The Case of the Missing Water

March 3, 2020

I have been slow to post a lot of updates lately as there has been much activity, and not a lot that we want to share for now.   The boat is getting some work done, Jinhee and I have been doing work and still finding time for some relaxation and then there is that issue with the markets.  Markets and their gyrations consume a lot of my brain power.

Today has been another wild day in financial markets and I will comment a bit further at the bottom, but first, the case of the missing water (where is Nancy Drew when you need her!).

If you have been reading for a while, you recall that when I splashed the boat off the delivery ship in Fort Lauderdale (from Palma de Mallorca), I discovered my water tank was empty and while a bit concerning, I passed it off as I had other issues which were more pressing.

Over the weekend new clues appeared (or more likely, became apparent).  I don’t like scary movies, so I am a bit afraid of looking too far under the covers for the answers here, but I think I must, soon.   Here’s the review.

  1. I loaded the boat onto a ship with water tanks about 10% full.  (That’s about 150 litres of water)
  2. The boat arrived in Fort Lauderdale and had no water in the tank!!!   I have pretty much ignored the issue since that time.
  3. On Saturday when I awoke, the water pump (which is really close to my bed) started running before anyone was out of bed.   I quickly ran around the boat to see that all the taps were indeed off and they were.
  4. I looked at my bilge and my upper bilge was full of hot water.   From that I ascertained that the problem is with a hot water line, as the boat hasn’t moved in days (not hot water from the engine cooling system), and the hot water tank is behind and below the upper bilge so it couldn’t have traveled to the upper bilge except in a hot water line.
  5. I turned off the water pump while searching for all of that.
  6. I turned the water pump back on . . . the problem disappeared.

It seems like I have an intermittent leak in a hot water line somewhere, and the water is eminating from underneath the supply tank (fuel) and the master stateroom.    There is NO room under there to look around.   This is going to be fun.

I did, over Christmas, buy a mini camera with an eight foot snake.  I still don’t know how it works so I guess I am going to get onto that item in the next few days.

Meanwhile we acquired our new anchor, a 60Kg Ultra Anchor.  It’s shiny, stainless steel and is supposed to be the best anchor you can buy today.   There has been some anchoring uncertainty over the past year or so, and we hope that this anchor helps us to eliminate that uncertainty with more weight (60kg vs. 47kg) and better design.   I should be able to try it out soon.

Also, I have to give kudos again to the folks at Yacht Tech.   My broken fuel line fitting has been essentially impossible to find.  When I mentioned this to Dan, he simply took the parts to the shop, and being a machine shop wizard, tapped the old copper fitting and put the old pieces back together.   I am now able to use an ‘appropriate’ fitting, although I still don’t have a spare . . . hopefully I will solve that problem in the coming months.   I do still have my jury rig available in a pinch.

Funny story about that fix though . . . when I changed the fitting I shut off all of the fuel lines (to avoid air getting into the lines), and then when I reassembled everything I tried starting the engine, and it simply wouldn’t start.

I bled the engine, I did everything . . . then I noticed a leak in the fuel return line (These diesel engines don’t use all of the fuel delivered to the engine, most of it travels back to the supply tank).   In a panic, I called for some expert help . . . just as it hit me that I had shut down all the fuel lines.  The return line was shut and there was massive pressure on that line, causing it to squirt out of various connections.

When I reopened the fuel return line, it started up and hummed like a kitten.   Oh, the things we learn through trial and error!

With other projects, the boat is quickly taking on the flavour that we are looking for to get us cruising up the East Coast.  I will add more to that plan in a few weeks, but for now, we are quickly adapting the boat to our ‘new’ North American plans.

I will take a moment and turn back to the markets.   I posted a little diatribe about relaxing and not getting too worried about the markets; that is still my focus.

Here come the caveats:

1 – Australia just reduced their interest rates by a half a percentage point

2 – The US Federal Reserve, in an emergency measure, reduced US rates by a half a percentage point

3 – The World Health Organization made an urgent plea for medical gear

4 – As well, China has introduced massive stimulus to keep their economy moving,  Europe is likely to add stimulus to their markets as well.

These items should not inspire panic in you personally, but as an investor, it highlights two things.

(a) Officials, both financial and medical, expect things to get worse and are trying to get out in front of ‘worsening’ conditions.  You should consider this for your investment portfolio too.

(b) Companies are not sustaining their valuations based on operating conditions, rather, governments are attempting to prop them up by throwing tax dollars at the problem.

The real concern here is that the COVID-19 virus is not a financial beast and throwing money at it is not likely to make it go away.   Yes, money will pay for resources like personnel, medical testing and more equipment, but the fundamental problem is one of human behaviour and very few will throw caution to the wind and head out to the mall, the movie theatre, or even schools if the virus begins to spread rapidly in their community.   The money being thrown at the markets now will almost certainly be wasted if the virus affects a large swath of North America.

Remember to ensure you have an ample reserve of cash in case markets freeze up, and consider that markets are within a hair’s breadth of their all time highs.   It has taken 12 years to recover from that last financial crisis, and there may be a time in the future when you can buy the same company for a lot less money.

Finally, also remember that it is difficult to predict markets and even harder to predict the path of a virus.   There is no ‘right’ answer but when I was a financial adviser, one of the key lessons I learned was that understanding how people would FEEL if their investments went down was just as important as the money.

 

 

2 thoughts on “The Case of the Missing Water

  1. I am just standing pat with my investments. Heavy in banks and very little in oil. Nothing that has caused me to panic just yet. If you think otherwise let me know.

    1. There are two separate issues here, and they should be treated separately. First, should you be invested in the market, the second about what you should buy/sell/hold if you are invested.

      Let’s talk about the first issue. Standing pat is not a bad choice as long as you are prepared to accept the drawdown if the markets collapse further. The last forty years of history suggests that prices come back (I take exception to that thesis personally, but history wins that argument). A second issue is that prices are already down 10% or more, and therefore selling now may not make sense if you believe the world is ‘under control’.

      My note, and warning reflect a more significant concern about what happens if things are NOT under control. Again to remind you of a key component of my post, this is not at all clear. There is evidence that the virus is spreading throughout the world, but there is also evidence that officials are getting some control over the virus at local levels (China specifically, and the US and Canada have not experienced massive spreads). So the evidence suggests that this is a neutral/unknown quantity.

      If it turns out that things are NOT under control then the downside here will likely be very, very significant (say another 10-15%) and the chance to take money off the table will have been lost in panic selling. So if you want to sell something and protect some of your portfolio, do it now. Just to be safe. Yeah, you might miss some upside, but the markets are very close to 12 year highs, so how much upside will you miss, and does it matter as much as the money you will lose if there is a downside panic. (I am hesitant to keep throwing this in, but this virus, if it spreads throughout the world, will change behaviour as well. This is a bit unpredictable. The other major issue is that if it spreads a negative debt event should also be expected causing even more pain . . . none of this has happened yet, and it may be avoided, but the risks are rising, not diminishing).

      Okay, so now onto what to hold . . .

      I would stick with Canadian banks for now, I would sell retail anything, entertainment anything. I would start buying oil (perhaps not Canadian oil, buy midsize US oil companies with a strong balance sheet, my favourite is REI) and base metals. Oil CANNOT stay at $45. About 20% of oil producers will simply go out of business at $45. Russia doesn’t make money at $45 (Brent, not WTI) and Saudi Arabia needs $45 (Brent) to break even, and $80 to run their country effectively. That means that within a reasonable time frame (6 months to 2 years) oil needs to go to $60 (WTI) for the world of oil to remain solvent. There is no rush to buy oil, but the whoosh of money out of the oil patch and the inevitable need for oil to be at $60 (WTI) is a draw.

      As you know, I follow the base metals . . . similar story. Companies can’t keep mines open at $2.50 copper for too long, and they can’t build new mines at these prices. Yields are falling around the world and that means that copper will need to go up. The same is true for Zinc and perhaps Nickel. On top of that, one of the reasons oil is getting killed is the move to battery everything. Batteries and battery powered everything requires a LOT of copper, Nickel, Lead, and of course Lithium. Just buy the stuff that people really need to save the environment.

      That’s it for now . . . I hope that helps.

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