Old People and Understanding Risk

Retire with dignity before this happens to you

Retire with dignity before this happens to you

In the course of my current job (think investing gazillions in real assets, i.e not stocks or bonds; I don’t want to get into too much detail to protect my privacy and confidentiality), I sometimes become privy to the weirdest investment risks.

Take the following conversations I had with an executive (“Exec”) when I was looking at investments related to senior’s housing and assisted living facilities. To get the full effect, play the following conversations in your head with giving the Exec a hint of a British accent, someone who moves the way old people fuck (be warned, this will be a recurring theme) and giving him the personality of that person who doesn’t directly answer the question that was asked but goes into all shades of background before finally getting to the point. To be kind to the dear readers, I will start the conversations more or less midstream and cut out the tangents.


Exec: “… and he was the head of surgery at the hospital. Now he’s moved in here and its been a big change of pace for him. You can imagine that his previous position was pretty hectic.”

Zuuko: “I guess. I still don’t see how that had to with my boss getting a call at some godforsaken hour in the morning and getting complained to about him.” How the little old ladies tracked my boss’s phone number was a mystery.

Exec: “Well, you see, we try to keep their minds occupied. It slows down Alzheimer’s and other mental diseases. Given his mental faculties, we had to give him the most complicated task we could find. So we gave him the job of organizing the library in this senior’s facility.”

Zuuko: “Go on.”

Exec: “Of course the first thing he did was throw out all the Harlequin romance novels and that was a big deal to some of the little old oldies in the facility. He thought that these novels were not “fit for human consumption,” as he put it.”

Zuuko: “So, we had a rebellion on our hands?” Pitchforks and knives wielded by an army of little old ladies.

Exec: “Quite so.”

Sadly, this would not be the last time the horny-ness of little old ladies would be brought up as an investment risk. Needless to say, the rebellion won and the Harlequin romance novels were brought back.


Exec: “…and so you see, its VERY important to the families that they know that their loved ones are not forgotten. But for privacy and space reasons, we try not to barge in on the seniors.”

Zuuko: “Yes. Yes. How is this relevant to my question; what is that hinge-thing?” pointing to the top left corner of a door frame to a senior’s apartment, where a little black hinge is resting against the door. Every apartment in the facility had one.

Exec: “Watch what happens when I open the door.” Proceeds to open the door and the hinge swings down. “At night time, the night watch will flip every hinge up and rest it against the door.”

Zuuko: “Ok. So what’s its purpose?”

Exec: “When the morning watch comes in, and they notice that a hinge is still up, they will knock on the door to make sure that the resident is ok. If the hinge is not down, it means the resident hasn’t opened the door since last night.”

Zuuko: “Ahh… making sure the resident hasn’t died in the ni…” (I trail off; mentioning death in a senior’s facility is a faux-pas of sorts).

Exec (embarrassed and furtive; he relaxes after making sure no one overheard me): “er… yes.”

Zuuko: “What do you tell the residents its for?” Given my faux-pas, its a slightly obvious question. The hinge is a physical reminder that death is looming.

Exec: “Well, the residents know its exact purpose. As I said, its comforting to them and their families to know that they won’t be forgotten by the staff and that there are systems and processes in place.” He’s getting a bit snippy with me, what with the faux-pas and my complete inability to connect his sentence meanderings into a concise whole.

Zuuko: thinking “Listen asshole, if you can’t give me a precise answer, how the hell am I supposed to know what’s going on?” verbally “That’s good. That’s good. It’s good that we’ve devised a system of checking on our residents every morning without invading their privacy.”

Exec: “Indeed. Did you know that the vast majority of deaths occur in the morning? Usually when the residents are in the bathroom. The thing I like about this procedure is that we’ve minimized the time between when the staff check to make sure the residents are safe and the highest probability of time of death in the day, statistically speaking of course.”

Zuuko: “Of course.” pretending to also very much be fascinated and proud of the system.

What I was actually thinking was about my secret fear of death… or rather not so much death itself, but dying on the toilet. I can’t imagine a more shameful way to die. I pray that my body doesn’t expel the ghost, as its in process of expelling last night’s toast.


Exec: “… as you can see, its not because the remaining spouse doesn’t have the means to afford their unit and is forced to leave. Usually, the wealth of the couple is not the issue.”

Zuuko: “So then, I would think that if a spouse dies and the remaining spouse doesn’t want to move out, they might downgrade to a one-bedroom apartment, from their two bedroom. So why are our one-bedrooms having such high vacancy?”

Exec: “Usually people move here after one of their spouses is already dead. Not a majority but a sizable chunk. Our biggest risk is when our residents get married. Before, there are two apartments being rented. But after marriage, the couple usually moves into one suite and we lose the rental stream from one of the apartments. So, the couple usually moves from two one-bedroom suites into one two-bedroom suite.”

Zuuko: “Yeah but seriously, but how often does that actually happen?”

Exec: “More often than you would think, obviously.” I detect a note of sarcasm. “It would have been ideal if our building had more two bedrooms rather than one-bedrooms. We would have maximized our rental stream that way. That’s why the building across the street always seems to perform better.” I detect some sullenness in his voice. The point he’s trying to make is that its unfair for us to whine about his underperformance, when his building is clearly inferior to the competition’s from a structural point of view. Note to self: If we want to buy more senior’s buildings, make sure they have a lot of two-bedroom units. Clearly the better investment.

Zuuko: “So, that’s why our two bedrooms are always full?”

Exec: “Yes. And might I add, the little old ladies get very excited when a young buck moves in.”

Zuuko: “Define young buck.”

Exec: “Someone in their late-60s, early-70s.”


As you can see, investing is a lot harder than it looks. As my two readers know is a bit ofa pet peeve of mine and for the life of me, I can’t understand other pros who make investment decisions without fully understanding the precise nature of the risks they’re hoping will translate to high returns. Statistics and models have their uses, but they are limited and they are no substitute to knowledge and understanding of the actual investment itself. Its like having sex and thinking that a condom will protect you against all the dangers inherent in that activity.

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9 Responses to Old People and Understanding Risk

  1. zolltan says:

    Picture doesn’t show up

  2. zolltan says:

    Also, “I pray that my body doesn’t expel the ghost, as its in process of expelling last night’s toast.”

    groaaaaan. You should be ashamed, dude… How long d’you think you can keep yr anonymity with stuff like that?

  3. Pingback: New Year, Old Reflections | Rated Zed

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