2020 Portfolio Review

Last year my main brokerage account had a total return of 8.97% (6.75% capital gain, 2.22% income). As usual I will compare to VOO, Vanguard's S&P 500 ETF, which returned 17.98% (16.19% capital gain, 1.79% income).  So I lagged the market by 9.01% which is a substantial amount especially considering that almost half of my portfolio was invested in VOO.

The main reason for my underperformance was that the steady dividend paying stocks that I prefer were out of favor (at least in a relative sense) last year.  At the beginning of the year I had 29.45% of my portfolio in individual stocks and 11.49% in ETFs (other than VOO).  The individual stocks returned 2.49% (-.53% capital gain, 3.02% income) accounting for 4.56% of under performance and the ETFs returned -6.15% (-9.49% capital gain, 3.34% income) accounting for another 2.77% of underperformance.  

A secondary reason for my underperformance was that I was not fully invested.  I started the year with 12.23% in cash (the remaining 46.83% was in VOO). During the year I invested 1.75% of this cash.  The remaining 10.49% in cash only returned about .51% in interest accounting for 1.83% of underperformance.

On March 18 I bought Fortis (FTS) a Canadian utility and added to VPU, Vanguard's utility ETF.  This was good timing as the market bottom (with respect to VOO) was on March 23.  However I would have done better buying VOO which returned about 60% from March 18 as opposed to about 33% for FTS and about 19% for VPU.  Still because of the good timing this portion of my portfolio outperformed by .16%.  This all adds up to 9% of underperformance in reasonable agreement with the actual 9.01%.

Only 2 of my individual stocks (BLK and TGT) beat the market by more than 10%.  Another 4 (BBL, CAT, NSC and UNH) were within 10% of the market return.  The remaining 15 (ALL, BNS, CM, ED, CVS, XOM, INTC, IBM, JPM, MET, PEG, SOUHY, TD, WFC and WBK) trailed by more than 10%. And all of my ETFs (except VOO) trailed VOO over the whole year by more than 10%.

When I started doing these reviews I only had one brokerage account which was funded with the IBM stock I had acquired over many years through their employee stock purchase program and which my new employer required me to mostly sell. I also owned some stock received by gift or inheritance in certificate or book entry form. Starting in 2018 I moved some of this stock as well as some cash and my Value Line mutual fund into a second brokerage account. In 2020 this motley collection returned 13.07%.     

Try, Try Again

As I have mentioned a couple of times, in 2010 I bought a cheap Dell Inspiron laptop computer. It has held up pretty well with a lot of use. However a couple of years ago it developed an annoying issue. The automatic Windows 10 update process started to fail repeatedly with an obscure error message about data corruption. I tried various purported remedies that I found with internet searches but none of them fixed the problem. I had basically given up and was resigned to living with an increasingly obsolete operating system (like with my still older Dell Inspiron desktop running Windows Vista).  However to my surprise on or about December 30, 2020 the update succeeded so the machine is now running the newest (20H2) version of Windows 10.

Upgrading to a new version of Windows 10 apparently wipes out the update history so I am unsure exactly when the problem started or how many failed attempts there were (it seemed like dozens at least). This wikipedia article has a table showing the Windows 10 version history. Based on this my best guess is that my machine was previously running Version 1803 of Windows 10 which was released April 30, 2018. The next version 1809 was released November 13, 2018 but apparently didn't get installed on my machine. The end of support for 1803 was November 12, 2019 leading to nagging messages from the Windows's updater about moving to a supported version of the operating system. However as noted above repeated attempts to do so always failed with an obscure error message. Whatever the problem was persisted through versions 1809, 1903, 1909 and 2004 as they became available. But it seems to have gone away with version 20H2 which first became available October 20, 2020.  New versions aren't installed immediately on all machines (my other laptop is still on 2004) but apparently installation was attempted on December 30 and succeeded.

So far (with limited use) I haven't encountered any problems with 20H2 so hopefully there was no actual data corruption issue and Microsoft just had some bug in their update process that went away when 20H2 was released. This problem wasn't the biggest deal in the world as I could still use the machine (which was gradually becoming functionally obsolete anyway) but it is still a rather sobering example of how hard it can be for the average person to effectively deal with this sort of obscure computer issue.  

Blog List Update

 Kevin Drum has left Mother Jones and is now blogging at his own site so I have updated my blog list link appropriately. I could never get the previous link to work correctly, it would go to the top Mother Jones page rather than Drum's blog specifically. Fortunately this is not an issue at his new site. The link to Steve Sailer's blog had the same problem, going to a general Unz Review page. I tried again to fix this with partial success, now the link to Sailer's most recent post works correctly but not the link to the entire blog. 

I also added the lefty "Lawyers, Guns & Money" blog to my list. I wouldn't say the analysis is generally very impressive but it does provide a view into what a segment of the left is currently thinking about politics. Also they have several active posters so they do generate a lot of content. 

Late Adopter

There are people who like to buy new products as soon they come on the market.  Then there are people like me on the trailing edge of the adoption curve.  Usually this isn't a problem but occasionally I have regrets that I didn't get on board sooner.  I recently had such regrets regarding digital thermometers.

Prior to this year I had not needed to take my temperature for a long time as I have been fortunate in having generally good health.  However this year because of COVID-19 I have needed to take my temperature many times (among other things my employer requires me to take my temperature before going to work every day).  When this started I looked around and discovered I had two thermometers (both of which I believe were gifts from my mother who properly worried that thermometers were the sort of thing that I would neglect getting for myself).  One was an old fashioned mercury thermometer probably about 35 years old (the instructions are copyright 1983).  The other was a digital thermometer probably about 20 years old give or take (I seem to have lost the instructions).  Unfortunately when I tried it the digital thermometer (a K-jump model 720 sold under the Today's Health brand) didn't work.  Probably because the battery had died over the many years of disuse.

That left the mercury thermometer.   I had some trouble with it too.  Mercury thermometers contain a reservoir of mercury at the base of a narrow glass tube with temperature scale markings.  When you take your temperature thermal expansion forces some of the mercury up the tube.  The higher your temperature the more thermal expansion forcing the mercury higher up into the tube allowing your temperature to be read off.  But the mercury doesn't return to the reservoir by itself even after it cools down.  The thermometer has to be "shaken down" which means shaking (or jerking) the thermometer in such a way as push the mercury back into the reservoir.  Apparently there is a knack to this as I was unable to do it.  Fortunately I figured out (or maybe read about on the internet) an alternative.  By placing the thermometer in its case, placing the case in a sock and rapidly spinning the sock I was able to force the mercury back into its reservoir. This allowed me to use the mercury thermometer.

Although capable of doing the job (of measuring your temperature) mercury thermometers have some drawbacks.  According to the instructions they need to be in your mouth for four minutes to obtain an accurate reading.  I am not sure this is really necessary but I didn't experiment with shorter times.  The shaking down process consumes some more time.  Mercury thermometers are also fragile and a real nuisance if they break because of the mercury.  While using the thermometer daily for several months I actually did drop it a few times but fortunately a short distance onto carpet so it didn't break.  Still breakage is a constant risk.

So eventually I decided to upgrade to a digital thermometer.  I could have tried replacing the battery in the one I had but new ones were cheap enough that this seemed the way to go.  I ended up buying a Vicks SpeedRead thermometer  (model V912BBUSV1) sold online by Walmart.  This was cheap (about $10) and had gotten good customer reviews.  I am quite satisfied with it after a few weeks of use.  The  easy to read display shows your temperature with a resolution of .1 degrees Fahrenheit (the mercury thermometer had similar resolution with scale markings .2 degrees Fahrenheit apart but it was a pain to  read).  I took my temperature with both a couple of times with good agreement (off .2 degrees one time, 0 degrees the other time).  The new digital thermometer is also much faster.  I seem to average around 10 seconds before it beeps announcing that it is ready to read.  This is a little slower than the advertised 8 second best case but better than the 15 second average case in the fine print.  In any case much better than four minutes (or even the 60 seconds claimed by the older model digital thermometer).   

 All in all in this case the new technology seems far superior and I regret not buying a digital thermometer months earlier (assuming I could have found one in stock, apparently they were in short supply for a while).  The main disadvantage of a digital thermometer seems to be that the battery can die.  I don't know if the model I bought will provide a reasonable advance warning that the battery is about to die (and this wouldn't help if the battery dies because of long disuse).  For this reason I plan to keep the mercury thermometer around as backup.  Consumer Reports recommends properly disposing (a bit of a pain in itself) of old mercury thermometers because of the breakage hazard but I don't think the risk is high while it is being stored in its case.

2020 Election

A few days ago I received a postcard from the Middlesex County Board of Elections thanking me for my vote in the 2020 general election. Unlike many people I didn't have a strong opinion about the race. So if New Jersey hadn't mailed me a ballot about 6 weeks before the election I might not have gotten around to voting. But as they did, I preserved my record of always voting in Presidential elections. I could have returned the ballot by mail but deposited it in a drop box a few days before the election instead. 

I rather reluctantly voted for Biden. Biden isn't a very inspiring candidate but I find him less objectionable than many of his fellow Democrats. And of course this election was largely about Trump. I voted for Trump in 2016 but four years of exposure to his many flaws including his indifference to objective reality was ultimately too much for me to support him again however much I dislike many of his opponents. Trump's post election behavior after his defeat has just made me feel better about my decision. 

I was pleased that the Republicans did well down ballot. I have no love for the Democratic agenda and I am glad that many of the more objectional parts now appear to have little chance of making it through Congress even if the Democrats manage to eke out control of Senate by winning both Georgia runoffs. 

There has been some talk that there was something surprising about the Republicans doing better than expected in the down ballot races even though Trump lost but it doesn't seem so to me. The Republicans outperformed the polls by a few points. This wasn't enough to change the outcome of the Presidential race (after a few anxious moments for the Democrats) but it was enough to make a difference in a lot of the other races.

Budget Host Liberty Inn

In the early 90s while driving on I80 in eastern Iowa I spent a night in a motel near an exit. These days when driving long distances (which I do a fair amount of because I am afraid of flying) I generally make reservations for intermediate stops over the internet before starting out. However at that time I would just drive until I was ready to stop and then start looking for a place to spend the night. This usually worked out okay. In this case as I recall the motel had a sign near the exit offering some sort of cross promotion (something like 10% off your room rate if you bought a tank of gas, that sort of thing) with a nearby gas station and/or restaurant.

In later years I drove on that section of I80 a number of times and with nothing better to do started trying to pick out the location where I had once spent the night. But although I knew the approximate location (a couple of hours east of Des Moines) I was never able to confidently identify the exit. Eventually this annoyed me enough that when I got home I found the old motel receipt (I am a packrat type with a house full of useless stuff like that). This told me that the motel was the "Budget Host Liberty Inn" and that the exit was number 259. Armed with this information the next time I drove by on I80 I was of course able to locate the exit. I saw there was an Econo Lodge motel nearby but it and the site in general still didn't seem familiar. Of course driving by at 70 mph an hour doesn't give much time for a close inspection. And then I moved from Ossining to Princeton and stopped driving on that section of interstate highway. Recently while on Covid lockdown I looked on the internet for more information about the place and was able to find some.

The 35 room motel was built in 1966. At some point it became part of the Econo Lodge chain (motels move from one chain to another a fair amount). It operated as an Econo Lodge until about 2015 and then as an independent motel (named "Elegant Inn") until about 2018. It appears the building may now be in use as a warehouse for a company that sells vintage motorcycle parts. In 2015 somebody (perhaps on behalf of the owner in preparation for a sale) took some fancy 360 degree pictures of the Econo Lodge entry, front desk, breakfast area and two rooms which can be found on google maps. It all looks pretty nice but the extant reviews (from 2010-2015) are a mix of "okay for a cheap motel" and "not okay even for a cheap motel". I only found bad reviews for the "Elegant Inn".

There is an adjacent gas station/truck stop and convenience store that dates to 1964 with some alterations in the early 90s. There is also a restaurant building (built in the early 90s) on this property (which is currently distinct from the motel property). It appears the restaurant building has not been in use for at least 10 years. The changes on this property were made soon after I stayed in the motel and may partially explain why I was unable to recognize the exit. Also available pictures of the Econo Lodge incantation of the motel show some superficial alterations were made to the facade at some point (perhaps when it joined the Econo Lodge chain). Together with a garish paint job this would be enough to significantly change the motel's appearance again making it harder to recogize. And of course memory is unreliable, I have stayed in many cheap motels over the years and may over time start conflating details.

If you drive a lot you see a fair number of abandoned businesses like gas stations, motels and restaurants along interstate highways. This always seems a little sad to me. In this case the motel property (which includes 4 acres of land) sold for $695,000 in 1996 which indicates (unless the buyer grossly overpaid) that it was doing well at that time although the building was already 30 years old. At a cap rate of 10% this implies operating income of $69,500 a year or a bit over $5 per room per night (or perhaps $10 per occupied room per night). This seems pretty good but apparently it didn't last. Perhaps the building started showing its age. And the failure of the restaurant wouldn't have helped. In any case the motel sold in 2007 for $388,000 and again in 2018 for $170,000 and now is not worth operating as a motel. As noted the restaurant failed some time ago. The gas station/truck stop is still operating (albeit currently for sale) but you have to wonder about its future long term.

So what went wrong here? My guess is that for whatever reason this exit failed to amass the critical mass of businesses needed to make a location sufficiently attractive to passing drivers to survive long term. Perhaps somewhat counter-intuitively businesses along an interstate are better off clumping together (at least up to a point) than spreading themselves out evenly. This is easier to see in cases of complementary businesses like gas stations, restaurants and motels as each will draw business to the others. It is clearly better to have a gas station, restaurant and motel all at one exit than spread out one each at three adjacent exits. But even competitive businesses like gas stations are better off clumping together. This is because an exit with two or more gas stations is a more attractive place to buy gas than an exit with a single station as travelers will expect a better price. And two gas stations may draw enough traffic to support a restaurant (where a single station would not) which in turn will draw more business to the gas stations. As this process continues some exits will lose out unable to compete with nearby exits with more businesses bringing in a greater volume of traffic.

Of course this process has limits. If you get too big a gap between gas stations, restaurants or motels it becomes attractive to open a new location near the midpoint. But you don't really need gas stations (or restaurants or motels) every 5 miles along a rural interstate.

Atlantic View Motel

The picture is of the Atlantic View Motel in Hatteras, North Carolina. I took it shortly before sunset (which would have been around 5 PM) in late December of 1995 during the most recent of at least two times that I stayed at the motel while vacationing in the Outer Banks. On a couple of later trips (in 2000 and 2009) I didn't see the place and wondered vaguely what had become of it. While cooped up on covid-19 lockdown this summer I did some internet research on the subject. This proved to be a little a challenging as while it may seem like everything you could possibly want to know is on the internet these days this isn't really the case especially if you go just a little bit into the past. However I eventually figured out what had happened although it took me longer than it should have for a reason that will become apparent. Here is what I found out.

The Atlantic View Motel was built in 1977. It should not be confused with the nearby but much older (1928) Atlantic View Hotel (now called the Atlantic Inn). At some point the motel became the property (they don't appear to have been the orignal owners) of a couple named Peele who operated it until they sold it in 1999. I doubt the motel itself was a big money maker but the land it was on seems to have become quite valuable. This land appears to have been a strip about 200 feet wide and 1500 feet long between Route 12 and the Atlantic Ocean dune line. The motel was about 500 feet in from route 12 so didn't actually have much of an Atlantic view (although of course the ocean was just a short walk away).

After the property was sold a dead end road was built down the middle and the property was subdivided into building lots. This included 3 ocean front lots which appear to have been worth at least $400,000 each and about 9 also valuable oceanside lots. Somewhat to my surprise the motel building still exists (although considerably altered in appearance). It was converted into 8 condominium apartments.

The road is called "Atlantic View Drive", the subdivsion "Atlantic View Estates" and the condominiums "Atlantic View Villas" all of which should have been a clue that this was connected with the former Atlantic View Motel. However for some reason I wasn't expecting a new road and it wasn't until I found an old tourist map without the road that I realized what had happened.