Uncompensated Risk in Investing

Since the new year began, my investing portfolio is looking rather basic and boring – and I love it! If you happened upon my last post on tax loss harvesting, you know that towards the end of 2022 I unloaded my position in a lot of hand-picked stocks (where I was in the red) to offset some taxes I was going to be paying from a real estate syndication that cashed out late last year. Truth be told, I have a slight degree of remorse about selling off the several hundreds of shares of Tesla that I owned – as it has rebounded/recovered rather quickly since then. Regardless, essentially, I have nothing but a couple of index funds (i.e. VTI and VXF) and a couple of stocks (i.e. COST and BRK.B) remaining that I stayed profitable in. In that simplicity, I have found I have a lot less stress about the going ons in the market day-to-day, and I feel strongly resolved to stay this course and filter out the noise and temptations of following grifters that make promises of higher returns and unfathomable riches.

As of writing this post, the current rate of inflation in the United States is a 6.4%. Taking on some degree of risk is essential if we hope to grow our money in a way that combats the toll inflation takes on our hard earned dollars. I first learned about the concept of ‘uncompensated risk‘ on the White Coat Investor blog. Basically he says that when we make an investment, a compensated risk will provide us a reasonable expected (but not guaranteed) return. However, in an uncompensated risk scenario, we take on additional risk without an increase (and in many cases, a decrease) in the generated returns.

I do not profess to be an expert at any of this. A disclaimer that I consistently make is to consult professionals for financial advice, as I am a mere pediatric dentist that is trying to figure out his footing on the path to financial independence. I have tripped and stumbled countless times along the way, and fallen flat on my face (e.g. Celsius and the whole crypto fiasco) in many instances as well.

There is a lot that goes into investing that I really only know a small (more like minute) fraction about. Lots of economic indicators and trends to look at e.g. jobs reports and unemployment, consumer confidence indices (CCI), etc. Changes in interest rates, geopolitical events, and macroeconomic factors (e.g. inflation, recession) drive the markets performance. Savvy investors have all kinds of sophisticated software to give them real-time market data, research reports, and analytical tools. And for those people that have the time to commit, the advanced training and education, along with the temperament to endure the volatile nature of the stock market day-to-day; more power to them.

For anyone average like myself; who work for a living, limited hours in the day to commit to much else, just trying to set aside some kind of nest egg for the future – taking on uncompensated risk investments really can be quite a dangerous setback. The key is diversification in your portfolio of investments. I hope we all know by now never to put all your eggs in one basket. The one saving grace for me has been that all my ‘speculative’ investing has been limited to 5-10% of my overall portfolio. My crazy crypto experience with Celsius Network (where potentially I stand to lose everything), my uncertain venture into real estate syndications (which fortunately has partially and profitably paid out) – it’s all been a bit of a wash, but I cap it all within a small percentage of my total asset allocation.

“Invest in what you know…and nothing more.”
Warren Buffet

For those that have read my blog, one of my previous posts talks about my love for watching some late night comedy bits to start my day. There was an interview recently on The Daily Show where Hasan Minhaj debated Kevin O’Leary (from Shark Tank) and essentially called him out on being a (paid) spokesperson for the recently failed FTX crypto exchange. About midway through the interview, Minhaj makes the point (around the 17:45 min mark) that most retail investors would be better off investing in boring Vanguard S&P 500 index funds versus trying to time the market and chase the trends that influencers make us believe was their formula for success. It resonates with me on a personal level since I so foolishly followed the same preaching’s of a similar conman by the name of Alex Mashinsky of the Celsius Network. The other point being that social media nowadays has made it so (dangerously) easy for grifters giving the illusion that millions can be made effortlessly simply by doing as they do.

The performance of the U.S. stock market overall, dating back to the 1920s, has provided an annualized average return of around 11.88% since its 1957 inception (according to Investopedia). After factoring in inflation, it runs somewhere around the 8-9%. That’s pretty darn good. If we put money into any one stock its the equivalent of putting it all on black (my attempt at a roulette metaphor in case you missed it) – that is uncompensated risk. I am willing to designate a small piece of that to certain companies and real estate deals (preferably REITs) that I think may, in the long-term, be worthwhile; but a vast majority of my investing endeavors from here on out will be in the slow and steady S&P500 index funds.

Wishing you all the best in your journey! Thank you all for visiting this site and spending some time to read through this post!

Tax Loss Harvesting

investing, Lifestyle

First off, Happy New Year to you all! When I reflect over the past year, certainly the Celsius crypto scam I endured and a private equity company taking over the office I work at were both big ticket items. While both matters still strike a chord with me, time has helped me not feel quite so overwhelmed by them. In terms of the Celsius fiasco, the Chapter 11 bankruptcy is still underway; but what has helped me cope is giving up on any expectations of seeing any of that money returned to us. The feelings of betrayal, and ignorance, and outright stupidity I once felt for falling for such a con – that has slowly subsided. Since then, yet another big crypto company (FTX) has collapsed; and while I thankfully did not have any money tied up in that embezzlement, I certainly can empathize for those that did. In the new year, I am resolved to return to the traditional, tried and true, much more conservative means of investing.

On the dental practice front, I had explored several partnership and ownership opportunities but ultimately decided to stay put. I talked briefly in a previous post about why I have remained an associate for so long; and at the end of all my recent explorations to find my own office, I realized that the time with my family is more valuable to me then equity in a business. Truth be told, I am still a little nervous about what changes have yet to come. Will I have to clock-in now? Will they start to dictate what supplies we can and cannot order? How soon do they intend on selling our office to an even bigger DSO? As of this new year, they are officially my new employer – so time will tell how tumultuous this transition will truly be. Let’s hope it is not as chaotic as my mind makes it out to be.

This past week, we vacationed with my sister-in-law and her family in their new home in Tampa, Florida. Towards the end of the trip, a few days shy of the new year, I received a call from one of the managing partners of some investment property we did in Arizona a few years ago. To my surprise, she notified me that the property was expected to sell before the end of the year and they had sold for nearly 3x the original amount of our investment. Now there are management, legal and accounting fees that are withdrawn before investors like us are paid out in syndication deals such as these, but still, it was music to my ears to close out an otherwise rough investment year.

As fate would have it, I so happened to be in the house with a Certified Public Accountant (CPA) at the time I received this news. Now, I am a simple W2 employee, with a buy-and-hold investment strategy, who has never inherited any amount of money to where I would need to be concerned about the tax burden on it. However, the profits on this AZ syndication investment would stick me with a 20% long-term capital gains tax rate on that amount.

The concept of ‘tax loss harvesting’ is a tax-planning strategy where you can offset some capital gains with some losses you incurred in the same or other securities. It can be a complex, and fortunately I had a knowledgeable CPA available to me at the time to help walk me through many of the intricacies in implementing this. Since the S&P 500 finished down nearly 20% for the year (2022), and many of my hand-picked stocks (including TSLA, AAPL, NFLX just to name a few) did even worse – I had plenty of stocks to sell (and therefore ‘realize’ losses on) that could help counter my tax liability on the gains I am looking to make from the AZ property.

Even with this tax loss harvesting technique, it comes with rules to abide by so not to void its efficacy with the Internal Revenue Service (IRS). One such rule is called the ‘wash sale rule’. The gist of this rule states that an investor cannot buy a ‘substantially identical security’ within a 30-day period before OR after the sale. For example, I cannot buy any shares of TSLA within the next 30 days, otherwise this eliminates my ability to use that original sales losses for tax purposes.

If you have any interest in this topic whatsoever, please visit the White Coat Investors Tax Loss Harvesting Rules website. He goes into much greater detail and knows significantly more about this topic then I have gleamed within this mere past week.

The only real mistake is the one from which we learn nothing.
– Henry Ford

Another potential route I would love to have explored (if I had more time then just two days) is to consider selling my Celsius claims at a loss. I read an article in the Wall Street Journal that states some customers are selling their bankruptcy claims (at steep discounts) to a broker/buyer (Cherokee Acquisition and XClaim). I already expect to see pennies on the dollar by the time the Chapter 11 bankruptcy concludes, I would have loved to utilize the financial losses this year and just have emotional closure to that whole mess. With such little notice between hearing of the AZ property sale and the end of the year, this was not unfortunately an option I was able to execute.

I am not a financial expert, nor am I qualified to give financial advice. I simply write about my own experiences, and if my ventures into crypto and individual stock picking has taught me anything, it’s that I still have so much to learn about. Hopefully some of the stuff I talk about helps others avoid similar mistakes and come out ahead. Hope everyone is having a good start to their new year!

Private Dental Practice vs. DSO Dominance

Dentistry, Lifestyle

Spoiler alert! This post is ALL about dental talk. You see, for the past several months – since I was notified that the company I work for (for the last seven years of my life mind you) was now under the ownership of a large dental support organization (DSO) – I have been deliberating whether it is time for me to pursue an ownership or partnership arrangement of my own. I have written about this very subject here; however, that was under the (much more ideal) circumstances of being employed by two pediatric dentists and not some massive private equity company that buys up dental offices for investment purposes. While the name of the new owners is irrelevant, their portfolio currently consists of over 250 dental offices across the country and they are continuously growing aggressively.

This business model is not new. In fact, I am sure you have seen many of your local, private-practice physicians selling to private equity companies. As a pediatric dentist that works closely with anesthesiology doctors, I witnessed first-hand when they started to be taken over. Once a large investment firm enters the picture, and really gets its claws into an asset class, you have to believe they are going to streamline the shit out of it in order to drain every last dime of profit out of a business they acquire. In the case of the anesthesiologists I work with; all of a sudden they were forced to work with an expanded lineup of surgeons, taking on more call schedules, learning new systems, performing post-op surveys, and more.

For someone that is close to retiring, some of these DSO offers may not be so bad. I imagine they give a very hefty upfront payout, and after mandating the doctor(s) stay on for ‘x’ amount of years (to ensure minimal attrition occurs), I am sure there is a golden parachute that many people receive on the tail end of the acquisition as well. My bosses both have to stay on four more years, but after which, they can and likely will retire from dentistry forever. Me? on the other hand. As a mere employee, with absolutely no equity stake, I get squat from the buyout and have yet to see how they plan to ‘trim the fat’ (so to speak) within our company. They’re a big company that tries to entice you with a matching 401k plan you can enroll in, some solid health insurance plans you can participate in, and some perks that smaller run organizations may not be able to afford to provide their employees with – but, its the changes in the day to day operations that scare me.

For example, I heard the words ‘production goal’ uttered from my office managers mouth for the first time in seven years last week. She also asked my lead assistant ‘why we ordered so many nitrous oxide tanks’ for our office? Something that has neither changed/increased, nor been scrutinized or questioned, up until this point. The way I see it, they are still in a transitionary period where they do not want to rock the boat (i.e. don’t spook the staff, keep changes to a minimum, etc.) – but certainly, the tides are changing.

While I am grateful that the transition has at least kept me gainfully employed; in the last couple months I have updated my CV, set up a LinkedIn and Indeed profile, arranged lunches with some pediatric dentists around the valley, reached out to dental supply reps and expressed interest in any partnership/ownership opportunities they may be aware of. Out of the five dentists that I reached out to, two recently sold some or all of their practice to a DSO, one is content and is not interested in any arrangement, but two are willing to discuss my coming onboard with some equity stake on the table.

“Success comes from taking the Initiative and following up…Persisting…

What simple action could you take today to produce a new momentum toward Success in your life?
– Tony Robbins

For the last seven years, I have worked for someone else because it has afforded me a comfortable working environment, good pay, a flexible work schedule, and no interference in how I chose to practice clinically. And, I am not a risk-taker. Or, I have been too afraid of failure. Unfortunately, I have come to realize all the time I have worked, was to build up someone else’s brand and valuation.

One of the pediatric dentists I met with recommended a book called “The Millionaire Master Plan” by Roger James Hamilton. He spoke highly of the book, and claimed it would expand my way of thinking and put me quite a few years ahead in terms of wisdom and self-awareness. I am a few chapters in, and so far a good portion of it has been dedicated to helping someone recognize their ‘genius’, their strengths and weaknesses, and talks about expanding on those traits to build your wealth.

For the sake of completeness, I should say that I have also toured a couple of empty, grey-shell office spaces as well. The problem here is that, dental build-outs can be quite costly, plus you have no cash flow for the first several months/years, plus you’re competing against the deep-pocketed DSO’s with their endless marketing dollars and – it really steepens the curve when it comes to opening up a start-up. I also have investigative work to do (with the help of an attorney), to review my existing contract and gauge the enforceability of my non-compete and other restrictive covenant clauses.

My way of thinking is changing. I am now seeking opportunities I would normally be too nervous to pursue. I hope to write again soon to share the results of some of these meetings, and with any luck, announce that I may have new endeavors underway. Thank you for taking the time to read all of this, and sorry to limit it primarily to the dental folk out there. Enjoy your day!

Anxiety and Panic Attacks

Lifestyle

Just to offer you some context, it is exactly 2:26 AM as I sit to write this post. That said, I cannot guarantee any actual coherency or substance in what follows. Writing has always offered me some degree of catharsis and, hopefully, a cure for my current bout of insomnia.

A few weeks ago, I was working in the surgery center when – mid-procedure, my heart started rapidly beating, I had a slight uncomfortable tightness in my chest, and I found I had to take a couple of deep breathes to essentially restore myself to a baseline where I felt normal again. The dentistry was going fine, nothing stress-inducing had happened and it was all very routine-Monday sort of work that I was doing.

I want to say, either the next day or the day after (shame on me for not keeping better records), a similar episode occurred while I was in the office working on a patient for dental treatment. Basically an identical presentation to what happened earlier, a brief couple of minutes where I had a slight aching in my chest, a shortness of breathe and what felt like I was getting tachycardic or having some palpations of my heart muscle – not exactly sure.

Admittedly, this has not been the best year. Most recently, certain members within my household contracted COVID; and so there were health issues amongst family to be worried about. Still a very fresh and extremely agonizing is the financial loss I incurred with my poor Celsius investment. And to pour salt on the wound, the practice I work for recently sold to a large corporate entity – leaving me with a suffocating uncertainty of whether or not to stay employed with the new group or finally take a leap (along with the many headaches and financial investment) of practice ownership.

I already do not manage stress well. My entire life I have lived very phobic of everything; social situations, new endeavors, taking on risk, basically changes of any size or shape. Just today in fact, something as simple as watching my boys play in a tennis tournament this afternoon – I can literally feel my cortisol levels spiking when the game gets close. To the point where I have to walk away, stare into the sky and observe the clouds through the trees, all the while playing calming music in my AirPods. Let me tell you, it makes for a miserable existence.

Doctor Googling the way that we do, tells me a rapid heart rate and chest tightness are commonly associated with Atrial Fibrillation (abnormality in the heart rhythm), panic disorder (panic attack), anxiety, and/or stress. Fortunately, I also saw my actual physician today; who recommended we do 1) an EKG (which I did right there and then – and thankfully, everything looked good according to him) and 2) a CT calcium score (which I plan to schedule soon). An electrocardiogram (ECG or EKG) assesses the heart rate and rhythm; but could be used as a tool to diagnose a possible arrhythmia (irregular heartbeat), blocked arteries, heart damage, failure or even a heart attack. While I did not experience any dizziness or faintness, the chest pain, rapid heartbeat and breathing warranted me getting this done. Apparently, the cardiac CT calcium score (aka coronary calcium scan) will help identify the amount of calcified plaque in my coronary arteries. As he put it, the EKG might be a past indicator of heart healthiness, but this Calcium Scoring may be more of a future indicator of sorts.

Once we have (hopefully) ruled out maybe this being a physical ailment with my heart; the next item on the agenda is to address the psychological element of it. My physician (as I am sure all do) encouraged me to exercise more regularly, incorporate yoga and if need-be, try therapy. No quick Xanax fix I guess.

Throughout my life, the times I have felt my best (both physically and mentally) are always when I exercise regularly. Unfortunately, it is easy to fall into a rut and lose momentum. I really am going to make it a priority now to squeeze in 3 or 4 days a week of a solid exercise regimen, and maybe – just maybe – I can get these panic attacks (?) to subside or disappear altogether.

The boys after their USTA Junior Circuit Tournament

Every post I write, I am always curious to know what others experiences are in this realm. I find my stress and anxiety (and now, panic disorders?) sometimes make it hard to get up in the morning. Other days I feel great, enthusiastic even, and embrace what the world has in store for me. Hopefully a healthy regimen of working out, eating right, yoga and (if need be) therapy get me feeling better. Thank you for taking the time to read this post!

Conquering Change

Dentistry, Lifestyle

Recently, I was made aware that the office I have gainfully been employed at for the past seven years was going to be sold to a larger, private-equity company. One of two owners called me to break the news about the transition, and nonchalantly tried to reassure me that not much should change about the terms of my employment other then who signs my paycheck.

I have never been one to embrace change well. I would almost go so far as to say I fear it.

I see day-to-day change take place in front of me constantly, and I struggle to accept even that. My kids getting older is a prime example. Google Photos reminds me of this day ‘7 years ago’ and I am an emotional wreck. Why do they have to grow up so freaking fast?

Listen, I know, it is a part of life and we cannot control it. Without a doubt, my best days are when I manage to block out the seemingly infinite “what if’s” scenarios that float around in my head. When I somehow silence all that noise that occupies my mental space, my days are much more peaceful and happier.

Years ago, I read a book called “Who Moved My Cheese” by (Patrick) Spencer Johnson. From what I remember, it was a quick enough read with a very simple message. Life moves on, and so should we. “The quicker you let go of old cheese, the sooner you find new cheese.” The author devotes the book to trying to embrace change in work and throughout our lives.

I have worked for enough large DSO’s (Dental Support Organization’s) to know they are not run the same as smaller, privately-owned offices. In an attempt to streamline operations and cut costs (and maximize profits), something’s gotta give – it may impact the quality of dental materials, the staff, the schedule – it could touch on every aspect of the practice.

As a mere associate, I am not privy to the terms of the sale and transition of ownership. Only time will tell what changes will come. The way I see it, at best, my office stays as-is and nothing changes. At worst – the autonomy I have enjoyed in picking out my own materials and setting my own schedule starts to disappear. What would be utterly devastating is if my beloved staff get spooked and decide to quit.

This is the second office now that has been sold out from underneath me. Because I have been just an employee, as the practice changes hands – even though I worked hard to build it up, because I have no equity stake – I reap none of the benefits of its successes throughout this sale taking place. The two original owners (not much older then I am currently) have now paved a pathway for retirement for themselves; and I am but a commodity being sold along with the chairs and other equipment.

On the flip side, I have been compensated well over the years and had I invested more wisely (thanks a lot Celsius Network), I might also in my own right have been on a path towards financial independence. Plus, over the last seven years I have not been burdened by administrative hassles of running this practice – and when the A/C fails, addressing staffing issues, dealing with payroll matters – none of that has really weighed on my shoulders.

“Change happens when the pain of holding on becomes greater than the fear of letting go.”
― Spencer Johnson, Who Moved My Cheese?

How my staff will respond to the new owners, how my pay will be affected, how my patient schedule may change – all of these are unknowns that occupy my mental bandwidth these days. Mixed in with regrets about not building up equity all these years and reaping zero ownership benefits. And do not get me started on the massive financial setback I have incurred with the atrocious investing missteps on the Celsius ordeal.

Lately though, when I am not caught in a moment of self-doubt and insecurity, I am convinced that – however horrendous these last several months may have been – I am more open to taking on the challenges of practice ownership, I am a wiser/more cautious investor, and I am, for the most part, optimistic about what the future has in store for me. I am even finding ways to enjoy my kids getting older and the fun activities I can do with them now versus seven years ago.

Hope you handle change better than I do. Every day I feel I have to convince myself there is light at the end of the tunnel. Thank you for taking the time to read my post today! Please feel free to share with me your own stories of taking on change in your life!

Lesson Learned

investing

On the evening of June 12th, 2022, I received an e-mail alert from the Celsius Network to the effect that withdrawals were being halted on account of ‘extreme market conditions.’ Which was true, the global cryptocurrency market was in the red, with practically all coins shedding 10% or more within a rapid 24 hours.

Fresh off of the downfall of Luna and TerraUSD, I initially thought that the move Celsius was doing (in freezing transactions) was genuinely in the best interest of its ‘community.’ Preventing a mass exodus of investments would give them time to stabilize their liquidity issues and protect the assets of the depositors (like myself).

In the last couple weeks, the company has been frustratingly silent about the current status of their operations and consequently, access to our funds. Many Tweets and news articles that have come out lately about the company all seem to suggest the company is moving towards bankruptcy filing – which, Alex Mashinsky (CEO of Celsius Network) and his company have given us little reason to think otherwise.

I had a generous amount of my families money invested with this company. I was drawn in by the impressive yield and a charismatic charlatan of a CEO. If you’ve read my previous post about the company, I (initially and foolishly) complimented the company for their ‘transparency.’

Only after being involuntarily locked out of access to my funds do I finally have some clarity as to how scammy this whole thing was. I trusted my families hard-earned money to a company solely based on reassurances of its salesman CEO; and what’s worse is I promoted it to others on this very blog. While I constantly caution my readers that I am not offering financial advice, and self-describe myself as an amateur investor at best; I falsely (and blindly) believed this company to be one of the good guys and truly saw it as a movement against the establishment.

It is through suffering that learning comes.
– Aeschylus

As of writing this post, nearly 3 weeks after the Celsius lock-out – I have come to terms with the real likelihood that I will never see those funds again. I am hoping for the best, but have mentally prepared myself for the worst. I have been a victim of a Ponzi scheme before; but this took me for significantly more money and left me feeling much more moronic then my past encounter. Rather than waste another minute more of anxiety or suffering on it, I am hoping this experience will teach me to be a better investor.

I am reminded of the news story about the young boy who committed suicide when the Robinhood trading app allowed him to over-leverage his investments and the kid accrued losses of over $730,000. (By the way – something a little eerie I just noticed was his suicide note was found by his parents on June 12th, 2020 – exactly two years to the day from my Celsuis email.) For me, especially as a father of two boys, this article was devastating to know that some child took their own precious life over financial problems.

Fortunately, first and foremost, I value how precious life is. Monetary loss, deep in debt, being broke – it sucks while you are in the thick of it, but everyone is capable of rebuilding and recovering from the worst financial situations. For me, that means learning the lesson of ‘if it seems too good to be true, it probably is.’

Honestly, I am not sure what my investing strategy looks like moving forward. I still continue to dollar-cost average into this tumultuous stock market. I most likely will shy away from crypto for a while. And probably get my real-estate exposure with REITs versus enrolling in more risky syndication deals. Really I just want to come out of this a lot wiser.

Hopefully none of you have had to endure being the victim of something like this, but feel free to share with me your story if you are so inclined! Thanks for taking the time to read this post!

Attending the AAPD 2022 Conference

Dentistry

Last week, I went down to San Diego, California to attend our American Academy of Pediatric Dentistry (AAPD) 2022 Annual Session. In order to be an actively practicing dentist in Nevada, I need at least 40 continuing education hours every 2 years; and these conferences usually knock a big chunk of those requirements out of the way. Not to mention, with the AAPD being a fairly large organization, the invited speakers and presented topics are high caliber.

In case you haven’t read some previous posts, I was president of our local chapter (the Nevada Academy of Pediatric Dentistry) for one year back in Jan 2020 to Jan 2021. In addition to informing our members of new COVID guidelines within their practices, dealing with state Medicaid cuts for dental reimbursement – I also worked with my executive committee to plan our annual business meeting and CE course. Mine was an extraordinary year; as an organization, we were implementing our very first online meeting. Finding sponsors proved to be difficult (many companies reported their own financial hardships), but our speakers were kind enough to donate their time to talk to our small group (plus we had no large venue to book) so fortunately we were not on the hook for the honorarium we have paid to our speakers in the past – so it was a bit of a wash for us in terms of our bank balance.

Anyways, the AAPD had also done virtual meetings for the past couple of years so certainly there was this universal consensus amongst attendees of how satisfying it was to be back to in-person meetings. You had not only pediatric dental professionals attending, but office staff members were invited, a bunch of children were present – I mean, it had the makings of a total super-spreader event. Let’s hope it wasn’t? I masked for all of 5 minutes. I got there and realized maybe about 1-2% of people were wearing one and I admit I got into a total ‘when in Rome’ kind of mindset.

If you don’t already know, I am an introvert and not particularly fond of crowds. When I arrived, and lots of people were standing together and socializing – and I didn’t see any familiar faces, I awkwardly stood alone at a table with continental breakfast wondering if I made the right choice to attend in the first place, and thought to myself anxiously whether the next four days would be like this very moment. I consider myself fairly affable, but I am not comfortable introducing myself or striking up conversations with strangers.

Fortunately, I eventually found my boss, some dental school friends, and even met some new people along the way. I spent time roaming the exhibit hall where many of the sponsors set up booths and promoted some of their products. I learned about dental procedures (e.g. tooth autotransplantation, molar substitution, etc.), attended some mini-clinic courses, and heard from M.D. physicians talking about mental health screenings on teenagers and adolescents.

Perhaps my favorite part of attending this year was listening to the keynote lecture by a guy named Ben Nemtin. He is an impressive young motivational speaker and is the author of a book titled “What Do You Want to Do Before You Die?”. His backstory discussed bouts of deep depression, but then went on to speak about how him and his friends started a journey to cross things off their bucket lists – resulting in more fulfilment in their lives by helping others, setting goals, and accomplishing their dreams.

Here are five things I took away from his speech:

Write your bucket list – make it a project.
Share your goals – make yourself accountable with others. “Fear is the taxes you pay to achieve your goal.”
Be unstoppable – be persistent. Take as many “no’s” to get the “yes”.
Moonshots – shoot for unrealistic goals.
Give – happiness is only real when it is shared.

“Today is the oldest you’ve ever been, and the youngest you’ll ever be again.”
Eleanor Roosevelt

In addition to the course, my family used this as an opportunity to turn our S.D. trip into a mini-vacation. We were able to hit up Legoland, had some fun at Belmont Park, went to the beach and saw Balboa park. All-in-all, I was very glad I attended this years annual conference!

Thank you so much for taking the time to visit this blog and read through this post!

The Terror of Terra

Uncategorized

This culture of ‘wokeness’ we’re all living in today is a fascinating one. Social media and hordes of people are getting together to drive companies to cancel celebrities (most notably Will Smith after his 2022 Oscar’s altercation with Chris Rock). Some issues, like the Supreme Court voting to overturn abortion rights, may not be so easy to influence. I know I personally favor companies that seem to have a moral compass. Headlines like “Costco’s iconic hot dog deal is still $1.50, despite record inflation rates raising prices everywhere else in the industry” just melt my heart – and I’m vegetarian and could care less about hot-dog prices. It is the principle of it, it gives you that warm fuzzy feeling that a big corporation is looking out for the common man. McDonald’s, Starbucks, and PepsiCo among many others promptly pledged to stop business operations in Russia after the invasion of Ukraine was ordered by Russian president Vladimir Putin.

This past week was particularly catastrophic in the crypto market. There was a collapse of Terra’s UST stablecoin and the native network token LUNA. I have talked briefly about stablecoin’s in the past here, but essentially these coins are supposed to minimize price volatility, offer a stable value, and many are supposed to be pegged to the US dollar. Several exist, including Tether (USDT), USDC (the one I use), Binance USD (BUSD), and many others. Terra created an ‘algorithmic stablecoin’ with UST that was supposed to hover closely around the $1 mark; but achieved this value using the other token in its ecosystem, LUNA.

The magic behind a system like this working has to do with a concept called ‘arbitrage’ trading. In the Terra ecosystem, a person could swap UST for a LUNA token (or vice versa) at a 1:1 ratio. The algorithm burns UST or mints LUNA to absorb volatility and balances the demand so that the overall price stays around its $1 level. This is in slight contrast to how USDC and USDT rely on a reserve of assets, fundamentally backed by state-issued fiat currency e.g. the U.S. dollar.

Stablecoins, to me at least, are seen as a shelter or a reasonably safe option in an otherwise frenzied crypto market. Algorithmic stablecoins do not technically have a solid collateral to back the price; in this case TerraUSD (UST) was using its governance token (LUNA) and minting and/or burning to help stabilize pricing. During major market stresses or shocks, in times like we have now where the Federal Reserve is substantially raising interest rates to combat record inflation, where stocks and bonds prices are falling together for the first time in decades, perhaps we shouldn’t be so surprised that a stablecoin becomes de-pegged.

The price of LUNA peaked close to $120 about a month ago, and is today worth fractions of a cent. I consider myself extremely fortunate that I was not invested in anything within the Terra ecosystem; but an event like this certainly does make me reconsider my risk tolerance in my crypto holdings – which currently sit at about 10% of my overall portfolio. Most of my crypto is in USDC gathering yield in the Celcius Network, with a bit of Bitcoin and Ethereum to add some excitement to the mix.

Speaking of the Celcius Network, I would say that my experience thus far has been wonderful with them. Granted, I have not attempted to withdraw any funds yet – especially in times of crisis (like with the recent rapid crash of LUNA and UST) – but I consistently collect interest (now, only available to accredited investors in the U.S.) every Monday like clockworks. Alex Mashinsky, the CEO of Celcius Network, came out within hours of this Terra catastrophe and spoke openly and transparently about how everyone (including himself) got pummeled, but this encounter may separate the ‘tourists’ from the true investors that believe in the decentralized finance (DeFi) movement. I think that makes for a good leader. Like Costco and the $1.50 hot-dog, I genuinely feel like Celcius has a mission to do good for the ‘common man’ (while of course, making millions of dollars for the corporation).

Everyone, none of this is meant to be financial advice. Truth be told, I have probably lost tons of money in my venture into the crypto space and especially in all this stock market, crypto crashing turmoil that has been happening lately. I recognize now more then ever that simple, straight-forward investing into low-cost, well-balanced index funds would’ve spared me the stress of all this volatility, would have saved me the high transfer fees, and provided me priceless peace of mind of just staying the course. I dodged a bullet this time with Terra; but suffered great declines in Netflix stock, SOFI, ARKK and many other hand-picked losers.

Thanks for taking the time to read my post. I was going to write about our recent family vacation, but this was the hot-topic of the week and my mind has been on our finances lately due to the craziness of the markets…so, there you have it. Good luck to you all, and please feel free to write me or post your own experiences!

Starting into Real Estate Syndications

investing

Life at the moment has been somewhat hectic. I am undergoing some PRP treatment for my hair loss, been busy scheduling and planning a family vacation, working on my 2021 tax returns, trying to exercise regularly while incorporating some dietary changes, and – last but not least – playing some tennis with my boys. Lots of content there for a blog post I suppose – I will write updates to many of these topics soon.

Today, though, I want to talk about investing in real estate syndications. As with every post I write; be it about investments, parenting, medical issues – please know it is not meant to be advisory in nature, and I always encourage seeking professional expertise and doing your own additional research where appropriate.

So, rather then reinvent the wheel, I would recommend you visit Investopedia’s Real Estate Investing guide for some of the fundamentals. It is a great overview, discusses a variety of real estate investing terms and options, and offers up some hard data on the historical pricing of this asset class.

If you are like me, and watched the fluctuations in the stock market these past several months; it gets unbelievably unnerving watching your account balance plummet so quickly. And while I feel investing in the market is a necessary evil, and (ultimately, over the long run) will bring in decent returns – diversifying a bit beyond Wall St. cannot hurt, right?

“But land is land, and it’s safer than the stocks and bonds of Wall Street swindlers”
Eugene O’neil

Just like my introduction to crypto and the Celcius Network started with a brief conversation with a friend, so too did my entrance into real estate investing. Several years ago (early 2019), a friend in Phoenix told me of a group of ladies (all professionals, one with a particularly successful family history in RE investing) that were looking to buy over 100 acre property in Arizona and needed investors.

At the time, the phrase “real estate syndication” was new to me, and little did I know that was what I was about to invest into. Essentially, a person or team (typically known as the sponsor or operator) identifies a property and/or project to purchase; and gathers a group of investors (a.k.a. limited partners) so to pool the capital together in order to buy real estate on a larger scale then we may individually have been able to do. This affords a small fry like me the ability to partake in partial ownership of shopping or strip malls, multi-family residential complexes, etc. without necessarily having any of the time demands or expertise needed to manage such projects. The sponsor I invest(ed) with has a niche of only buying vacant land in AZ with anticipation of future sales to a land developer for a significant profit. Again, the syndication is run by people that have expertise and insight that I do not possess, and are usually privy to off-the-market listings and can close on deals that would normally be too high dollar amount for me to afford alone.

When we started, some initial conference and Zoom calls were held among the syndicators and the investors to present the investment opportunity and to host a little Q&A. This was followed by an influx of paper work (i.e. subscription and operating agreements, confidential private placement memorandums, etc.) that needed to be signed. To be honest, much of the legal jargon in these documents go way over my head (and is scarily ironclad); but a big part of performing the due diligence on these investment opportunities is carefully evaluating these legal agreements – even if that means hiring a real estate attorney to review them. Within them are information such as management fees, distribution details, limitations on liquidity – content that is quite critical to weight the risks and benefits of entering into such an investment.

Another thing I learned along the way is that many syndication deals only take investments from “accredited investors“. Again, Investopedia to the rescue! I met a couple of the (income/net worth) requirements of becoming an accredited investor, had my CPA compose a letter stating as such – but basically it is a title given to those “who are deemed financially sophisticated enough to bear the risks.”

One of the general partners of the syndication stated that it would behoove me to set up a Limited Liability Company (LLC) in Arizona before I enter into this investment with them. What’s that? You don’t know what an LLC is? Investopedia has just what you need to learn more. I went to the Arizona Corporation Commission (ACC) website and registered a Domestic LLC. Then, immediately followed that by going to the IRS website and submitting an application for an Employer Identification Number (EIN) so that I could create a business checking bank account to transfer funds through.

Once the business bank account was created and funded, the final step was sending off the cashier check. I have gone sky diving before, and the scariest moment was the point where you’re kneeled over the open doorway of the plane about to freefall into the unknown. I liken that rush of adrenaline to sitting at the bank tellers desk signing away our hard-earned money into a risky and new investing endeavor.

“If you can, you should, and if you’re brave enough to start, you will.”
Stephen King

Our families goal was to try and do at least one real estate investment every year. Last month (March of 2022) we closed on our fourth syndication deal – with this same group. Each one has gotten progressively smoother to complete, the repetition makes the process easier to understand. Truthfully though, I am slightly unsettled by the fact that we have “put all our eggs in one basket” – and though my friend vouched for this syndication group, we have yet to see any deals come to fruition (although in fairness, the managers have been quite honest about their long-term projected timeline for sale of each property).

In the past, I have come close to entering into deals with CityVest and DLP Capital Partners. Now that I am in this space, I pay attention to various crowd funding opportunities so much more readily. Believe it or not, Investopedia has a page devoted to just that.

My wife and I (along with a friend) recently purchased a condominium unit as a rental property – now we are even landlords. We also, quite regularly, invest in Real Estate Investment Trusts (REITs) with Vanguard. We currently have real estate as 12% of our overall investment portfolio and would love to see it grow to mid-twenties. Another goal is to get more cash flowing/passive income and tax benefits out of it. I will certainly keep you apprise of what we do next!

Since this post got quite lengthy, I’ll commit to writing more about those ventures in a future post.

Believe it or not, I have no financial interest in Investopedia or any other site referenced above. Investopedia just has lots of great info on it, so much to learn from. Thank you very much for taking the time to read this post, and I am always curious to know about ways in which people diversify their own investment portfolios. Please let me know what you do! Have a wonderful day!

Weather the Storm

investing, Lifestyle

If this blog affords me anything, it is the opportunity to write about the things that occupy my attention. Day after day, since 2022 started, I wearily watch as the stock market plummets and any profits and gains from the last several years get wiped out within a matter of months. Like the gray, rainy weather in Seattle that leads some to experience seasonal affective disorder (SAD); so to can the chronic red and sharp declines in the stock market lead to gloom and mental anguish.

By definition, a correction is a market decline that is more than 10%, but less than 20% off of a recent market high. A bear market is usually defined as a decline of 20% or greater. The S&P 500 index is the overall representation of the market’s performance. There are plenty of other terms (i.e. market dip, crash, etc.) that are pertinent but could just as easily be Investopedia‘d.

Again, graphs like the one above present the performance of the overall S&P 500 Index. If you are like me, and your portfolio is a composite of index funds, stocks and bonds, and other asset classes – you may fare significantly better, catastrophically worse, or somewhere in-between.

Individual stocks are prone to much more volatility. A character on an HBO show rides his Peloton, suffers a heart-attack and dies – causing the stock to sink nearly 12% the next trading day. A large group of traders on the r/WallStreetBets Reddit forum helped drive GameStop’s stock surging up over 400% once upon a time. A misinterpreted tweet by Elon Musk stating to ‘use Signal’ confused investors and sent the wrong stock up soaring over 6300%.

More recently it is the Ukraine and Russia conflict and the question of an impending war? The Federal Reserve and possibility of several interest rate hikes? Certainly economy-related concerns but also lots of other miscellaneous events and outside influences can spook investors and cause the fear that lead to sharp market declines and panic selling.

Probably a totally irrational skepticism on my part – but I think the news media has manipulation tactics and selectively seeds content, stock analysts have their own obvious biases and agenda, and of course corrupt politicians have access to insider information that allow them the ability to execute privileged and personally advantageous trades. It is hard to find trustworthy sources to believe. Just my opinion.

In a past blog, I briefly introduced a bit about my investing approach. Certainly trying times like these test our conviction. Lots of different investment philosophies exist – each with their own strengths and weaknesses. I subscribe to a philosophy known as Dollar-Cost Averaging (DCA). You can read about it a bit more here, but essentially you put same amount of money in the same stock (or index fund, etc.) on a regular basis over time, regardless of the share price.

“Our favorite holding period is forever.”
– Warren Buffett

In terms of personal investing, the February-March 2020 bear market was the only one I have actually had to endure. Before that, I was dirt broke and too busy suffering through dental school and multiple residency programs. Even though I know many others are experiencing these same tribulations right now, there is a unexplainable loneliness and depression that sets in when you see these steep market declines. I used Vanguard’s financial advisor services for a short while, and while I ultimately decided to stop and take things into my own hands, I did appreciate that I was not constantly worrying about how the markets were doing.

I dare not try and predict where the bottom of this latest market crash will be. However, I find some solace in knowing, if we stay the course and weather this storm, the market will do what it historically has – deliver some dependable returns.

In a future post, I will go over a few other investment strategies I do to minimize risk, including: invest in syndication real estate deals, invest in REITs and rental properties, and more recently – dare I say it – cryptocurrencies. Diversification is the name of the game!?

As always, thank you for taking the time to read through this post. Hope that some of this information can be useful to you, and please feel free to share in your own experiences!

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Author: Sulabh Shroff