September Update: Electricity Reduction, Net Worth, Wiseguy, Euro

My work picked up in September, and life felt like it regained a some sense of normalcy. I was concerned with the ongoings at my job, and there were work politics and friendships to manage. Since I'm not traveling, I could devote myself to my hobbies and to fitness. My wife took new bold steps in her business and is attracting new better-paying customers.

With a moment's reflection, it becomes clear that things are not normal. For one example, we've done a good job lowering our electricity usage by reducing the temperature of our showers. Lukewarm is the best description. We've relegated using our clothes drier to being emergency use only. I've tuned our Synology to only turn on and back up our computers at night. I wake up and immediately unplug the chargers in my bedside table, since they're mini computers, drawing a small current at all times. Lights come on and are shut off quickly. The fridge and freezer are less cold. The kitchen water heater isn't as hot. I cook food in bulk and eat it throughout the week.

We also haven't used our radiators at all yet. It's starting to get chilly in Germany, but we are resisting using them until it's absolutely necessary. We've always kept hot water bottles, and so we've used those when the chill was too oppressive.

For our efforts, our electricity was reduced to 193.4 kWh in September, down from an average of 259.75 kWh per month in the first half of 2022. That's about a 26% reduction. As the weather cools and the sunshine becomes ever shorter, our usage will inevitably creep back up, but I continue to look for other ways to reduce our demand here.

Net Worth Changes

Image: our net worth in a stacked bar chart. The dark blue line is the net sum of assets and liabilities.

Our net worth fell 3.66% in USD and 1.89% in EUR to $117,080 and €119,469 respectively.

For this month, it was entirely due to declines in our stock and ETF portfolios. There was one area of - short term - good news, when Store Capital agreed to be bought out at a premium to what I paid, which brought in a sudden burst of profit. However, this could not counteract the declines elsewhere.

Cash

I continue to hold what are, for me, substantial cash positions. Additionally, my IRA remains in a money market fund as the trend following rule triggering a purchase has not been met. As interest rates rise, these sums bring in ever greater monthly income. However, that is not enough to counteract the S&P 500's regular down 1% days in any meaningful way.

Wiseguy Portfolio

Image: The Wiseguy Portfolio (green line) vs. S&P 500 (red line) in September

The Wiseguy Portfolio did what it should have in September, but it was cold comfort. It "only" fell by 8.51% vs. the S&P 500's 9.87%. I continue to add to it, however, and I add to that which has done most poorly. In October, I added exclusively to the international small cap value fund, since that had been the most battered. In September, unfortunately, we didn't have the income to make a purchase.

Euro

The euro continues to decline, which leaves me conflicted. On the one hand, I'm worried because I earn euros, and although a $500 addition per month to the Wiseguy Portfolio will likely be enough on its own to make us wealthy over time, if $500 per month becomes out of reach, my plan may come undone.

Image: Our net worth in euros over time. Notice the lower volatility.

On the other, I feel ganz schön clever for having all these dollar assets, because in euros, our net worth has been much more stable than the dollar equivalent. My US bank accounts have grown in euros over time by just sitting there.

As I said. Conflicted.

Life Goes On

Despite all the worries, we're trying to live our lives as happily as we can. I have lived without hot water entirely at one point in my life, and it had no effect on my happiness. Ultimately, relationships are wealth, and we've had some social occasions this last month that reinforced that truth. Additionally, we expect my sibling to visit in Christmas, which excites me to no end.

It's a frightening time, but human life is more than the numbers and more than the creature comforts.

Until next time, stay healthy and hug those who need hugging.

Update June 2022: Bear Market, Options, Life in Germany

In June, our net worth fell by 5.93% in USD and 3.04% in EUR to $115,344 and €110,695 respectively. Liquid net worth was at $83,151/€79,800.

The Bear Market

The S&P 500 officially entered a bear market in June, but this has felt like a bear market to me for awhile. I was holding stocks like Netflix, Facebook, Amazon, Paypal, and Cloudflare from 2021 into 2022, and they're down much more than 20%. It's funny: I knew holding that stuff was really risky, but I couldn't see a way out. I didn't want to sell and pay taxes, so I just held and watched money evaporate. Dumb.

However, even when I did sell, I'd often buy shares in a different company that hadn't started falling yet but inevitably would. For example, if I sold Cloudflare or Square I'd put the money in Amazon. So there was this sense that there was nowhere to run: stay in the name and lose money or sell to buy something "safer" and still lose money.

The names in my individual stock portfolio have gotten progressively more boring. One advantage is that they aren't nearly as correlated, even though on the really bad days, they still all fall together. But at least it's not one big tech trade, which rises or falls based on how the world is viewing tech as a whole.

Painful as this has been, I have learned a lot:

• Be careful of correlations.
• Valuation eventually does matter.
• Paying taxes is better than a crash.

Lastly, this experience has convinced me that most of my money should be in a basket of diversified ETFs, where single stock risk won't wreck my day.

Options Trading

In June, I bought and sold my first options contracts. This is small potatoes, but I bought a call option and sold it the same day, and I'm holding on to a few puts on the overall stock market.

I've long wanted to be able to buy this kind of insurance on my portfolio, but I just didn't follow through with my broker. That said, because it's new, and because it's risky, I don't want to commit a lot of money to this. I remember on Reddit's /r/Wallstreetsbets when there were a few weeks of easy gains for the guys who bought weekly calls on SPY. Inevitably a bunch of other people followed and bet huge sums only to see their options expire worthless.

I recognize the risk that goes along with options trading, and I'll size accordingly.

Life in Germany Right Now

The other day, my wife and I along with a group of others assisted a Ukrainian family move in to a new home. They obviously don't know anyone, so organizations have sprung up to help house them. The family, like many such families coming to Germany, consisted of a mother and her children: the men tend to stay behind in Ukraine.

During this last week, the power company Uniper said that they might need financial assistance from the Bundesregierung due to rising gas prices in addition to lower gas flows from Russia. As I wrote in my last piece, we were asked by our local power company to pay more for our electricity due to the current price realities. When we first moved in, our electricity was around 24 cents per kWh vs. the 39 cents we're now paying. Electricity prices have always felt high here, but now every click of a light bulb or every drop of warm water feels consequential.

The whole situation is unsettling, and it's only summer now: few people use air conditioning here. What happens in the winter when we're all cranking up the heat? I don't know.

There are shortages too, though they're limited to specific items. For example, my employer told us to conserve paper due to a paper shortage. Canola oil in Germany is now basically a distant memory.

Weird as it may sound, I've begun asking myself what event would cause me to buy some plane tickets and bail on Germany. My usual trigger is something like the war expanding into other countries or hitting a NATO country.

I don't want to leave though. It's really a very pleasant country to live in. So let's hope for some kind of peaceful resolution to this violent madness.

Forecasting

My wife and I will be leaving this week to enjoy our summer vacations. We're going to France, so there's clearly still plenty of fun to be had in Europe, despite the present reminders of hardship. Afterwards I'll be flying to the US. I need to hug my family members and, ahem, log into my US accounts from the address I claim as my residence (haha).

And with a vacation comes expenses, but it also comes with my employer's summer bonus. So I've sent off a lot of money - for me - to the various savings account, and I think I've set aside enough for the two of us to enjoy ourselves. My wife also needs a new computer, so that will take a bite out of us.

Until next time, take care. Enjoy yourself in whatever way makes you happiest.