Part 2 of my post on our family’s progress towards a new car will have to wait for one more week as it is the time of the month for me to update on AVI family net-worth.

Musing

The financial markets have been good to me in the month of September, as value seems to be getting back into vogue.  Several articles have been published in the past month, all pointing to a possible inflection point in the market,  see for example:

• Value Trap of Growth Bubble? One Quant think it’s the latter.
• The last time the market acted this way, value stocks gained 30 percent
• The return of value investing

On the other hand, there still is quite a vocal community of folks who strongly believe that the market trends of past several years, will continue simply because, why ‘this time it’s different rings true in today’s stock market.

I am reminded of the financial adage by the late Sir John Templeton, “The four most expensive words in the English language are, this time it’s different “.

Net Worth

On to  net worth numbers- The table below provides a snapshot of our net worth as of this writing. For comparison, I have included numbers from last monthly update. Our net worth now stands at 55.1 % of our FI number!

The first thing that pops out from above table is the significant month-over-month increase in our cash assets. Checking account assets increased more than 2X.

There are 2 primary reasons for this increase,

• The first should be evident from last week’s blog.  I moved some funds around to have cash available for the upcoming big car purchase!
• The second reason relates to the generous semi-annual bonus that I receive from my employer.

The generous company bonus also resulted in >28 % increase in 401-K contributions for the month.

Residential home prices seem to be stabilizing now.. courtesy, fed rate cuts. Earlier in the month, 30 year fixed mortgage rates dipped below 3.5 %, lows not seen since earlier half of 2016.

In terms of liability, credit card expenses have again ballooned to over 27 % relative to last month. This increase however was unavoidable resulting from payment of semi-annual car insurance dues.

Investment Activity

Continuing the trend from the past month, in September as well, I trimmed down some of my stock holdings. Specifically, I reduced my position in KKR by half as well as my position in DIS by half.

KKR has been one of my long-term holdings. I made my first purchase of KKR stocks in circa 2016 after reading an article by Economist on KKR. What attracted me to KKR as a private equity holding back then was (1) KKR was a limited partnership, which meant all its earnings were distributed to share holders in the form of dividends  (2) KKR was holding onto a boat load of dry-powder (term used to describe cash on hand that is available to invest) and (3) the nature of private equity business; i.e., less taxation, fewer operational constraints and low legal vulnerability. Not to mention, KKR was trading at cheap valuation due to the nature of its business structure.

Since then, primarily  motivated by changes in the US corporate tax rate, KKR changed its business structure from a partnership to corporation, which unlocked the pool of investment money that could go into KKR. The stock jumped 3.2 % on the new and since then has continued to trade in mid-20’s.

In the past month, following the reversal in market trend towards value, the stock reached close to its multi-year peak, and I felt that it was a good time to take some profits. On the hindsight, it was a good decision. As I am writing this, the stock has suffered a relatively large correction of 7 %.

The second stock that I trimmed was DIS. It was a hard decision for me to trim DIS stocks. Part of the reason was simply to lock in some long-term gains and have cash available for my upcoming big-purchase.

Video/Book/Article/Audio for the Week

For this week, my highlights are the following two articles

• Quantum Breakthrough: In an, apparently leaked, Nature Photonics paper,  Google has reported major breakthrough in quantum-computing. It has demonstrated a quantum-computer solution to the problem, circuit sampling: checking whether numbers their machine spits out, given random inputs, fit a particular pattern, in barely 3 minutes, as opposed to 10,000 years that it would take a modern super-computer to solve. As economist put it, this could be the fields Sputnik moment.
• Buffets Investing Philosophy: I liked this article not so much for what it says of Buffett’s investment philosophy, but rather, a reminder of why I am so attracted to investing. Buffett notes that you don’t need tons of IQ in this business. He further notes You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls. Both these sentiments very much resonate with who I am.