Investments
When we were employed in Silicon Valley, we created a “personal mutual fund” of stocks. We have been monitoring our stocks and some, like natural gas, have done very well while others have lost a lot of value. Our plan is to hold on to stocks in U.S. companies that are producing internationally exportable raw materials as we believe they will have expanding markets and profitability. We are reducing our holdings in stocks with less exportable products such as domestic natural gas producers because it is difficult to make it exportable (converting it to LPG) and we expect depressed prices for piped natural gas in the US for many years. We expect stocks in US retail markets to continue to decline and will exit them if there is a market rally. We only hold stocks from US stock markets due to our belief that the oversight of financial reporting in the US, though often disappointing, is still higher than stocks in international markets and investment information about US companies is more reliable than other county’s at this point.
We mentioned in a previous blog that our real estate holdings in Hawaii have been severely deflated, off over 50% and still dropping, but we will hold on to them even though we expect local deflation to continue to lower their value for the next year or more. We believe real estate in Hawaii will ultimately rise spectacularly in price as the deflating dollar makes Hawaii real estate cheap for affluent Asians and Europeans. We sold our house in California and are enjoying the freedom of mobility that renting gives us, however, if the prices for Hawaii real estate continue to plunge, it will at some point be smarter for us to buy a house or condo than to continue as renters. We are closely tracking the price of foreclosures in Hawaii County and watching in awe as the prices drop, particularly on the west side of the island.
Cost of Living
We are constantly looking for ways to cut back our expenses and preserve as much of our savings as possible. Prices of imported food, gas and materials are rising which drives us to find local replacements or live without where possible. We have dramatically changed our lifestyle from our corporate days in Silicon Valley to our laid back lifestyle in Hawaii. We eat less, exercise more, sleep more, and use less energy. We are monitoring the cost of living in every part of Hawaii County and noticed that west side prices are more deflated, particularly for rent, compared to the east side, perhaps due to the huge decrease in tourism on the west side and the growth of University enrollment on the east side. We expect deflation for local products, such as rent, services, and locally grown food, to continue as the State and County furloughs and layoffs continue to lower income in the east side economy. As we study the rents on the west side, we are considering a move to reduce our monthly expenses, though we are concerned about the intense VOG (volcanic emissions) on the west side.
Income and Employment
We have been jobless for over two years now and getting another job seems unlikely as the local and national economy continues to shed jobs. Where in the 1990’s and roaring 2000’s earning an income seemed effortless, now it seems impossible. The fact that major companies such as Sony, GM, and Citibank are struggling to make an income with their huge market share and experience, makes us feel a little better about not having a job right now.
We are viewing our future income producing activities as needing to be self created rather than dependent on a job. We are focused on developing a product or service that we enjoy and will make a valuable difference to others. We are assuming that social security and Medicare won’t be there for us by the time we would qualify in a decade and a half, so our income producing plan has to be something we can do for a very long time. We are thankful that our savings and downsizing efforts are allowing us this precious time to enjoy Hawaii and gain new skills in this rapidly evolving global economy. Though it takes time, we will constantly reassess our plan as the local and global situation changes.
We are eager to hear from others about their approach in this current economic situation and how they plan to flourish in these current times.