on these first… After my deployment last year, I came back to Italy when it was a semi-open country. We were able to travel a little bit, with a few days spent in Florence and Venice, along with some local trips up to some historical towns, caverns, and up into the mountains. Shortly after, cases continued to rise and the country went on full lockdown (we’re not even supposed to walk our dog in the neighborhood!). After spending nearly all of November and December either in our house or at work (splitting half of my usual work time at home), the days REALLY started to blend together and the monotony started to breed boredom and discouragement that started crossing over into depression. We had a few days in January that were a little relaxed that we took advantage of, so I hope by writing and focusing on the positives as monthly posts, they will be similar to the “gratitude” journals that help foster optimistic thoughts.

Since this is primarily a financial blog, let’s start with that – finances.

I know it’s not Jan 31st and the market has some time to go up or down, but since all of my bills are paid for the month and all of my paychecks are in, I don’t think it’s too disingenuous to talk about that today.

Another month of headache free house rentals, with us paying a little bit to our PM for a walk-through + filter replacements.

True to form, on Jan 1 I initiated my annual Roth IRA transfer. At the time, my balance was just a hair over $85K. Along with my $6K deposit, my positions grew by just a hair under $7K over the last 3 weeks – this market is CRAZY – bringing my total Roth IRA balance to $98K.

As I mentioned before, I am frontloading my TSP with a 60% contribution from my base pay. Although, the DOD deposit has yet to officially hit my TSP, it WAS taken out of my account, so for the purposes of this post, I will add that number into it. In any case, I was just short of $70K on 1 Jan and now I am just over $73K. Adding in my 60% pay deposit brings my total TSP balance to just over $75K.

One thing to note on the above, it’s awesome to see that my growth so far outpaces my contributions. Of course it’s silly to think this is always going to happen, but it is definitely encouraging. Of course if when the market will finally slip, I am completely happy to buy more at lower prices!

My taxable equity investments have had no additional deposits and so my regular investments are totaling just over 25K.

As a pretty large bonus, I “found” 11.94 ETH (in addition to my 10K XLM) coins, so my crypto assets are currently totaling around $17.3K.

Adding in my checking account total gives me a grand total of $~225K in fairly liquid monies. Great start to the year so far.

Finances aside, let’s talk about some things I enjoyed or accomplished this month.

As I mentioned a few posts ago about my camera purchase, I was able to go out on the few days we were not fully locked in and do some shoots of my friends car and a couple of impromptu shots of my dog on our walks. After messing around with edits, it was something that took me a few days to finalize, so time well spent!

Additionally , just before the most recent lockdown that started last weekend, we had Friday off (in conjunction with the MLK holiday) and were able to rally a few of my coworkers for a sit down lunch. Although it felt so odd to actually have the opportunity (the first and ultimately, last chance to do so for all of January) to do so, the act of just dressing up, going out, and having face to face conversation was a huge boost to our overall mood.

Lastly, a bittersweet event – after waiting for nearly four months, my snowboard finally came in! I was able to get my bindings installed on it so I am ready to hit the slopes as soon as they open. Unfortunately, it seems that the earliest possible open time will be mid-February, but all signs point to that opening being exclusive for (semi)professional athletes and their training.

As I am working from home next week, I plan on finishing up some more photo-edits, finally catching up on all my non-uniform laundry, and perhaps finally start painting my miniatures that have been sitting on my desk for far longer than I want to admit if my work schedule allows it. I also want to start doing a refresh/restoration on my current car, so if the body shops are open, I will potentially swing by and see if they can do a thorough rust check and get a price for repairing some hail damage the car suffered a couple of years ago.

Dealing with early retirement negativity.

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One of my coworkers, a civilian actually, came to Aviano around the same time I did. He is admittedly high on the food chain and got into the federal workforce after getting out as an officer a couple of decades ago. As I was walking through our hallway, I ran into him as he congratulated me on my recent promotion (to E-6). We started talking about our future goals and he started trying to convince me to commission – which isn’t going to happen for a few reasons. We started talking a bit about what my plans are for the future and I mentioned that with my aggressive savings rate and investments, I’m looking forward to not working after I retire from the military and I should be in good shape to do so. His reaction was typical, although a little surprising. He started raising his voice and telling (at) me that I will not be able to retire after the military (especially as enlisted) and I am silly for thinking that it is possible. Even if I monetize a hobby, it will not be enough! I will become bored in retirement and will need to work to keep stimulated. He got so flustered, he actually excused himself from the conversation and hurried back to his office before I can even get a word in.

This happens a lot.

So what to do? I do not particularly believe in withdrawing from all future planning conversations, and in fact I enjoy trying to convince people what IS in fact possible. I like to inspire my troops, peers, and even those above me. Even if people do not want to retire and want to keep working, showing them the possibilities (besides the generic “here is what Johnny would have after 50 years of compound growth” presentation we get) and opening their eyes is a great feeling. Needless to say, shutting down and pretending I am living paycheck to paycheck is something I just am not interested in. While we all have relatively hidden lives and expenses, we literally do wear our paychecks on our sleeves (or now with OCPs, on our chests) so we all are aware roughly of what our financial situation at least COULD be. The more people are comfortable about talking about their numbers and position, the more others can ask questions and we can make our financial lives better across the board.

It is definitely discouraging when you run into people that are so set on this being impossible. I’ll also be honest that once I got home, I went through my spreadsheets JUST IN CASE as I tend to do when I run into these situations. Although this particular person made it quite clear that he is set in his ways about his beliefs, plenty of others are not. If/when other people see these types of exchange, let THEM know that the person who made those assumptions are in fact wrong and show them how. Be better supervisors, peers, or subordinates and try to help everyone in your sphere of influence.

2021 is upon us and already with good news for the military!

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As most other Russians, I grew up celebrating and giving out presents on New Years instead of on Christmas as Russian Orthodox Christmas occurs on January 7th and is much more a religious based holiday. Although I now do presents on the typical Dec 25th to the wife and her family because of her upbringing (along with my general uncaring attitude towards traditions), I do sometimes miss waking up and getting presents to start the new year. Although I did not get any physical gifts this year, the government finally did something I am in support of and gave me a decent present anyways with their military policy bill veto! To be more specific, congress just overruled President Trump’s veto on the NDAA bill, which means uniformed members will be getting a 3% raise.

For me, that means roughly $113.1 extra per month, or $1,357 a year!

Although that figure doesn’t sound like much to some, due to my already high savings rate, I try to frame it as an experience I no longer have to worry about saving for separately. In my case, this means that the upcoming splurge at Osteria Francescana (which I have had reservations moved three times now due to COVID) along with the nightly hotel stay and some of the day events my wife and I looked up in the area will be taken care of, so not too shabby at all.