Were You Prepared?

Feb 22, 2021 | Investing, Lifestyle

On this special podcast, many in Texas were hit with power outages and had no water due to the winter blizzard and freezing temperatures. Karl explains some various ways to prepare for just these types of situations.

Hey, welcome to the show everybody. This is Karl Eggers. This is Creating Richer Lives, the podcast, our telephone number (210) 526-0057. Our website creatingricherlives.com. This show is brought to you by Covenant Lifestyle Legacy Philanthropy. By the way, on creatingricherlives.com, I do want to point you to a couple of things. Number one, we still have our free report, 10 Ways To Generate More Investment Income. This is really, really important right now, we continue to become more and more bearish on bonds. You continue to see bonds falling back in price as interest rates rise. This report has several different options in there and things you can put in your portfolio. It’s a compliment, the income producing securities you may already have in there. And again, they’re not specific recommendations as we’ve said in the past, these are ideas, these are a place to start your research.

Number two, right there on the front page, if you need help or anybody else does that you know, there’s a place that says 15 minute conversation. And you will see right into our calendar and you can schedule a 15 minute introductory phone call, tell us a little bit about yourself, what you’re trying to accomplish. We can tell you a little bit about Covenant and again, you can schedule your own time right there. So make sure you check out creatingricherlives.com.

All right. Well, it was an interesting week. Not necessarily in the markets as much as it was weather-wise and I came away fairly unscathed. Fortunately, we did not ever lose power. We never lost water, but so many people I know, so many people around Texas and, and other areas really struggling this week. I was really proud of the Covenant team because a lot of our employees were struggling right alongside everybody else in Texas, and yet continued to push through and work. And really our preparedness in terms of how we have tested some of our systems came through. And so we were able to meet all of our clients requests and needs. It’s getting closer to tax time and so people needing information, and we were able to do that from various locations. And certainly COVID helped us advance that. And now it came in handy once again, during Snowmageddon, if that’s what you want to call it.

But I was very fortunate. I did have a couple of broken check valves on my pool, but compared to other people, that was nothing. So very, very fortunate and blessed. But it did get me thinking about preparedness and where we all prepared for something like this? We obviously can go different places, when something happens to our homes, we may have friends or relatives. In this instance, we could not leave, right? We could not drive. So were we prepared individually for something like this? I’m going to spend some time today talking about that and some things that you can do to, again, not over-prepare, this isn’t about being a prepper, this is more a function of just being knowledgeable, and being sensible, and logical with some of the things that we have around our house that we can use, or things we may need to purchase for future events.

And it may not be a snow storm, but it could be something else, right? A tornado or hurricane, just an extensive power outage, the grid going down for some reason or another. So we’ll get into that in just a minute. That’s what’s today’s show is going to be about. And by the way, next weekend, if you are somebody that is needing to save for education for yourself, but primarily for a child or grandchild or great grandchild, we’re going to have Oliver Norman, one of our wealth advisors here at Covenant on the podcast, he’ll be joining me next weekend. So make sure that you tune in for that because it’s going to be a good podcast, covering all things, education planning.

All right. Well, real quick before we do talk about preparedness and what things we can all be doing, I did want to touch on really the five things that I saw this week that were the highlights I guess. We’re not going to go through each day. It was a pretty flat week for the markets in terms of the indices. If you look at the Dow Jones, pretty flat, the S and P down, less than 1%, the Russell 2000 down about 1%. So it was pretty flat. We did see interest rates continue to push higher ending the week at about 1.34 on a 10 year. Again, if you compare that back to where we were, even in August, it was around 0.5%.

So interest rates continue to move up, but we did see a lot of things moving this week. But probably the biggest ones that I saw were the Japanese stock market went above the level it was 30 years ago. Now you may be saying, “Well, I don’t own a lot of Japanese stocks. So it doesn’t impact me.” Well, that’s not necessarily true because you may own international mutual funds that do own Japan, but it’s really a lesson that a stock market can move sideways for a very, very long time. We’re very spoiled in this country that every time it’s dipped, even in a severe dip, like 2008 or March of 2020, we tend to get a pretty quick rebound if you just in there.

Well, the Japanese did that and it took them 30 years to get back to the level where it last peaked. So it could happen in the US and that’s why it’s so important to have a diversified portfolio, to make modifications, to make sure you have plenty of income coming in the portfolio. Even if you’re not using that income right now, it’s meant to help the portfolio sustain itself and be a shock absorber over time. The next thing I saw was Bitcoin, of course, crossing 50,000 and then on Friday cross and 55,000. So you’re getting a huge move in Bitcoin, much more adoption, as far as people allocating part of their portfolio to it. A lot of the hedge funds in the last few months have talked about it. Some of the institutions doing that, and we saw of course, Elon Musk and Tesla do it a couple of weeks ago and saying, “We took some of our cash and did that.”

But it’s all the coins are moving up right now. And again, for those of you that say, “This is a fad, it doesn’t make sense,” as I’ve said before, I’m not going to comment on too much about it because you may be right, but it’s what’s the perceived value and there are people finding value in it. So we need to respect to that part of it. But for most of us, it is very confusing, and it’s something that if we do have an allocation to it, it’s a very, very small part of our net worth.

All right. The other thing that I saw in the New York Stock Exchange and the NASDAQ stocks are together making new highs that has never been higher. So the company’s making new highs. When you take the New York Stock Exchange, you take the NASDAQ, you take all the companies, making new highs and put them together that’s never been higher. So we have a very broad bull market going on right now, and it continues to push higher. We will have corrections, of course, but again, there’s a lot of good things and a lot of tailwinds behind this market right now. Somebody told me this week, “Hey, Karl, I’m really getting bearish. I really am worried about this.” And I said, “Don’t forget you and I had a conversation back in June, which was what eight months ago. And it was the same conversation and look how much money you’ve made since that point.”

And so again, if you want to take some off the table here, get a little more conservative. That’s okay to do that, but don’t abandon your plan. In fact, your plan may be too aggressive right now because the stocks have gotten such a large part of your portfolio. The other thing I saw this week was, when you compare the two year treasury rates to the ten-year treasury rates, it’s the widest it’s been in four years. The yield curve they call it is steepening. That is a good, good sign because a lot of people look at that and say, that means the economy is healing. The Fed’s not going to raise rates, but long-term rates are going up. People are demanding higher rates because the economy is improving. That is a very good thing.

And then we saw oil go back above 60 for the first time in about a year. Copper making nine year highs. So we’re seeing commodities continue to push higher. Again, very industrial type uses for these types of commodities. So we’re seeing commodities telling us the economy’s improving. And we had that whole discussion last week on inflation, which was another discussion, another topic, but generally speaking, seen these things go up right now is a very good thing. So those are kind of my top five things that I saw this week.

All right. So what I wanted to talk about today is for those of you pretty much anywhere in Texas and anywhere, I mean, there’s a lot of places around the country, but most of our listeners are probably in the Texas area and you’ve seen the numerous power outages. You’ve seen people’s pipes freezing, cracking, just traveling to different places has been nearly impossible. The grocery stores have had very limited hours. Some of the pharmacies have closed down. So it’s really been a pretty big deal the last few days. And it reminded me that we talk about creating richer lives on here, and the show is typically about financial matters.

But I wanted to spend some time today talking about some things that I think you can do now to prepare for the next event. And the next event may not be six to 10 inches of snow, right? It may be a tornado. It could be a hurricane. It could be just a power outage for an extended period of time. Maybe in the summertime when it’s really, really hot, Texas seems to have some power issues as we’ve seen the vulnerabilities. And really that’s what COVID did last year, was it unmasked some of our vulnerabilities that we have, that we thought we were very safe and everything was perfect when he had all our I’s dotted and our T’s crossed, but it revealed some things to us that made us question how we are doing some of our PPE, and maybe some of our ICU units. And just a lot of things like that, that I think over the next few years, we will try to plug some of those holes. And I think we can be doing the same things in our households.

So I wanted to spend some time today talking about some things that I personally do, and maybe you can do going forward again to prepare for the next time something like this happens. And again, it doesn’t have to be the exact scenario. A lot of people make fun of preppers, right? They have cans and cans stored up and kind of an Armageddon end of world scenario. I’m not one of those people. Let me just say that right off the bat. However, what I have done is done some things to prepare for times like these. And again, what I’m talking about is an interruption in our normal daily lives. We get very used to turning on the switch on a light and electricity appears. We turn on the stove and lo and behold it works, and the microwave and we turn on the faucet and we have water, right?

Well, a lot of those things were interrupted this past week. And so what I want to talk about is what we can do. Some practical things we can do. And again, these are things, some of them are things that I already do, some of them are things that I’m in the process of doing, and some of them are things that frankly I need to do. So let me start with some of the necessities. I mean, one of the things we saw was the power going out for hours and hours at a time. Some people I’ve talked to had power out for 32 to 48 hours, two days, it’s a long time without power. So one of the simple things we can do is obviously have a generator. And a generator can be a small generator that can run just some very simple things, and it can also be a whole home generator. Companies like Generac is one that sits on the side of your home. It may be propane powered, and it’s meant to come on about 45 seconds after the power in your home goes out automatically.

Now these things can get expensive, but there’s also less expensive ones that are simply a way for you to transfer power to your house. So you may get some type of, and this is an electrician would come in to do this, but you have certain breakers, they kept to maybe four or five, that can be switched over to essentially auxiliary power. So even if you had a smaller generator, there’s a smaller generates, it’s not a whole home generator that can actually power certain things in your home. So you have basically four breakers that are for bigger items, things you’re going to need, you heat, maybe your stove, maybe a few lights, things like that. And that’s a manual switch over.

So generators can come in all forms and fashion. Obviously they, again, they can get very expensive, but that is something that may not be used that often, but it’s an insurance policy. There’s even smaller things you can do now. And really this is something that I think is pretty exciting is there are lithium batteries that are powering, essentially a power bank. So if you think of the power banks to charge your phone, that you take with you on trips, you’re out on a hike and you know your cell phone is going to run low on juice, what do you do? You, you whip out one of those power banks, it’s about the same size as your phone, and you have more battery power to charge your phone. This is the same thing, but a little bigger picture, like the size of a lunch pail or a little larger.

There’s a few companies that do this and you charge them up and they’re a battery backup and they can run simple things that you might need in your house. Certainly they can charge your phone, they can run small appliances, keyword being small. I’ve seen these up to maybe 1000 Watts, even some of them up to 2000 Watts. And what’s nice about them too, and this is really important is that some of them can be charged through small foldable solar panels. So you just open them up, put them on your driveway or wherever, and it can charge. Now it’s going to take a while to do it that way, but it can be done that way and some of them can be used simultaneously to be charging and to use that. So this thing can obviously hold a lot of power and can be used in emergencies, but also if it ran out of power, you can use small solar panels to charge it.

So that’s a great one. A lot of people use these for camping. A lot of people that are taking an RV trip will use them. They’re very, very effective, very useful, very reasonable in price as well, under a thousand dollars for a lot of these. So that’s kind of the generator way of doing this, which is to have a backup. Now I did mention the phone battery backup. Those are something that companies like Anchor make. There’s plenty of them out there. Again, keep those charged. This is really important, not only to continue to get cell service, a lot of people that saw their power go out for a couple of days or needing to communicate with their parents, with the elderly, they’re needing communicate with other family members, and if your cell phone goes out, you have no more battery backup. So getting a battery bank of powerful one that can charge a couple of cell phones, having that charge is important.

I’m somebody that uses a C-PAP machine. Probably many of you out there also use one. Imagine if you didn’t have power for a couple of days, how do you power your C-PAP machine? I actually have a special battery that can run my C-PAP machine, in addition, it can charge a cell phone. So before all this happened, I had that fully charged, knowing that we could lose power and I’m fortunate to not have lost power. One of the few that I know of in my ear that has not lost power, but that’s something that I had that charged and plenty of power banks charged up as well. So I was kind of preparing for that. So that’s the generator, that’s the power side of this.

Let’s also talk about another issue, which was water. People’s pipes were freezing. They weren’t dripping their faucets, or they may have had a water pipe burst, whatever the reason, a lot of people did not have water because it just was frozen or some other reason. Buying some extra drinkable water and having them in your pantry on the floor, sitting there ready to go is a great idea. And again, it doesn’t take up a ton of space, it’s used for emergencies. Now, if you want to go bigger, certainly there are bigger water storage tanks that can be used and stored maybe in a cool place somewhere else. That’s going to take up more space and they’re meant for water storage. So they’re perfectly safe and water can stay in there for a long time.

So again, how much you want to do totally up to you depends on how prepared you want to be. And I actually bought some water back when COVID first started and things really blew up because there was talk that the people may not be able to get to the utility companies. So again, I was worried about some of these potential brownouts, maybe even the water utilities who knows it was just a good idea to have some water on tap. Some of you prepared by filling up a bathtub with water prior to this big freeze. That was another smart idea. It’s a great way to store a lot of water temporarily for the next few days. So water is essential. So we’ve talked about some central power and some water.

Let’s talk about food. I also have about a months worth of food prepared. And it’s not, I don’t have walls and walls of canned goods, but there’s companies out there that will send you basically rationed food, almost like what the military and a lot of calories in it. Again, it takes up very little footprint, but you can get a week’s worth, two weeks worth. I got four weeks worth and I just keep it on hand in case again, let’s say that we had at a tornado come through and the power was out for several weeks in our neighborhood, I have food that could be eaten directly out of there or heated with some simple propane, what have you.

And again, those are things that I probably will never use, but I have it. Or if I needed to share it with a neighbor, if I can’t get to the grocery store, I have that food ready to go. It’s all types of meals. Some of them, the packaging’s kind of funny because it makes it sound like you’re at a five-star restaurant eating this food. But linguine with clam sauce, I’m not sure how fantastic that would taste, but these companies obviously are much better than they used to be and they’ve seen a huge skyrocket in business after COVID because everybody started worrying about lots of things during COVID, right? And we saw the supply chains really freeze up. And that was a great example of when the supply chains frees up, people started freaking out over toilet paper, paper towels, but again, let’s think about the essentials, food.

So there are ways to have that. This is meant to have a shelf life of 25 years. It comes in its own container. So it’s ready to go. You just get it when they deliver it and just stick it in your pantry. There’s people out there that may have a years, two years worth of food, because they’re worried about Armageddon. I’m not going to that extreme. I just want a little bit of… I want a bridge loan, if you will. So food supply really important, and there’s again, several companies that do that.

What about propane? Did you think about, for those of you that have propane run into either, you have a pool to heat up or a hot tub to heat up, or it could be going to your fireplace? That’s a great, I mean, you have a big storage tank of propane underneath the ground probably, and it feeds some of the things in your house. May even feed your stove, which is huge. So think about that if you’re moving, if you’re building, having that propane, because you have a lot of propane sitting there that you can use for cooking, and for heating, for warming up some of this prep food I talked about. So having that and not have to worry about firewood, a lot of people really getting their heat from their fireplace and having to go find wood and split it and have all of that if they’re not prepared, which if you don’t have propane, do make sure that you have some split firewood prepared. That’s another good thing to have sitting there, ready to go in case you need it for again, cooking or staying warm. So propane is a big one.

Other small things I would think of as things like batteries. There’s a lot of people that needed batteries for certain situations in different sizes. And you’re going to need those. Keep those on hand. Also, some something to light the fire with, right? We take for granted some of that. I don’t know how many of us are really good at rubbing a couple of sticks together. So I think having some BIC lighters or other brands sitting there ready to go, you can have some matches, et cetera, I mean, again, a lot of things nowadays we feel like we don’t really need that, but it’s in these instances that we might need that.

The other thing that you might consider too is, and I use this primarily for hunting, but a little buddy heater. These are cool little… They take the small propane tanks. You screw them on. I mean, very, very small, about the size of a laptop in terms of the width, but very small. I keep it in the blind with me. Of course, you got to keep some windows open, but what it does is it just that heats up a pretty nice area. You need to be careful because you need to have some ventilation. Now they do have an automatic shutoff, but many people who use these will keep a carbon monoxide detector next to them in case the levels get too high. But you can open a window and let that air escape. And so having that again can keep you warm, and so you might just have that in your house for emergency. It’s very, very small, very inexpensive, but having those small propane bottles is helpful.

The other thing you can get is the propane tank that we might use for your grill. There’s an attachment that you can get on top. It screws on top, has a little fan and a heater. And basically you could be running that and heating again in a dire situation. So think about some household stuff that you might have dual-purpose for, right? You’re cooking with it during the summertime when people are coming over for a party, but you could also use it to heat your family in an emergency situation. So I really think, starting to think about again, what vulnerabilities do we have? And so vulnerabilities would be water, food, and heat, right? Especially in the winter time, water, food, and heat. Those are big ones.

Some of you people are on medication. I know I’m on some medication for various things, nothing major, thank you. But do we have enough of that supplied up? So when you know some events are coming, like this particular one, we knew it was coming, we knew it was going to be cold. We knew it was going to be freezing and probably two, three, four days of this where we probably couldn’t get out of our house. Do we have enough stuff? Now we saw the grocery store is very crowded, but again, have some things that are basic necessities always on hand. You don’t want to be rushing to the store when this type of event might happen. So you might keep some things on stock that are just for these emergencies, right, so you’re not having to run to the store to grab items, standing in line while it’s 10 degrees outside waiting to get a roll of toilet paper or what have you.

So those are just some that popped into my head. This is certainly not an exhaustive list. This is not me having a dedicated room wall to wall with cams stored on it, or 20 lighters and water storage everywhere. This is just being smart and just understanding that in the last year, we’ve seen two big events, at least for some of us that have caused us to really question the supply chains and how we get our stuff and really taken it for granted. And so I think this is a good lesson. I think, just look around and say, “Hey, if I was to be stuck here for a week and not go anywhere, or if I didn’t have heat for a week, or if I didn’t have air conditioning for a week, whatever that looks like for you, what would I do? Would I have enough food?” And then just start building that little inventory up for those things.

And you may already have some of that, it’s fantastic, but these are some things that popped into my head. I think the one that probably most of you wouldn’t do is a whole home generator. I mean, those are very expensive. And again, you just aren’t going to use it that often, but some of these smaller generators make a lot of sense. And again, what fuels that?If you have the generator, make sure you have enough fuel because if you can’t fuel the generator you can’t fuel the house, right? So these are some that just popped in my head. I know I’m missing some. I just really wanted to share my experience of some things I’m doing. Again, some things that I’m in the process of doing and some things already have done. And so hopefully you haven’t been in a dangerous situation.

Most of us have been inconvenienced and a little chilly, but for some people out there, it’s literally led to death. Again, some of this may not be for you, maybe it’s for an elderly neighbor who can’t really take care of themselves in a situation like this. So these are just my initial thoughts. Let me know, get back to me. Maybe let me know what some things I missed, what things you do. All right. Hope that was helpful. Hopefully, we don’t have to deal with some of this in the future. This is why we live in Texas. But again, I was around in San Antonio in 1985, when there was 13 inches of snow and a similar, maybe not as cold then, but similar, we’re just fun to see when it first starts snowing, and then you have to deal with all the aftermath.

So, all right, guys, have a great weekend and don’t forget to go to creatingricherlives.com, creatingricherlives.com. If you need our help for anything, 210-526-0057. Take care.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product, including the investments and or investment strategies recommended or undertaken by Covenant Multifamily Offices LLC, Covenant, or any non-investment related content will be profitable, equal any corresponding indicated historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Moreover, you should not assume that any discussion or information serves as the receipt of, or as a substitute for personalized investment advice from Covenant.

To the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his, her individual situation, he, she is encouraged to consult with a professional advisor of his, her choosing. Covenant is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at creatingricherlives.com.

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