Exercise and Wine … What could go wrong?

Dr Spock with the Vulcan Salute which usually comes with the salutation “Live long and Prosper” – Image may be subject to copyright – Star Trek

Most of Slack Investor’s blog is about becoming financially sound, but there is also a need to be happy and healthy and to flourish in other areas. Spock and his fellow Vulcans are all over this idea – Live Long and Prosper – What is the use of becoming financially prosperous if you can’t be around to enjoy the choices that this state can offer.

One of my favourite UK blogs The Escape Artist also flogs the theme of trying to be fit and healthy of body … as well as looking after your financial state. There can be a parallel in approaches to athletic and financial matters.

Set Goals

36 years ago, my brother and I were sitting in a Greek Restaurant with a bottle or two of Retsina and we were full of youthful optimism and set ourselves a list of things we would like to get done in life. They were exciting things like “have a girlfriend”, jump out of a plane, learn how to scuba dive, go on a TV talent show, etc. I am pleased to say that most goals were achieved within 5-years of that goal setting night – but the elusive one was to “Run a marathon”. We found this task even harder than finding a girlfriend! 42 kilometres is a long way and the training required to do this thing properly had this feat rolling around in the “too hard basket” for decades.

That was … until 2018.

Work Hard through efficient research

Slack Investor believes that there can be many solutions to a problem, and as my body aged and I became even slacker, it was apparent that the conventional route of working up to this great distance over time and training 6-days a week was not going to cut it. One look at the Runners World suggested marathon training program over at least 6 months and starting at 24 km per week building up to 64 km – gave me the “vapours”. The “Fair Dinkum” marathon runners train hard and aim for below 4-hr times and these folks have my greatest respect. Most marathons have qualifying times for participants and they usually sweep the slower runners off the course if they can’t complete in 6 hours. My challenge was to find a marathon in the world that had a generous cut off time – that would accommodate slack athletes.

While not a complete fitness numpty, Slack Investor has trouble running 5km comfortably at a shuffling pace – and the thought of running further than that is mildly appalling! You can see the dilemma here.

Festivals of “Convivialité ” to the rescue

Luckily we have the French to remind us of the joy of life and each year they have 20 Conviviality challenges that are run by regional communites that involve some sort of running combined with tastings of wines and other regional delicacies. To add to the festival theme, the runs are usually done in fancy dress.

The most famous of these Convivialite’s is the Marathon du Medoc where, one day in September, 8500 participants run around the beautiful Medoc area, near Bordeaux. Registrations must be done by the previous March and I found the combined accommodation/run packages the easiest way in. There are refreshment stops along the way where 20 of the wineries around the Pauillac area will offer water, wine, music and food. It is tempting to linger at each Chateau but there is the ever present sweeping crew that will put you out of the marathon if you are slower than the required 6.5 – 7 hr pace.

In the same way as investing, Slack Investor likes to break things down into achievable chunks. I was working on a theoretical finishing time of 6 hrs and 45 min (405 minutes).

First 30 km Plan – I thought that using my ungainly shuffling jog I could do 5 sets of 5km runs at a 7 min per km pace (175 min). I could walk a kilometer between each 5km runs (to gather breath!), 4 lots of walking at a 10 min per km pace (40 min) . This plan will use up a total of 215 minutes to do 30 km.

Last 12km Plan – I knew that I would be knackered here … but still hoping I could comfortable walk a kilometre in 10 min. If I walked the last 12 km, that would use up 120 min.

The planned running/walking would use up 335 min (215 +120), leaving 70 min (405 – 335) for wine tastings, toilet stops, recoveries! Even allowing for time shrinkage – this was a good plan!

Image may contain: David Nahrung, smiling, standing and outdoor
Slack Investor in a fetching outfit prior to the the run with fellow Aussie “Steve Irwin”
Image may contain: 1 person, smiling, outdoor
Slack Investor about to cross the finish line – Goal achieved!

Well, I signed up for the Medoc 2018 Marathon … and happily, the plan was executed (in a fashion). There was more time shrinkage than anticipated – and it was hot! I did not have a wine at every stop (Although my colleague “Steve Irwin” did! I was scared the wheels would fall off my plan if I imbibed too early …. so I had a wine-free first 20 km … but after that, I found each of the Chateau offerings delightful.

Would I do this again? It was a lot of fun and a worthy bucket list destination – but it was hard! The day after there was a 10km walk through four Chateaus over 3 hours. Much more my style, I will seek out these more leisurely, but still challenging, events in future. I have now retired from marathon running and look forward to new adventures.

Choose your battles … then Go Hard. Live Long and Prosper … in wine is truth!

August 2019 – End of Month Update … and “I’ll Give you a Yield Curve!”

Slack Investor remains IN for Australian index shares, the US Index S&P 500 and the FTSE 100.  The Slack Investor followed overseas markets have taken a bit of a savage beating this month ( ASX 200 -3.1%; FTSE100 -5.0%;  S&P500 -1.8%). Thanks Boris and Mr Trump!

As well as this turmoil (kind of normal), my monthly looking at the charts this month has revealed that I have forgotten to adjust the stop loss upwards – I should have done this last month. My rule is that when the monthly index chart forms a new “minimum” and the monthly range drops below the black 10-month average line, a new minimum is formed and I should adjust upwards the stop loss. I have done this for the UK index (shown above in the green circle) and also the US Index (see the index pages for details).

I still remain nervous about the current situation. However, checking out the US Yield Curve indicator at GuruFocus , this indicator has oscillated to negative again. Because of its fluctuations, I have decided to switch to a “Probability of Recession” Indicator (see below). My monthly stop losses for Index funds are now “switched ON”(see below).

All Index pages and charts  have been updated to reflect the monthly changes – (ASX IndexUK IndexUS Index).

Inverted Yield Curve … Probability of Recession … Yeah Baby!

Tributes to the great Mike Myers for creating the most excellent character Austin Powers … I could see Austin becoming obsessed with the yield curve… Maybe not … Credit to Austin Powers: International Man of Mystery (1997)

The Inverted Yield Curve has been all over the financial and even mainstream press lately – as a possible predictor of recessions. There is some contrary evidence of an imminent recession due to continued good employment in the US, but most economists have some faith in the predictive power of the yield curve. Slack Investor will admit to not knowing much about this till recently … and is still learning. I wanted to develop a way for me to know when a slip of my index funds below a stop loss was Really Serious! – and not just a temporary downturn that would shake me out of a position … and then recover. This is the battle that a trend trading investor often has.

Trend-following systems either suffer from a large number of shake-outs or are slow to exit when the trend reverses; and often both. You can’t have your cake and eat it.

Colin Twiggs, founder of the excellent Incredible Charts and The Patient Investor

Slack Investor typically wants his cake and to eat it! – and is always on the lookout for a way for this impossible thing to happen.

Slack Investor has often made a virtue of using other peoples work in areas that require a lot of effort and research. I am happy to outsource my Inverted Yield Curve study to the boffins at the Federal Reserve Bank of Cleveland who supply a monthly prediction of the likelihood of a recession using the slope of the yield curve and GDP growth to provide predictions of future GDP growth. Like all good researchers, they caution not to take their predictions too literally but a glance at the chart below show that when the Reserve Bank of Cleveland Fed predicts a probability above say 20%, a recession (the grey columns) usually (not always) follows. As I am feeling my way on this one … I will use the predictions above 20% barrier to make my stop losses live! They currently have the likelihood of recession within one year at 44.1% … so all my stop losses are “live” at the moment.

The Fed Reserve Bank of Cleveland are predicting a 44.1% chance of recession within one year based upon end of August data. The Grey columns are the recessions, the blue line are the Cleveland Fed’s past predictions and the red line “gazes” into the future.