We are still in the first week of June and I thought may be its not too late to do a short post on NW updates for month of May using numbers from last updates in my excel log.

Without further ado, the key numbers for the month-past (from April 25th through June 3rd) are:

• Net Worth (as a fraction of FI number): 67.38
• Liquid Assets/ Debt Ratio: 1.654
• Cash balance/ Two Year Living Expense: 1.274

NW Distribution Table:

NW Progression Chart:

Synoposis:

• An amazing recovery, with value again roosting home! AVI family NW increased by  ~17 % in a month. A significant portion of the recovery was driven by the mind-blowing market turnaround, especially in small-value stocks. The rapid rebounce once again drove home the futility of market timing. AVI family NW number is now the highest its ever been, at about 1% above the previous peak reached on Feb 19th of this year.
• A clear divergence is emerging between the markets’ view on the economy and the real economy. Covid-19 is still around the corner. Treatment is nowhere on the horizon and testing is not at 100 %. Coupled with the tragic case of police brutality and the ensuing protests that has grasped the country in the last week, massive uncertainties still abound. The divergence in the markets and the real-economy is getting worrisome. As such, Mr AVI is beginning to take precautions by gradually cycling out of equity markets into cash.
• Mr AVI also feels that may be this is a good time to build up on real-assets, by paying down on mortgage and refinancing into a low interest rate mortgage. In order to facilitate such a transaction, Mr Avi anticipates the funds in checking account to remain high for the month of June, which has already seen triple digit gains over the last month.
• Another reason for gradually building cash position is to prepare for tax filings, which are due in a months time.
• In the spirit of preserving cash,  for a second time this year, Mr AVI did not make any extra payments on his current mortgage.
• And finally, AVI family was stuck home for the better part of May as well. With no extra dues payments for the month, no dining out, no gas expense, and no discretionary spending,  AVI family CC expenses plummeted to levels we have not seen in quite some time.

Musing

Investors have had a front row seat on the unfolding of a dystopian novel that has been 2020 thus far! The following charts offer a glimpse into the ferocity of downturn, the massive fed-intervention and the equally ferocious rebound that for sure will be a folklore everyone will talk about for a very long time

• Fastest 30 % decline in S&P 500 index:
  
• Bottom falling off the unemployment rate:
• US Oil Futures turn negative:
• Massive Fed intervention, spanning governments across the globe:
• Markets rebounds 42 % (as of this writing) from its March lows: 

All of the above in the first half of 2020. What a turbulent ride it has been thus far. Let hope for some what calmer water as we tread through the remainder half of the year!

Video/Book/Article/Audio for the Week

• Book: Came across an interesting book on personal-finance and investing, titled, The Geometry of Wealth, wherein the author, Brian Portnoy introduces the concept of funded contentment as a path towards wealth building and leading a meaningful life as opposed to the treadmill path towards riches.
• Video: Over the weekend I saw the documentary, Who Killed the Electric Car? An eye opening documentary on the extent to which a company can go to squelch a relatively successful product of its own creation, in this case the all electric EV1 vehicle produced by GM in the mid-1990s.
• Article: Interesting article  on tail risk hedging from Verdad Weekly Research, as a strategy to navigate the turbulent markets
• Podcast: Ben Thompson of Stratechery on Invest Like the Best podcast.