This has been a big month for AVI family. Of the three key metrics on the path to FI that I track, two metrics have now crossed their threshold value. Have a look at the numbers below (highlighted in red):

• Net Worth (as a fraction of FI number) (NW): 78.12
• Liquid Assets/ Debt Ratio (LDR):  2.066 
• Cash balance/ Two Year Living Expense (CLE): 1.015

In a recent blog article, I summarized what these metrics mean for me. Having the LDR metric cross the threshold of 2 now allows me the flexibility to pay off our biggest debt–home mortgage– in full,  without ever worrying about being house rich and cash poor.

Should I pull the trigger on paying off AVI family home mortgage, LDR as a metric to track may become meaningless, given the fact that the denominator on LDR may go to zero. However, the trick would be in simultaneously maintaining CLE ratio above 1.

Moving forward, sustaining CLE >1, while continuing to increase the margin of safety on LDR will be the primary focus for AVI family. This is one of the primary reasons for me to begin to explore ideas on Portfolio Hedging. Given the fact that market shocks (such as the one we experienced in late-March) are a part-of-life, my efforts are going to increasingly focus on investing ideas and strategies to sustain and expand the moat around the FI-metrics of interest.

NW Distribution Table

Synposis

• In my last monthly update, I mused over the continued insanity of market rally. The party goes on and even sky is not beyond reach anymore. Case in point, almost double digits growth in AVI family retirement portfolio. Pretty much all sectors of markets are now seeing robust growth, signs of good times ahead or an impending reversal!
• The strong double digits growth in non-retirement portfolio, while certainly benefiting from the tail wind of continued bull-market rally, is a reflection of Mr AVI employer-stock equity vesting.
• Residential real estate is booming, unsurprisingly so, given the low-mortgage environment and the COVID induced flight to suburbia!
• AVI family mortgage is now fully transferred to a new mortgage servicing firm. We made our first monthly mortgage payment (adding an extra months of payment in principle).
• The result of all of above, quite a robust double digit growth in AVI family NW, resulting also in LDR crossing the critical threshold of 2.

The chart below offers a visual display of how robust the growth in AVI family NW has been over the past one-month.

Musing

For the past one month I have been beating the bush on market bubble valuations. The markets remain unfazed and every waking day we have been witnessing new market highs! Dow  markets rose to 28653.67, a 2.6 % rise for the week, S&P advanced 3.3 % reaching a new high of 3508 and Nasdaq Composite gained 3.4 % to another high of 11685.63. Small-cap Russell 2000 index also finished the week up increasing 1.7 % to 1578.34.

The absurdity that is markets never stop amusing me and they always offer something new to ponder upon and learn from! Case in point, Walmart of all companies partnering with Microsoft to put forward a bid for TikTok.

The usual suspects, AAPL and TSLA on the news of stock split have continued to rally as if there is no tomorrow! Joining the party, a new mega-cap tech stock, Salesforce (ticker: CRM). On the news that Salesforce will replace ExxonMobile in DOW index, the stock rose 3.6 %, and then the company released its earnings for the third quarter! Boy, the market responded with gungho! The stock rose another 26% on the earnings report, the largest move for the stock in its history.

For folks who were around investing in the tech bubble of 1999-2000, it is impossible to not draw similarity to the overheated market of that bygone era. Is there anything that will eventually put a damper of this maniac tech-rally?

Warren Buffett, the legendary investor of our times, turns 90 today! Andy Serwer put out a fascinating article, paying omage to the greatest investor of all times, acknowledging why now more than ever the world needs Warren around.

Video/Book/Article/Audio for the Week

• Podcast: John Huber (@JohnHuber72) of Saber Capital on the We Study Billionaires podcast. John offers an excellent summary of his investing approach to seeking high-quality businesses with moat to invest in!
• Book: In an effort to educate myself on Portfolio Hedging strategies, I came across an excellent book on Option Spread Trading. Loving the book thus far– especially ideas on hedging with option spreads!
• Article: Fascinating article by Uri Friedman in Atlantic on living with young kids and home schooling in the COVID world