The stoics said the key to happiness was managing expectations.

Misery comes from expectations.

I’m going back to my stoic roots to help me keep my sanity in these crazy times.

And this is one of the key insights from the stoics.

Misery comes from expectations.

Think about it like this. Imagine someone gives you an apple.

That’s kinda nice. Apples are good.

But let’s put it in context.

You’re in a 5-hat restaurant and you’ve ordered Japanese beer-fed steak and a bottle of bubbly.

They come back and say, “Sorry Sir, all we can give you is this apple.”

You’re not happy now right. If you’re like me, you’re probably going to say some stuff that will put you on a black-list for the next five years.

But let’s imagine another scenario. You’ve been sleeping with your best mate’s wife for the past ten years. He calls you up and says that he’s got something to “give” you.

You’re mind starts to panic, but then he comes round to give you an apple from his tree.

Suddenly that apple is the best thing in the world.

So the context matters. Your expectation matters. The apple has a certain quality in and of itself. Apples are objectively pretty awesome.

But how much happiness you get from that apple really depends on what you were expecting.

And so this is where stoics put emphasis.

Happiness and misery are in large part determined by our expectations. If things go much better than expected, we are very happy. If they are worse, we’re miserable.

But – and this is an important but – we have the ability to control our expectations.

Our expectations are within our control – or at least within our sphere of influence – and in that way are an important leverage point in creating a happy life for ourselves.

I’m feeling this in myself right now. Melbourne has gone into six weeks of hard lockdown. I’m really bummed about that.

But part of my misery comes from the expectation that I was building – the expectation that we were coming through Covid, and life was about to get back to normal.

If I didn’t have this expectation – if I had another expectation – like if I was expecting 12 weeks of lockdown – I would be having a very different experience.

And so the discipline here is get our expectations of life anchored.

You can expect to have a happy life of abundant material comfort, or you can expect to die cold and alone with stage four bowel cancer.

If you choose the expecting painful death route – then every day you’re alive is a cause for celebration.

Seneca, a famous Stoic philosopher who, as the adviser of Nero, was actually very wealthy – he suggested that we should set aside a certain number of days each month to practice poverty. Go without food, wear your worst clothes, get away from the comfort of your home and bed.

Do what you can to anchor your expectations. Keep your eyes open to the grim and brutal realities that are the staple of human life.

If you can do this, then even simple pleasures will bring you great joy.

And in that way, this is a hack. It’s a way top reprogram your mind so it is primed for happiness.

Ask little, enjoy much.

And bring your happiness under your own control.

JG.

How this apology saved my faith in politics.

Wow. Did you see the apology Dan Andrews just made?

My Fellow Victorians,

I muffed it. I’m deeply sorry.

I am so sorry that our half-arsed brain-fart of a quarantine policy failed. I’m so sorry that it means that life can’t go back to normal. That face masks are mandatory. That you’re not allowed to go to Queensland… or anywhere.

I’m sorry for the businesses that will be forced to close. I’m sorry for the people who will lose their jobs. I’m sorry to everyone in hospitality, events, the arts, tourism… actually just everyone.

We messed up. Every other state got it right. Jacinda Ardern in NZ is making us look like idiots. But we got it wrong.

We knew what best practice was, but we didn’t listen.

We knew that our system had problems on day one. We didn’t listen.

In the midst of a pandemic, we had one job. We muffed it.

I’m so sorry.

Hugs

Dan

No, of course he’s not saying that.

Politicians don’t say stuff like that.

Politicians have one job – to get re-elected. That is literally all that matters.

I mean sure, we can tack on a whole bunch of secondary objectives. Like, I don’t know, stopping a global pandemic from carving through the population and the economy like a wrecking ball.

But these things are always secondary.

(Actually, raising money from their corporate mates is probably secondary. All these other things are tertiary.)

And so if you’re holding your breath waiting for an apology, you won’t catch coronavirus, but you will still probably die before you get one.

But of course, Victorians are angry. Andrews is going to cop a thrashing in the polls.

I mean, no he’s not!

The majority of Victorians – 53% – think the government is doing a “good” job!

Seriously, what planet and/or state are these people living in?

Finding ourselves at the far end of the earth gave us a massive head start. We had a pretty good sense of what was coming before it got here.

And the Good Lord had provided us with a massive great moat around the entire country, just to make it even easier.

And so our governments had one job – making sure the quarantine program for re-entry was water-tight.

That’s it.

It was just one job.

So in what universe do 53% of Victorians think the government is doing a ‘good’ job?

“Yeah, they really muffed the pandemic thing, but their work on developing planning protocols for temperate wetlands has been exceptional.”

And look, don’t get me wrong. I’m proud of Victoria. I’m proud of the way people are putting their heads down and getting through this. I’m proud of the people working hard on the front-lines.

But I’m really trying hard to hang on to the skerrick of faith I had left in our political systems. I really am.

Stay stoic Jon. Stay stoic.

JG.

I’m going back to my roots to learn how to handle Melbourne’s lockdown.

I’m not sure how many of my readers across the country know this, but I’m in Melbourne.

It’s the city I call home. It’s where I grew up. It’s where we base the whole Knowledge Source operations.

And we’re in lock-down. We’re in mandatory mask town.

I’ll be honest, I’ve been having a bit of a rough time with it. It’s not just that there’s the all the inconveniences that comes with a global pandemic. It’s mostly knowing that it all could have been avoided if we hadn’t tried to skimp a few bucks an hour on hotel security by employing uber drivers and lollipop ladies.

(And I’m not trying to poke fun at the guards themselves here. I would have done the same job with the same training.)

But that one little mistake and wham – Victoria’s on a runaway pandemic train.

And given the fate of the entire state – and perhaps the entire nation – seems to have swung on that one bad decision, I’ve been doing a lot of woulda, coulda, shoulda. I’ve been doing a lot of “if only’s…”

And then I caught myself.

There’s only one place that this kind of thinking ends up: misery.

This is one of the key teaching of Stoicism.

I’m sure you’ve probably heard of Stoicism. It’s a philosophy. My people came up with it. (The Greeks).

Stoicism is funny. It has huge brand recognition, but very few people understand the actual details.

Most people think Stoicism is just a commitment to being ‘stoic’ – and by that they mean, impassive, unemotional, unmovable.

In that sense, people think it’s a bit of a grim philosophy. It’s great if you’re a Spartan warrior, staring down the full might of the Persian army.

But it’s not so great if you’re a comfortable graphic designer living in the inner city with a couple of kids.

But this is the key misunderstanding about Stoicism. It’s not about being unemotional. It’s about being consciously emotional.

That is, it’s about carefully watching your thoughts and attitudes so you don’t get pulled into misery traps.

A lot of thinking leads to misery. Many types of misery are only possible through thinking.

If we’re not engaging with our thoughts, we’re leaving a lot of our emotional experience of life up to chance.

In that sense, Stoicism is a tool kit for consciously engaging with your thoughts, and consciously engaging with your emotions.

And the ideal isn’t some numb emotional state. It’s actually a light joyfulness.

But people don’t get that. So yeah, Stoicism has some branding work to do.

Anyway, one of the key insights (and maybe I’ll share a few over the next few weeks – it’s certainly a challenging time for a lot of people) – one of the key insights is that we shouldn’t get too caught up on the things we can’t control.

The ancient Stoics drew a clear line between the things we can control and the things we can’t.

And basically, they said that if you can’t control it, then there’s just no point worrying or complaining about it.

So right now, they’d say, “Jon, stop worrying about the Pandemic. Stop worrying about what Dan Andrews should have done, or what the government should have done, or China should have done.

It’s just not useful. It doesn’t make you happier.

Focus on the things you can control. What can you do right here and right now to make your situation better.

If you focus on these things – if you put energy towards these things – then happiness will naturally follow.”

I’m simplifying this. There’s a lot more Stoicism that some simple-minded ‘Don’t worry, be happy.’ I am going to need to unpack it.

But as a general war-rule, keep your energy and attention focused on what you can control. Stop yourself dwelling on the things that are beyond your control.

If you can manage just this much, you will be a whole lot happier.

JG.

Banks are nervous, and data shows a lot of deals falling over…

2020 hey? So much new. So much unprecedented. It’s the year that keeps on giving.

So let me give you the latest phenomenon: Boomerang Properties.

A boomerang property is a property that gets sold, but then ends up coming back on the market because the deal falls over – most probably because the buyer can’t get finance.

REA group – the mob who run realestate.com.au – reckon that there’s been a surge in these boomerang properties:

Residential property deals are falling over and homes are being readvertised amid COVID-19 uncertainty and financial belt-tightening.

Data compiled by realestate.com.au shows a growing trend in the number of ‘under offer’ listings being readvertised, prompting speculation that deals are falling through because of tighter lending restrictions by the banks and home buyer cold feet.

Week-on-week figures from realestate.com.au between January and July 2020 shows an increasing number of boomerang homes nationally– that is, properties returning to the market after having an offer accepted.

While there is no requirement for agents to notify realestate.com.au of confirmed sales, the available data highlights a trend in properties transitioning from ‘under offer’ back to ‘for sale’ rather than the site’s ‘sold’ listings.

Banks tighten up as buyers back away

At the start of the first COVID-19 lockdowns, there was a large spike in the number of ‘under offer’ properties across the country that went back on the market with a jump from 13.08% to 17.97% in the week commencing 23 March 2020. The following week the number dropped to 13.76% before decreasing even further but has gradually risen since mid-April.

I’m not sure this is a problem with buyers. I’m not fully buying the “buyers getting cold feet” story.

I think its much more likely that it’s a case of banks getting cold feet in an uncertain economic environment, as REA note:

… We are finding that banks are well-capitalised and they’re not under pressure, but they are nervous about the situation, particularly the unemployment situation,” Ms Conisbee said.

“On one hand, they are lending and they have enough money to lend but they’re being very careful about who they lend to.

“The banks are having to look very carefully at a person’s ability to pay back their loan and in the situation where unemployment is rising, they would be looking very clearly at an individual’s employment situation. I can’t see that changing any time soon.”

To me, that seems likely to be a much bigger part of the story.

We also know that banks are prioritising refinancing over new lending, and there’s been a boom in refinancing that has pushed new borrowers to the back of the cue.

Oddly enough, I reckon all this creates room for potential upside in the market.

The bank’s fears are driven by uncertainty. Buyers want to buy, but the banks lack confidence.

Sooner or later, as the economic picture becomes clearer, bank confidence will return. With that, lending will return.

So what we’re doing now is creating a backlog of demand – buyers who want to and are ready to buy, but just can’t.

Once they get a green light, we might find demand is stronger than we thought.

JG.

MMT is going mainstream. This changes everything.

Over a year before Covid hit, I was telling my readers about a seismic shift in economics.

And I still reckon over the next ten years, this will hands-down be the biggest issue for property investors going forward. 

For better or worse this revolution has a name: Modern Monetary Theory, or MMT.

It’s possible that you’re starting to see this term come up more and more.

The ABC, in fact, have done a couple of pieces on it recently. Finance legend Alan Kohler has been giving it some air time, and then last week, they published this primer on it.

(I’d brag that I’m a year ahead of the ABC, but there’s not much pride in that.)

They do do a pretty good job of explaining the basics.

And remember that the basics are that debt and money printing are not necessarily bad.

They can be bad, but a lot depends on the context.

But in the right context, governments can print, borrow and spend, without disastrous consequences.

It’s a little more nuanced that that. Read the article or my original piece if you want a good primer.

But anyway, what’s interesting here is that the idea is slowly going mainstream.

The ABC did make a couple of mistakes, and these mistakes shine a light on just how much confusion is out there.

First, the piece opens up with a picture of money growing on a tree, with the caption: Theresa May famously said there is no “magic money tree”, but MMT theorists say she is wrong.

Yeah. No totally. That’s totally what MMT theorists are saying. There’s a magic money tree.

It comes from the seminal 1968 piece in the Harvard Economic Review, “There’s a magic money tree. A unicorn told me,” by R. Strudthrup.

That is not what they are saying. They fully admit that in the wrong circumstance, money-printing can be highly inflationary and very dangerous.

But we’ve been so conditioned around infantile arguments – All debt is bad. All money printing is bad, etc. that it’s really hard to see what a limiting mental framework it is.

And it’s incredibly frustrating to argue with.

It’s like someone says, “All apple are green!”

And you say, “I don’t think it’s true that all apples are green.”

And they say, “Hey guys, check this idiot out. He doesn’t believe in green apples.”

So that’s one thing holding this economic revolution back.

The second is the way the ABC talks about MMT “proponents”.

It’s a mistake to think about MMT in public policy terms. It’s not a political philosophy. It’s not a position about how to run the economy.

It seeks to be a description of what is. It simply attempts to describe what’s actually happening in the economy with more nuance and detail.

And in that sense, its wrong to talk about proponents the way you might have flat tax proponents.

Take myself for an example. Even though I think MMT does a great job of describing what’s happening, I don’t consider myself a “proponent, no more than I’m a ‘proponent’ of gravity. 

And remember, we already been living in the MMT era for over ten years now. American has been running a massive money printing experiment since the GFC.

It’s already happening. The only question is about whether we, as governments but also as the public, do it consciously or not.

But mark my words, we’re not going back. We’ve had the money printing presses on full-bore, and I think people and governments will decide they like having money to throw around.

And that’s not to say there won’t be problems. There will.

Like asset-inflation. After the GFC-era money printing, the American stock market tripled in just over ten years.

Are we ok about that? It’s happening. Are we ok about it? Are we comfortable with the political ramifications?

Who knows. Most people don’t even know it’s happening.

And so my prediction is that the money printing machine will remain on, MMT or not, and the price of hard assets will boom.

Mark my words.

MMT will define the new roaring 20s.

JG.

Could turning office towers into apartments be the solution we need? No.

So things are getting a bit “panicky” in Melbourne. It’s getting a bit edgier.

And now they’re talking about turning empty offices in Melbourne CBD into apartments in an attempt to ‘revitalise the city’.

With business leaders and the Melbourne City Council concerned that WFH could become permanent, they have devised a plan to convert empty office space into apartments in a bid to revitalise the CBD:

Empty office towers would be turned into apartments in a dramatic effort to bolster Melbourne’s ailing CBD.

White Night-style projections would also be beamed on to heritage landmarks and big discounts offered to lure locals to multicultural precincts.

A high-powered committee tasked with revitalising the CBD will discuss the proposals this week…

Lord Mayor Sally Capp, who has formed the advisory board, said converting empty offices into residential buildings could revitalise the city as more people continued working from home and shopping online even when the pandemic was over…

“This global pandemic has knocked us for an economic six,’’ Cr Capp said…

“We can stimulate economic activity, create jobs, build more homes and boost the number of people in our city by finding ways to encourage retro-fitting of commercial buildings into residential accommodation.

“This will also ease the burden of the housing shortage…

Some workers aren’t expected to return with the commercial vacancy rate to hit at least 10 per cent.

I think it’s a bit telling that authorities are talking about retrofitting a whole bunch of offices as being a Covid response.

How long does it take to retrofit an office tower? Flipping ages, would be my guess.

So how long are they expecting Covid to stick around? How long are they expecting the hit to the economy to last?

Again, flipping age would be my guess.

And you’ve got to wonder about the sense of this anyway.

Because one thing Melbourne doesn’t have now is a shortage of inner city apartments.  From the AFR:

…According to City Residential Real Estate, there are nearly 27,000 apartments for rent in Mebourne’s Docklands, Southbank and inner Melbourne, an increase of about 500 in the past week.

That 27,000 sure sounds like a lot, but is it?

Yes. Yes it is. Check out the vacancy rate in Southbank:

Or Melbourne CBD:

Or Docklands:

There’s an abundance of options there for apartment renters already. I don’t know that adding to this stock should really be a public priority.

Because it means that “revitalising” the CBD, would probably just mean “de-vitalising” Southbank.

I’ve been warning people about these high-rise apartments for close to six years now.

And broader market fluctuations aside, the real challenge with apartments is that it’s very hard to do anything to them (ever heard of someone adding a granny flat to an apartment), and if there’s a lot of stock on the market, it’s very hard to differentiate your property from the pack.

That means that when the market turns, like it is right now, there is very little you can do. You are really at the whim of the market.

Tough lesson to learn.

But tough lessons? 2020’s got a bunch of them.

JG.

I think most people are way to shy. This is why.

So like a lot of Aussies right now, I’ve been spending a lot of time in the garden lately, and I had an epiphany:

Gardening sucks.

I mean sure, some people love it. Good for them.

But it’s not for me. If I want to get my hands dirty, I’ll open a spreadsheet and crunch the numbers on my next deal.

I don’t ‘literally’ want to get my hands dirty.

But one of the things I’ve found fascinating is the little turf war that is my garden.

The prize is obviously sunlight. Everything is jostling for space, fighting for its little patch.

Now one thing I’ve noticed about plants is they’re not big on manners. The rose bushes aren’t saying to the gerbera’s, “Oh excuse me, do you mind if I grow just a little to the left here. Thanks so much. Ever so kind.”

No. They just do it. They just muscle in where they can. They grow first, see if they can get away with later.

And this is life in the garden. It’s a turf war. You’ve got to fight for every minute of sunlight you get.

(Until you get Uncle Jon on a whippersnapper screaming, “Pull your head in Grass!”)

But this is the fundamental nature of existence.

Not just in the plant kingdom. But everywhere. You’ve got to fight for your spot in the sun.

I think as humans we find ourselves caught between life in two worlds.

In the material world, we know that life is a bun fight. We’ve got to scrape and hustle for everything we get.

If we sit back and rest, even for a minute, then some rose bush with tickets on himself starts muscling in on your spot.

So we get that.

But we also live in a social world.

In the social world the rules are a little different.

In the social world, it’s a team sport.

Early humans managed to evolve on the back of a diet rich in woolly mammoths because they were able to work in teams.

In the social world, we know that it’s in our best interest to be a team player.

Now the challenge for anyone with a foot in two worlds is balance.

How do we find that sweet spot between muscular self-interest, and broad-sighted altruism?

Wish I had an answer for you there buddy. But I don’t.

But one thing I would say is that I think a lot of people are far too shy when it comes to being a champion of their own interests.

They’re much too shy about standing up for their place in the sun. Or they’re just too squeamish about getting their hands dirty – really dirty – rose blood all over them.

And as a result, they waste their days scuttling about in someone else’s shadow.

So I don’t know who needs to hear this, but stand up. Fight for your place in the sun.

This is just how this world works. Deal with it.

Grab your spot in the sun and defend it with everything you’ve got.

JG.

America is still the country to watch… but it’s like watching a train wreck.

Good news. Disney World has reopened!

Great stuff. Must mean that the US is on top of things, right?

Well, actually, not so much.

The number of daily cases is on the rise.

I don’t know if you’ve been tracking this chart like I have (The prospects for the global recovery swing on what happens in America, IMHO), but this is grim.

I can remember watching it at the beginning of June, when the new wave was building, and we were all anxious about whether we’d get back to April’s peaks.

But nup. Blew that out of the water. New Cases are on a break away and don’t look like slowing down soon.

That’s starting to have its impact on the health system. Hospitalisations are starting to rise again. We’re still aways off April’s peaks, but definitely going in the wrong direction. 

And ultimately, the only chart that matters is this one – the daily death rate. That’s three days in a row just shy of 1,000 deaths, and again, moving in a very worrying direction.

That daily death rate is key. Everything changes if that gets away from America again.

And I reckon you could write-off any prospect of a second term for Donald Trump.

I still think this is one of the biggest threats to the global outlook.

America is a mess of contradictions, and there doesn’t seem like there’s a clear way forward.

Many people in America want restrictions to ease – they want to go to Disney World. (Sorry, am I being unsympathetic? Well, I can’t go to the footy, so sue me.)

But they want restrictions to ease and for economic activity to get going again.

But we know that economic activity causes infection.

Investment bank JP Morgan have modelled a correlation between spending and new cases:

JPM has observed a correlation between spending levels and the subsequent spread of the virus three weeks ago, and it has remained strong over the last three weeks. Indeed, to date the bank finds that states with higher levels of spending—especially card-present restaurant spending—have seen more rapid growth of the virus in subsequent weeks.

To summarize, JPM has documented two important facts about the interaction between spending and the spread of the virus—higher spending levels have predicted the spread of the virus, but spending levels have not fallen much in the states where the virus has spread most rapidly recently.  These two facts raise the concern that behavior in the hardest-hit states has not changed enough to stem the spread of the virus going forward.

That’s not partisan ideology. That’s fact. (Yes, I get my facts from billion-dollar investment banks whose only interest is money. You can trust them on some things.)

But this is the bind America faces. If they reopen, they reopen the way for Coronavirus to spread.

But people want to go to Disney World.

Good luck, America. You’re going to need it.

JG.