My regular cadence for update on net worth for the month of Oct was last week, which happened to be the Diwali day. Avi family got involved in local diwali festivities and I was unable to compile our net worth report for Oct on time. So the first article of the new month will have to be a catch up article on net worth update for Oct 2019.

Below is a snapshot of key numbers as it relates to net worth that I am keeping track of:

• Net worth as percentage of our FI number: 56.9 %
• Liquid Net worth/ Debt Ratio: 1.32
• Cash balance/Two years living expense: 1.26

Liquid Net worth = Cash + Equity portfolio in taxable brokerage account.

Musing

Recently I came across a very interesting article by Forbes, which analyzed the net worth of the top 20 contenders from the 2020- presidential race. The bar-plot below shows the net worth (in log scale) for each of the presidential candidates profiled by Forbes. The difference in the net-worth is striking. Donald Trump stands tall with net worth upwards of a billion dollars, and on the other end stands Pete Buttigieg with net worth of merely $100,000.

What about age? The differential is also quite striking. As can be seen from the figure below, the grand-dad of presidential candidates is Bernie Sanders at the ripe age of 79 and on the other end stand Pete Buttigieg and Tulsi Gabbard, both aged 39,  less than half of Bernie’s age.

How do these stats compare relative to ordinary americans?

According to bankrate.com, the median net worth of Americans as function of age is as follows:

Compared to ordinary Americans, it seems that pretty much all the presidential candidates, with the exception of Pete Buttigeig, are financially quite well-off.

The most interesting statistics however is the following: the median age of all presidential candidates is 56 years, and the median net worth is around $200,000.

This is indeed representative of median net worth of Americans in the age cohort that matches the median age of presidential candidates. Coincidence?

Net Worth

The table below provides a snapshot of AVI family net worth numbers as of Oct 27th 2019.

• Despite markets being quite volatile during the month of Oct, the net worth growth trend for AVI family in all the various parts have continued . We saw modest gains in both of our taxable and non-taxable brokerage accounts and modest gains in 401-K account.
• Market price of our house fell marginally, though not as bad as is predicted by Zillow for the housing market in our neighborhood.
• We saw double digit gains in our cash account. This was driven in part by the cash received from the sale of our beloved Hyundai and the inflow of cash to prepare for the upcoming purchase of AVI family vehicle.
• The CC balance fell by upwards of double digit percentage points, given the drag of big-ticket appliance purchase is now gone.

The chart below presents our steady progress in building up liquid net worth assets relative to debt. We are more than half way towards the 2X mark necessary for us to be in a position to pay off our mortgage without being house rich and cash poor. At the rate we are going, except for some unbeknownst circumstances, at this time next year we should be in a position to pay-off our mortgage should we choose to.

Investment Activities

This blog post offered a snapshot of our investment activities in the month of October. Since then markets have been very kind to us, providing ample opportunities to  take a swing. I gladly obliged and added a small stake in the bankrupt Pacific Gas and Electric Utility (PG&E), ticker, PCG.

PG&E has been in the news lately and not for a good reason. California has seen unprecedented levels of fire activities in the past month, leading PG&E to take several precautionary and must I say not very popular measures to cover their a**.

All the negative publicity has had a significant impact on the stock price of PG&E and at one point last month, PCG was trading below $3.50 a share, the lowest it has been in the entire history of the company.

PG&E provides its services to about 2/3rds of northern California utility customers and is one of the largest gas and electric utilities in the USA.  As of this writing, PG&E has an operating cash flow of $4.76 B, with a book value of $19.54 per share. Devastating losses from 2018 fire season led PG&E to file for bankruptcy in Jan of this year.

Interestingly though, this is not the first for PG&E. It went through bankruptcy proceedings in 2001 coming out of it in 2004, after taking on huge debt and paying upwards of $10 B to its myraid of creditors. The result for customers, 5.1 M of PG&E customers had to pay above market price for their utility needs for several years after. If history is any guide, I expect PG&E to again come out of bankruptcy and the stock price to get its mojo back.

From an investments perspective, I see PG&E at its current valuations as a classic Graham value stock, with a finite but a low probability chance of permanent capital loss and a much greater chance of becoming a multi-bagger.  Accordingly I have taken a small position in PG&E and will continue to actively monitor the charts to add onto my stake in the company.

Video/Book/Article/Audio for the Week

For this week, I have just one suggestion

• Value Investing with Legends podcast interview with the hedge fund barron, Leon Cooperman. Fascinating interview, a peak into the mind of conservative billionaires and their hatred for taxes they deem to be unfair. The case in point, the wealth tax,  as proposed by some of the democratic presidential candidates for 2020.  Yet another factoid that I learned from this interview, markets relative to interest rates are trading at fair value.