Net Worth Update: June and July, 2020

In June, our liquid net worth¹ increased by 8.01% in USD and 5.7% in EUR to $68,000 and €60,606 respectively. In July, it increased 13.67% and 9.48% to $77,298 and €66,350 respectively.

The biggest factor in both months was the stock market. Like anyone who held positions similar to the overall market, we experienced terrific growth. It is counterintuitive that in such a moment, with as much economic hardship as exists, that the stock market should be on such a tear. I honestly don't know exactly what it is that the market sees, and I won't pretend to. I listen to a lot of stock market talk, and some experts claim that this is a bubble that's likely to pop at any moment, while others say otherwise. It's pointless to try and act on this chatter. I know what my time horizon is, and I hold.

Cash is King (Sometimes)

One thing I haven't been doing, however, is buying. Our savings the past few months has gone exclusively to cash. That's not a stock market timing call but rather a series of tactical moves given the relative uncertainty of the moment. I know that we have certain large expenses in the future, but I don't know what my wife's income will be, and it's hard to guess it more than a few weeks out. Therefore, I've been preemptively saving to knock out those costs whenever they arise, in order to prevent having to scramble to pay for them from that month's cashflow. You might be thinking, "Well, duh, that's the way savings works," and you'd be right. But our situation has changed enough that we have to do this for stuff that we could previously just pay for out of cashflow.

That means saving early for tax preparation costs, estimated taxes, and large purchases. We've also been continually adding to our emergency fund. An emergency fund is basically early saving for known recurring expenses in addition to surprises, after all. One unsettling aspect of this pandemic is that my industry has been especially hard hit, and my seemingly secure job doesn't feel as secure anymore.

A couple of large cash infusions also buoyed these months' changes. In June, we deposited the stimulus check that was sent out. US expats who file their taxes were also eligible, and we were happy for the money. Secondly, my employer paid me early for August, and without any message from them, I truly don't know what that was about (new employee clicked the wrong button on the bank website maybe? I've done it).

And on top of that, because most of our cash is in the euro, the recent upward spike of the euro's value has made that lump more valuable in USD.

Vacation?

Although it's summer vacation time in Germany, we have decided to stay home. And by home, I mean our apartment in Germany. We contemplated some trips, but hotel prices in Germany weren't low enough to really make it worth our while. Outside of Germany, some prices are incredible, but we quickly wrote off getting in a plane or bus or long distance train, especially since those prices also aren't all that great.

I will say, the FOMO is real. The weather's also not been very summer-like, so it's been kind of lonely and dark. We've used the time to take care of some home improvement projects, and I've been using FaceTime more often to get in touch with American family.

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1. This includes: bank accounts, investments (excluding German private pension but including US IRAs), credit cards, rewards programs valued at 1¢ per point, cash, installment plans and any other debts. ↩︎

Take the Power Back

It's stunning how quickly everything in the world is moving due to coronavirus:

• Like many organizations, my company has suspended some operations to prevent large social gatherings.
• My wife's business has seen cancellations out of fear.
• Stock markets feel like they're properly crashing. Unlike 2018 or 2016, the S&P 500 is well below the 200-week moving average. That alone makes this look like 2008 or 2001.
• Not to mention, there's the giant oil price blowup.

I took steps weeks ago to manage my risk. I sold my lowest conviction positions, and I extinguished all my margin debt. I'm fully invested (not including our emergency fund) and don't plan on making any adjustments to my existing portfolio. I've made my bed, so now it's time to sleep in it. When I get paid, I'll continue purchasing assets and setting aside cash for our cash buffer.

But more importantly, we're having to face the very real real-life possibility that we and/or many people we love will get ill and, possibly, die. I believe it's important to simply be honest about this and begin to adjust to the reality.

I have two parents over 70. I also have two grandmothers. My sibling in the US is in a densely populated city with rising numbers of infected. My company has around 500 employees working in close contact with one another, and some are definitely high risk. My city is one of the largest in Germany, and cases are increasing here.

It's funny going to the supermarkets here and seeing sold out soy milk or pasta or toilet paper. All those purchases were made out of an attempt to prepare, as if hand sanitizer or toilet paper meant you could control the outcome. Yes, yes, wash your hands, and stop touching your face. This has long been a good standard practice, so even after coronavirus, you should keep this up.

But the preparation must be more in your mind and less in your pantry. We must think through what reality might look like in the coming weeks and months for us. Only then can we make rational choices.

You might have some risks that you need to deal with. Some social distancing is wise. Some financial risks carry "blow up" potential, so deal with them as rationally as possible and move on. However, try to avoid waving your hands and justifying poor choices -- such as selling out of all equities after a big drawdown -- out of fear. We are awfully good at justifying poor behavior, so try and resist it.

And this needn't be a dark process. I've been actively reminding myself of what I enjoy. I enjoy reading. I enjoy music. I enjoy playing guitar and taking pictures. I enjoy exercising. I love my wife. I love my family. These are all things I can have more of if I choose to.

Just as you can. Take whatever power you have and use it to love your life.