Author Archive

Christopher Peck

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.

Data vs. Drama – A Cautionary Tale

Factfulness by Hans Rosling

FACTFULNESS: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think
By Hans Rosling
Hardcover: 352 pp. Flatiron Books

The conundrum about this book is that it really should be read by those folks who never read books. You know who I’m talking about. The late Hans Rosling, who died in 2017 after an impressive career in education and public health, urges us to let the data tell the story, rather than imposing a narrative based on our “dramatic instincts.” He highlights ten ways that our instinctual bias and craving for drama, similar to our craving for sugar and lethargy, undermine our wellbeing.

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Post-Disaster Lessons for Resilient Investors

My family and I survived the Northern California firestorm of 2017. We were incredibly fortunate; unlike many our friends and residents in our area, we did not lose our home or livelihood. At the peak moment of fear, the fire came within 3,400 feet of our home. I spent hours wetting the roof, talking with panicked neighbors, and gauging the wind and the smoke. We got ready to evacuate by packing the car, letting our chickens loose, and making peace with the thought of starting over. Thankfully, some can-do neighbors with tractors plowed down the fire front, and we were spared.

Months later, our lives returned to normal. But as a planner, I am surprised at how unprepared we were when disaster arrived. We had planned for this. We’d held meetings with family and neighbors, checked on each other’s stores of water, food, and supplies, and located the water and gas shut-off valves for each home. We had back-up phone numbers of relatives, battery packs for our phones, and emergency radios. But still, we were missing critical elements. I share these insights now, with the hope that they will encourage others to prepare well in advance of fire season.

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Natural Investments Expands its Ownership

NI Partners 2017

We have some exciting news to share. This year, Natural Investments, LLC (“Natural Investments”) made some changes in the composition of its ownership. Previously, Natural Investments was equally owned by Hal Brill, Michael Kramer, and Christopher Peck. We are pleased to announce that Natural Investments is now owned by Hal Brill, Michael Kramer, Christopher Peck, James Frazier, Malaika Maphalala, and Greg Pitts. Michael Kramer and Christopher Peck still own the same percentage they owned previously. Hal Brill sold a portion of his membership interest in Natural Investments to James Frazier, Malaika Maphalala, and Greg Pitts, each of whom now owns 5% of Natural Investments.

The managers of Natural Investments remain the same. Michael Kramer and Christopher Peck have been managing members since 2007 and will continue in that role. The new owners have been Investment Advisor Representatives (IAR) with Natural Investments since 2011 for Greg Pitts, 2009 for Malaika Maphalala, and 2008 for James Frazier. Hal Brill is still an owner and an IAR, providing continuity to Natural Investments.

We expanded ownership to help sustain the long-term continuity of Natural Investments.  We believe that these changes will not alter the control, management or vision of Natural Investments. All of us continue to be resolved to build a better future through a transformation of the investment world.

Please let us know any questions you might have. Feel free to contact Christopher Peck through our contact form.

Sincerely,

Christopher, Michael, Hal, James, Malaika, and Greg

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Catastrophe Planning in Real Estate

As Robert Muir-Wood says in The Cure for Catastrophe: “Natural disasters are in fact human ones: we build in the wrong places and in the wrong way, putting brick buildings in earthquake country, timber ones in fire zones, and coastal cities in the paths of hurricanes.” Global climate change is already amplifying freak weather events, adding tricky considerations to today’s real estate decisions: unprecedented droughts, raging wildfires, and superstorms with their disastrous floods.

How is the smart, responsible homebuyer/homeowner to reduce exposure to such risks? No one would disagree that protecting one’s life, family, and assets is a worthy goal, but planning and preparation don’t come easily to everyone.

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Appreciating Appreciation

Recently I talked with a client who is considering buying a house in Sonoma County. As you might know, the housing market here in the Bay Area is variously described as “crazy,” “red hot,” “ridiculous,” and “divorced from reality.” A similar situation prevails in many cities and towns across the country. Should a smart home buyer take the leap now or wait and hope for prices to drop? How do you evaluate whether renting or buying is the best strategy?

The comment sections of innumerable personal finance blogs are strewn with the wreckage of the battle—no, the war—around this question. It’s nearly as hot as the debate over whether to pre-pay a mortgage or not (don’t get me started). As a math major, I like to look at the numbers myself, play with calculators, build my own spreadsheets. After hours of work on this my definitive answer is “it depends.” Seriously. It depends on a bunch of factors, but actually pivots on one big factor.

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Location. Now more than ever.

Climate change is not a Chinese-created hoax to kill American manufacturing. It’s real, it’s happening now, and all of us need to adapt. Regardless of which climate scenario you think is likely, be it 1° or 2°C in the next 50 years, sea levels will rise, it will be hotter, there will be more droughts, more flooding, more wildfires, more stress, and after a list like that, likely much more drinking. I’m not suggesting you invest in Seagram’s to compensate, though buying a houseboat might make some sense. If you’re going to buy a house, and you know location is the most important purchase factor, what do you do when one of the key elements of location, climate, is changing rapidly? Can you anticipate and plan around climate change?

The real estate cliché about “location, location, location” usually refers to issues like being close to good schools, close enough to work, near family. Clearly these are still important but looming climate change is a disaster on a scale that will make them seem quaint. For many of us, real estate is the biggest piece of our net worth so getting it right is crucial.

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Please don’t buy a second home

Sometimes when folks read or hear my recommendation for buying a house they think, “If one is good, two should be better, right?” Well, sorry, no. Please buy a primary residence for you and your family (be smart about it) but also please don’t buy a second one. The challenges that Jim Collins outlines for personal residences as an investment are surmountable for your primary home, but are very difficult to overcome for a second. Collins suggests renting is better than buying, but I think with smart choices, as detailed in the previous article, buying is the better choice. But for a vacation home, renting is definitely better than buying. Why?

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Not “why” but “how” you should buy a house

A couple popular bloggers have been making the case recently against the idea of buying a house. Sure, there’s overwhelming pressure in the US of A to settle down, buy as big as you can afford, live the American Dream—so some pushback seems reasonable. James Altucher and Jim Collins (the personal finance blogger, not the Good to Great author) have both written persuasive posts about “don’t get sucked in” to the real estate scam. Collins is blunt: “Why your house is a terrible investment.” It’s thorough and humorous, but I still think he’s wrong. But why?

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Time for climate adaptation?

It’s us. We’re responsible. Well, not us directly exactly, but our internal combustion engines and our land clearing and the flatulent animals we love to eat and our need to be somewhere other than where we are right now. I’m talking about the most important issue of our time of course, the intractable and undeniable problem of climate change. The scientists call it anthropogenic climate change; ACC in Acronym.

For years many of us have been thinking and writing and doing what we can to reduce emissions of greenhouse gases: eating local food, driving less while driving an efficient car, making our homes more energy efficient. Ten years ago I even wrote in this newsletter about how we could store all of that extra atmospheric carbon in the soil and how good that would be for agriculture and ecosystems and water as well as bringing the climate back to what our grandparents knew. Collectively all these ideas are known as “mitigation.”

But a new strategy has emerged, recognizing that all of those years of thinking and writing didn’t actually generate much doing.  So now it’s time to consider “adaptation.” How can we adapt? Thankfully someone has been working on this, and I’m delighted that it’s happening right in my backyard.

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Utility death spirals and the future of energy

“Utility Death Spiral?” This provocative title jumped off the agenda page at the recent SRI Conference. What could that mean? Well, with a title like that, I knew I had to attend, though the session description’s litany of tech terms—gigawatts, levelized cost of energy, photovoltaic grid parity, net metering time of use—had my eyes going a little blurry. Spending an hour with a bunch of energy nerds turned out to be the standout presentation of the year for me.

A year ago, Amory Lovins and the team at Rocky Mountain Institute (RMI) released a report called “The Economics of Grid Defection” that highlighted the forces and timing that will drive commercial and residential electricity users to unplug from the grid. Lo and behold, the time is almost here that solar photovoltaic (PV) in combination with new battery technology is/will be cheaper than staying plugged in to the grid. Wow, that changes things! Ever since the initial boom in the 1970’s, PV systems with batteries have been only appropriate for far-off-grid folks, people who lived a mile or more from an electric line. But now, with the cost of PV panels dropping dramatically, coupled with the slow but accelerating reduction in the price of batteries, even someone living in a city house that’s already connected to the grid might choose to unplug. In some parts of Hawaii, the time has already passed—folks there are unplugging, not just to “go green” but to “save green.” In California and New York the report’s most optimistic scenarios suggest it could make economic sense to “defect from the grid” in as little as two years! In places with lower electric rates, including Kentucky and Texas, the time frame is much longer, though well within the thirty-year planning scope of electric utility infrastructure development.

A key factor that will drive “grid defection” is the ongoing monthly cost to stay connected to the utility and the grid. In our current net-metering model, once businesses and homeowners are generating sufficient electricity to cover their own use, then they are using the grid as a giant battery. When the sun is shining the PV system is pumping energy into the grid, and when it’s dark the user is pulling energy out. As the cost of using the grid as a battery increases and the prices for an actual, at-home battery system decreases, users start to look at using their own batteries to perform the same function. If it costs $10 a month to have the convenience of the grid, for example, but it only costs $5 a month to finance a battery pack at your house, well, you can see the appeal—especially if utility fees rise as their customer base shrinks.

What does all this mean for investors?

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