Author Archives: SMS

Family Adventure: Zion & Capitol Reef National Park

Reading Time: 3 minutes

We made a trip south this Fall to Zion and Capitol Reef National Parks.  This completes our tour of the five national parks in Utah.

We camped in both parks.  Anytime we grab a camping spot in a national park, I feel privileged as that can be hard to find, especially in popular parks like Zion.

Here was our trip itinerary.

Day 1: Drove to Zion

Our first day was all about getting down to Zion.  It is about four and half hours for us, mostly down Interstate 15.

We did stop off at the park entrance on the northeast side, the Kolob Canyons Visitor Center, for about half an hour.

And then drove a short bit to the main entrance, near the town of Springdale, and to the South Campground.

Day 2: Zion Hiking

The main area of Zion is not that large.  During the main season, you have to take the trolley, which was easy and convenient, especially already staying in the park.  There are nine shuttle stops.  We did two stops – the Temple of Sinawava and the Grotto.

At the Temple of Sinawava, we hiked out the Riverside Walk to the start of the Narrows.  The ranger told us the flow rate was pretty high, to the point of not being fun, so we opted out of doing the Narrows.

At the Grotto, we hiked up to the Upper and Middle Emerald Pools, and then down the Sand Bench trail to the Court of the Patriarchs.  I might opt out of the last part, the Sand Bench trail.  It was a fine hike and all, but probably the least interesting.

Day 3:  More Zion Hiking

Sort of the same programming as Day 2.  We took the trolley up to the Grotto and hiked up to Scout Lookout via the West Rim trail.  We did not fight the people and the permitting process to do Angel’s Landing. 

 But we did see California Condors – which I consider a bigger win.

And after regrouping at camp for a bit, we hiked the Watchman trail – which was accessible and had some nice views.  And we saw Big Horn Sheep.

Day 5:  Driving Over To Capitol Reef

Not too much exciting here; about a four hour drive over to Capitol Reef.  We did drive out the east side of Zion on Route 9 – the Zion Mount Carmel highway and that was worth it.  We likely would not have ventured over to this part of the park otherwise.

Campsites at Capitol Reef were pretty domesticated.

Day 6:  Capitol Reef

We were fairly low key at Capitol Reef.  We caught a ranger session, did the Cohab Canyon hike to the lookouts, and ate pie.

Capitol Reef is not a super popular park, partly due to its location away from most other major sights.

Day 7:  Home

And then we drove home, which was about four hours from Fruita.

All in all, both parks were great. Glad we saw them. We covered a lot of ground in Zion and got the main feeling for Capitol Reef. I certainly would go back to either, but if we didn’t, would feel like we saw the main highlights of both.

Influential Reads – October 2023

Reading Time: 2 minutes

“Our obsession with being informed makes it hard to think long-term. We spend hours consuming news because we want to be informed. The problem is, the news doesn’t make us informed – quite the opposite. The more news we consume, the more misinformed we become.” – FS Blog

My reading goal of 30 books in 2023 has been achieved – in a large part due to the Slough House series from Mick Herron.

From time to time, I post some excel tools for folks to take advantage of.  In most cases, I am just making those available to save people some time.  But tips are always welcome.

Here are my most influential reads for the month – in no particular order:

  1. Can’t Escape the (Capital) Cycle – “Marathon Asset Management did not invent the framework, they just clearly articulated it in their letters and used it to navigate markets. “
  2.  The Tide Is Going Out – “While this will likely still take time to unfold in the private markets, it appears to already be well underway in the public markets with the average small-cap stock in the Russell 2000 down more than 33% from its 52-week high.”
  3. Can Economists Predict Recessions? – “Short answer: Maybe a quarter ahead (but not always). Beyond that short time frame, it’s simply too variable.”
  4. 6 Reasons Why a US Recession Is Likely — and Coming Soon – “… typically the US consumer keeps buying right up until the brink.”  SMS: This has been my view for awhile – the U.S. consumer will spend until stopped.
  5. What goes down must come up – “But more likely we are in a new regime, with more volatility at the very least.”
  6. Further Thoughts on Sea Change – “No one cites my candidate: the 2,000-basis-point decline in interest rates between 1980 and 2020. “
  7. Housing Market: 1981 Vs. 2009 – “Have people forgotten how bad the real estate market crashed in the early 1980s? Apparently so.”
  8. Weekend Thoughts – Inflation Hedges, Bonds & The “This is Fine” Economy – “The main reason I take it personally is because the Fed has broken a whole bunch of stuff and I don’t see how anyone can frame it any other way. “
  9. Something “Big & Stupid” Is Coming…– “So there are two ways to deal with excessive debt: fiscal discipline and inflation.”
  10. The Power of Morning Pages – “There really isn’t much to lose by sitting down and writing for twenty to thirty minutes every morning.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

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Reminder: I learned way back in 2000 not to give investment advice, especially to people I know well.  So please do not take anything in any of these posts as financial or investment advice.

© 2023 Something For The Effort LLC – All Rights Reserved

Hold To Maturity – A Fuzzy Framework for Fixed Income Investing

Reading Time: 3 minutes

I have been seeing quite a few articles about the decline in bond prices and the bond bear market.

These are excellent headlines, but appear to be fighting the last battle.

Many investors appear to be evaluating fixed income investments without considering hold to maturity.  Isn’t hold to maturity the primary way you should be evaluating fixed income?  

You lend money to the borrower for a fixed amount of time, the borrower is contractually obligated to pay you a coupon, and at maturity give you your principal back.  That is why they call it fixed income. The returns are not ambiguous.  As a fixed income investor you care about yield, duration, and credit quality (i.e., getting your principal back).

Decades of declining interest rates appear to have made that framework fuzzy.  With fixed income, declining yields lead to price increases.  A long period of declining rates appear to have lulled fixed income investors to sleep a bit.  Or distracted fixed income investors from the fundamentals.

However, if investors are focusing on the short-term price movements of fixed income investments, then they are trading, not investing.  Price increases have historically not been what fixed income investors should be counting on.  Again, fixed income investors should be focusing on yield, duration, and getting their principal back at the end of all that. 

Expecting price increases in fixed income implies expecting lower rates in the future.  Another dimension that investors need to realize is that the Fed does not control longer rates.  The Fed sets short term rates. Longer rates are determined by many things including supply and demand and the inflation outlook.  So the Fed could lower short rates, but that’s no guarantee that long rates follow suit.  The yield curve is still inverted mind you.  

This topic also ties into Howard Marks’ latest article where a main point was – if an investor could achieve their target returns with fixed income, why would they consider investing in equities.  Marks is using the traditional framework for fixed income – hold to maturity.  Short term price movements are not something to focus on.

ETFs could also be causing some issues here.  ETFs tend to hold many issues, even if they are the same type, and therefore do not have a clear maturity date.  For example, the iShares 7 – 10 Year Treasury Bond ETF (symbol: IEF) holds 13 issues with a 2.93% current yield, 4.69% 30 day SEC Yield, and weighted average duration of 8.37 years.  So ETFs hold multiple issues, which are changing as the fund sells issues and purchases new ones.  And, the yield is not fixed as is the case with a single issue.  So, bond ETFs are sort of a composite issue, but not really, which also makes hold to maturity a bit fuzzy.

What is also interesting here is the difference between the current yield (last dividend annualized) and the 30 Day SEC yield, 2.93% and 4.69% in the case of IEF, respectively.  The current yield is nowhere close to the yield on new 10 year treasuries, but this would be expected since older issues are yielding much lower rates.  The fund cannot payout income it is not receiving.  

The older issues would also have a current market price well below par.  Those issues should theoretically increase in price as they get closer to maturity.  Recall, bond investors will get their principal back at maturity unless the borrower defaults.

It is not entirely clear to me  why the current yield and 30 day SEC yield differ so much, but presumably reflects the fact that some of the issues the fund holds are below par and would be expected to increase in price as they get closer to maturity.   I am also unclear how price increases would eventually make their way into investors’ hands, since iit does not appear to be happening through the current dividend.  It seems possible the funds are reflecting that “accrued interest” in the 30 day SEC yield.

All of that makes ETF bond funds a bit confusing and not exactly like an individual bond.

© 2023 Something For The Effort LLC  – All Rights Reserved

This commentary on this website reflects personal opinions, viewpoints, and analyses and is not financial or investment advice.

The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Surging Bond Yields with Downtown Josh Brown

Reading Time: 2 minutes

This was so good on so many levels.

Catch me on Scott Galloway’s show

Long End of the Curve + Velocity:


An absolutely great dissertation on the yield curve, impact of rates, and flow through into the economy so far.  So many good points here, you just need to listen to the whole conversation.

Keep in mind, velocity matters a lot. Long rates matter way more than short rates.  There may be lags and some structural weirdness, but I am in this camp.



“You need the shock.  What is the exogenous shock that is going to happen that is all of a sudden make the recession real.?”

Spenders gonna spend.  This has been my thesis for a while.  The American consumer is not going to stop spending until they are literally stopped from spending.  American consumers will spend until they run out of money or, more likely, cannot get credit any longer.

Rates are impacting this already.

Hold To Maturity:


I disagree with this somewhat.  Not his attractiveness of the starting yield discussion; I agree with that point. 

However, if I buy a 30 Year Treasury Bond with a 5% yield, and hold it for 30 years, then my (nominal) return is literally going to be 5% every year.  How would it not be, assuming the U.S. government doesn’t default (I felt I had to add this caveat, unfortunately)?  Only if I look at price on a short term basis and mark-to-market or sell the bond prior to its maturity will my return vary.  This is like the whole point of a bond.  It is why they call it fixed income.

In my opinion, too many fixed income investors are focusing on price movements (i.e., trading) and not focusing on yield and duration.  The fact that yields have come down for 20 years, has probably caused too many fixed income investors to focus on price movements.  ETFs also distort this a bit for a couple of reasons.  More on this later.

Credit Spreads:


“Spreads have not blown out…and until they do stop saying recession.”

Yes, totally, spot on.  Watch credit…especially consumer credit.  See above.

© 2023 Something For The Effort LLC  

The World of Low Rate Mortgages

Reading Time: 3 minutes

File this under things I don’t understand.

During the Covid-19 pandemic, the Federal Reserve lowered short term interest rates and rates across longer maturities followed suit.  The rates on mortgages, such as the 30 year mortgage which is common in the U.S., hit all time lows of 2.65% in January 2021.1

Home buyers and existing home owners financed new purchases or refinanced existing mortgages at these historically low rates.  This appears to be a very rational financial decision.

Banks and financial institutions; however, lent substantial sums of money at these historically low rates.  In hindsight, this appears to be a less good decision.  Using TLT as a proxy for the value of longer dated bonds, the value has fallen close to 50% in three years. 

Now, rates have increased sharply to unexpectedly high levels.  Mind you, these are not historically high rates.  The highest rate on a 30 year mortgage in the U.S. is 18.63% set in October 1981.1  But the rates are certainly local maximums in terms of the memories of most people.  You would have to go back to 2000 to find rates this high.2

So now what?

Existing homeowners are understandably reluctant to give up these rates – in other words – sell any property financed with low rate mortgages or paydown low rate mortgages quickly.  

Banks, financial institutions, and investors who hold these low rate mortgages appear to have locked themselves into an under-performing asset for a long time.  The thesis appears to be that these entities are going to hold these assets to maturity, which means they will eventually get the principal back, so the unrealized loss sitting on their books is not a concern. In this case, they will be earning roughly half as much interest as a similar mortgage made today.  In a poorer scenario, these institutions sell these assets – for whatever reason – and take a substantial realized loss.

It seems to me that I am missing something somewhere, and do not see how this plays out (efficiently).

Mortgage owners that locked in low rates appear to have received a huge financially engineered (one-time?) benefit.  But now have little incentive to sell their properties or pay down their debts.  So the gains are literally trapped in their house.

Lending institutions lent money at historically low rates and picked up transaction fees along the way.  But are now holding under-performing assets for a couple of decades.

Is that it?  Are we stuck in the world where:

  1. Most existing homeowners are unlikely to sell for discretionary reasons.
  2. Refinancings appear to be highly unattractive.
  3. Repaying mortgage debt would also be less attractive since Tbills are earning well above the low rate mortgages.
  4. Banks and financial institutions are holding relatively unattractive mortgage assets regardless of how accounting rules make these appear.
  5. Real estate transaction volumes are going to be substantially lower for the foreseeable future.

It is almost like the average U.S. mortgage holder outfoxed the supposedly sophisticated financial institutions.  But somehow the financial institutions appear to be unimpaired in any way.  And participants are going to wait in their respective corners until…until…until what?


Influential Reads – September 2023

Reading Time: 3 minutes

“One of the most important parts of developing an identity that can thrive, persist, and endure change is to diversify your sense of self. You can think of identity like a house. You want the house to have multiple rooms. Perhaps there is a “parent” room; an “athlete” room; an “employee,” “entrepreneur,” or “executive” room; a “community member” room, and so on. It’s okay to spend a lot of time in just one room, but you’ve got to ensure you keep the others in good enough shape. This way, when you experience a massive change or disorder event in one area of your life, in one room of your identity, you can step into other areas to gain your footing and stability. Like a diversified portfolio in investing, diversifying your sense of self makes you more rugged and flexible in the face of change.” — Brad Stulberg in Master of Change

Welcome to Q4! September was a month, for reasons that I won’t go into.  I guess I should have just T-Billed and Chilled.

Actually, I’ve been doing that for quite some time.  See this post.  All the recent publicity around that makes me a touch nervous.  I have gotten so used to being wrong, that apparently being within the consensus makes me uncomfortable.

There’s probably some sort of lesson in there somewhere.  One day, I might figure it out.

Here are my most influential reads for the month – in no particular order:

  1. Of boiling frogs and underperforming investments – “There are so many areas in life where we know we can reduce losses and avoid harm by taking preventive action, yet we wait and wait until it is too late.”
  2. New 20+ year record high mortgage rates begin to impact home sales; bifurcation in new vs. existing home prices continues – “As per usual, interest rates lead sales…Further, sales lead prices.”
  3. Should You T-Bill and Chill? – “You have a significant amount of reinvestment risk.”
  4. Why TIPS Look Attractive – “Given recent events, as well as the ever-rising level of national debt, it seems prudent to treat future inflation prospects from a neutral perspective rather than being distinctly optimistic.”
  5. Ray Dalio All Weather Portfolio Review, ETFs, & Leverage – “Utilities provided the lowest volatility, smallest drawdown, highest return, and highest risk-adjusted return:”
  6. Fewer Losers, or More Winners? – “Neither maximizing winners nor minimizing losers is necessarily enough. It’s all in the balance. “
  7. The Bond Bear Market & Asset Allocation – “The bond returns have been higher most of the time but it’s not a huge difference.”
  8. Asset Class Correlations Convict Central Bank Activism – “While central bank largesse may undergird returns (at least most of the time), it does so while increasing portfolio risk by increasing asset class correlations. There is no free lunch, indeed, even when it looks like there is.”
  9. Our future is Japan – ” In Japan, the central bank has been manipulating the bond market through its interest rate targeting policy for years. This has kept long-term bond yields close to zero and helped the government sustain debt levels well in excess of 200% of GDP.”
  10. Have Bonds Finally Reached Escape Velocity? – “In short, bonds with a duration under 5 have likely already reached escape velocity. T-notes in the 5-10 year duration range are close to escape velocity, but not quite there yet. And long bonds are still far from escape velocity. “

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

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Reminder: I learned way back in 2000 not to give investment advice, especially to people I know well.  So please do not take anything in any of these posts as financial or investment advice.

Influential Reads – August 2023

Reading Time: 2 minutes

“If you simply do what everyone else has already done, you will be rewarded with the same mediocre results everyone else has already gotten. The only model for success is to avoid most of the world’s models for success.” – Mark Manson

We were mostly in place back in Utah for August, after being on the move from essentially mid-May through July.  However, not too much notable to report.  Lots of riding mixed with a bit of Coursera studying (Contract Law 1 by Yale).  Online learning has to be a major component of the future of our education system – to expand access to larger portion of the population and reduce the costs and other impediments to education.  The admissions practices of elite private universities and student loan forgiveness are a distraction.

Here are my most influential reads for the month – in no particular order:

  1. Common Probability Errors to Avoid – “If you’re trying to gain a rapid understanding of a new area, one of the most important things you can do is to identify common mistakes people make, then avoid them. “
  2. The Intel Split – “Intel’s factories, denied monopoly access to cutting edge x86 chips, will now have to compete with TSMC to earn not just 3rd-party business, but business from Intel’s own design team.”
  3. On the business, strategy, and impact of technology – “Smartphones, though, provided a reason to build up the software layer from scratch, with efficiency, not performance, as the paramount goal.”
  4. Blackstone ❤️ private credit – “the simple fact is that institutional investors like the smoothness of private markets.”
  5.  The Tide of Price over Volume – “There are very few chances to find the elasticity of demand. And – for the time being – there are ample excuses to figure it out.”
  6. Bear market investors think different – “And it is this lack of overoptimism why investors who have learned their trade in a bear market have slightly better performance on average than investors who have learned their trade in a bull market, as I have discussed here.”
  7. A giant wealth transfer is why the economy isn’t responding to Fed – “it is virtually certain that central governments’ fiscal deficits will be large, and it is highly probable that they will grow at an increasing rate as the increasing debt service costs plus increasing other budget costs compound upward, and, as they increase, governments will need to sell more debt, so there will be a self-reinforcing debt spiral that will lead to market-imposed debt limits while central banks will be forced to print more money and buy more debt as they experience losses and deteriorating balance sheets”
  8. John Eastman Comes Clean: Hell Yes We Were Trying to Overthrow the Government – “The Declaration of Independence has no legal force under American law.”
  9. Guest Contribution: “The End of Zero Interest Rates” – “US short-term rates had been near-zero for nine years [2009-15 and 2020-21] out of the preceding 13 years, since the Global Financial Crisis of 2008. “
  10. Have Bonds Finally Reached Escape Velocity? – “In short, bonds with a duration under 5 have likely already reached escape velocity. T-notes in the 5-10 year duration range are close to escape velocity, but not quite there yet. And long bonds are still far from escape velocity.”

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

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Family Adventure: Colombia

Reading Time: 5 minutes

We had an excellent trip to Colombia.  

I realize that Colombia is probably not the first country folks would consider visiting when going to South America.

However, my cousin’s wife is from Colombia, so we went to celebrate her birthday, see her family, and tour three cities: Bogota, Medellin, and Cartagena.  Also, having a native Spanish speaker was almost mandatory, since, unlike other tourist destinations like Costa Rica, etc., it seems that most Colombians do not speak English.

We would definitely go back.  Medellin was the most friendly for international tourists and seemed to have a bunch of nearby sites and outdoor activities.  Cartagena is a beach resort town, although I think primarily for South Americans.

Here was our trip itinerary.

Day 1: To Bogota

Our first day was all about flying to Bogota.  We flew Avianca airlines direct from Orlando to Bogota; a fairly easy three hour flight.

Immigration and customs was straightforward.  Make sure you have your travel visa in order.

We were met at the airport by my cousin’s wife’s brother – who lives in Bogota and a driver.  As you will note throughout this post – finding English speaking drivers & guides is not common in Colombia.  So traveling with a native speaker is a huge plus and almost mandatory.

Day 2: Bogota Museums

Three museums and a market.

We visited three museums:

1) Museo Nacional de Colombia – the national museum of Colombia, which was great and housed in an old prison.  For non-Spanish speakers, I would recommend a guide since most of exhibits do not have English subtitles.

2) The Botero Museum – not a huge Botero fan, especially his people.  I do like some of his landscapes.

3) The Gold Museum

This was worth it, although after two other museums we were a little museumed out.

The pigeons were the highlight of the market; although the churro was pretty solid too.

Day 3: To Medellin

We had a morning flight to Medellin from Bogota that went according to plan.  Then we toured the city a bit ending up of Nutibara Hill for some sightseeing and food.

Day 4: Medellin Coffee Plantation

A highlight of our Colombia trip for sure.  We got lucky with an excellent tour guide who spoke great English and knew a lot about coffee.  We went to a smaller, family owned plantation that was low key.  We tasted four different kinds of brewing techniques and picked some coffee.

Plus,we got to dress like Juan Valdez.

This is an excellent restaurant that I would never have set foot in if not for a recommendation from our tour guide (hint: it is down a somewhat scary alley with little signage).

Day 5: Taxi Flat Tire & To Cartagena

I am now sure how to say “shit show” in Spanish, but that is what you get when you are in a taxi with seven people and all our luggage and the taxi gets a flat tire on a very busy street in downtown Medellin.

All luggage and most passengers were accounted for.

We regrouped, ate lunch, and then headed to the airport for our flight to Cartagena.

But let’s not end on that note, since we really enjoyed Medellin, so here’s a picture of the city from our hotel.

Day 6: Cartagena Beach Day

Recovery day spent at the beach and pool.  Much needed.

Day 7: Cartagena Castille & Pool

This was mostly another recovery day spent at the pool.  However, we did taxi into town to see the Castille and walk around some.

Yes, more pigeons.

Day 8: To Miami & Orlando

A relatively uneventful return trip flying from Cartagena to Miami and then a shuttle up to Orlando.

Yes, I said “gracias” to the guy behind the counter of the Pizza Hut at the turnpike rest station.