Life finds a way, says Pimco ‘s Neel Kashkari

There are ways for equity investors to keep buying into the asset class while still managing future risks better, argues Neel Kashkari, head of global equities at Pimco.

I bought a cabin in a forest high in the Sierra Nevada Mountains in 2005.

Surrounded by pine trees and natural beauty, it is a peaceful getaway from busy life. The cabin is fairly remote at an elevation of 6,500 feet and almost 10 miles from the local town. My closest neighbors are deer, birds, chipmunks and an occasional bobcat, coyote or bear.

This is the first and only home I’ve ever owned. Even though it is not fancy, it was a major financial commitment for me – the biggest I’ve ever made. A former engineer, I read everything I could find about the challenges of owning a home in a remote location.

Although it is connected to the power grid, water comes the old-fashioned way: from a well that runs 500 feet underground into a six-foot tall, 2,500-gallon storage tank that feeds the house. My research highlighted the risks that come with being so distant: Septic systems can freeze. Well pumps can go bad. Unlike a typical house, if power gets knocked out, you also lose your water because the pump can’t run.

With all of my research I concluded that these risks were manageable. I even created a checklist of procedures I would follow every time I visited the cabin to manage them, such as shutting off the water when I leave, using Ridex in the septic system every month and checking the water storage tank each visit.

It’s been six years now, and extreme cold winters and power outages haven’t been a problem. With the help of a back-up generator, my vigilance paid off. I considered and prepared for all contingencies.

Or so I thought.

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