How many more P’s can you get in the title of a blog post Mr. PIE?
With Q3, 2016 literally just behind us, it is that time again for a portfolio update. What is that I hear you cry? Is Mr. PIE rehashing old (pie) charts and figures yet again? Are we destined for more bad puns involving baking the family PIE. Let’s see if he can get the Q3 update out without boring the crap out of the readers.
In Q3, we navigated the post-Brexit blues and had the first presidential debacle / debate – call it what you may but it was far from “presidential”. Even the post-debate follow-up focused on the life story of a former Miss Universe where the GOP nominee continued to throw his weight by weighing in on the weight of the aforementioned former beauty queen. Stirring stuff indeed! Mr. and Mrs. PIE were just reflecting over a slice of fruit-cake and a pot of Earl Grey tea that there may be one or two topics of greater national importance that deserve the close attention of the voting public, Twitter and even our little blog. The munching of “fruit-cake” also conjured up more musings on the behavioral attributes of the GOP nominee but let’s leave opinions aside for now.
The Ryder cup was in full swing where the USA went to
bat swing against the might of UK & Europe (still includes the UK I hasten to add) with golf sticks. NFL season got underway with the New England Patriots starting the season by ensuring there was insane drama around every single quarterback on their roster. It is rather amusing to see the desire of the New England Patriots to shove it right up Roger by threatening to line up Humpty Dumpty under center and still begin the season a quite remarkable 3-1. Mrs. Yellen and the plethora of economic whizz-kids at her disposal at the FED elected not to increase interest rates and most sectors were fairly flat like a pancake despite a few ups and downs over the quarter. Despite such riveting political, sporting and financial drama, life rumbled on.
In short, very little of any importance happened that was going to dramatically move the needle either way on the size of our swag-bag of investments. Please divert your browser to another web-site if you don’t feel the urge to read on.
As a reminder, our overall goal is to achieve FIRE in July 2018.
Overall, Q3 2016 was a reasonable quarter for us despite the shenanigans described above.
Our portfolio of investments (Tax deferred + Taxable + Cash + Primary home equity) increased in size by 4.2% in Q3, 2016. That is a figure we certainly can’t complain about. In fact, in true Boston vernacular, it is “wicked awesome”. A more detailed breakdown will follow, but first, a picture of a rather ‘Wicked’ awesome cake that was baked and exquisitely decorated by Mrs. PIE not so long ago for a friend. Fine and dandy skills, I think you would agree! A side hustle down the line if Mrs. PIE is so inclined.
Performance over the Last Two Quarters
The figure below captures the change in various buckets over the last three quarters of 2016
A few salient points can be taken away from it:
- The taxable account continues to be the major focus of our investments as we dollar cost average on a monthly basis into our Vanguard account.
- Our cash position was reduced during Q3 when we took advantage of one of the dips in the market to buy some international funds with Vanguard. Mr. ERN will be a happy man with this sort of behavior from one of his readers.
- In terms of tax-deferred accounts, we continue to max out both of our 401K’s and also max out the Health Savings Account, fund both kids 529 plans and Mr. PIE’s deferred compensation plan. Within our IRA’s we also own REIT’s.
- The equity in our primary home also rose slightly thanks to favorable real estate dynamics in our area and the monthly reduction in principal as we pay off what remains on the 15-year mortgage. Still, you only ever gain what somebody is prepared to pay and the concept of buyers/sellers market is not lost on the inhabitants of the house of PIE.
- Overall, the portfolio of investments increased by 4.2% by the end of the quarter in terms of actual dollar amounts.
Note, we have not captured the equity in our secondary home (which we don’t carry a mortgage on), Mr. PIE’s company pension or additional…ahem….”assets” we own (two cars, art, multiple aged single malts, endless number of mixing bowls…..blah, blah…).
Our taxable account is held at Vanguard and consists of a mixture of stock and balanced (stock/bond) funds, representing primarily US and to a lesser extent international markets. The table below summarizes the various funds we own within the brokerage account at Vanguard.
The vast majority of our investments in the taxable account are with the first two funds VTSAX and VWIAX. International funds have been trashed by US based funds over the last 10 years. It has not always been like that and the three international funds add a little more diversification to our holdings. International funds are perhaps due their day in the Cayman Islands sun rather than languishing in sub-zero temperatures you will find in the dark Northern Siberian forests. However, we continue to believe that sufficient international exposure within funds like VTSAX and VWIAX can be provided by major US companies that operate in global markets. With all the funds we own, including those in our 401K’s, expenses are low with the goal of not being a drag on growth. Yep, those voracious mice that scurry in the basement of high expense mutual funds out there are not going to nibble away at our cheese.
The figure below wraps it all up for you in a visual you may only find by sifting through presentations from business analysts and venture investors for too long. Allow me to digress a little- Mr. PIE was afforded the wonderful opportunity to take in a couple of these presentations at an off-site this week where more expertise in PowerPoint skills were on display than practical, actionable substance. On top of that, he and his colleagues were advised by these geniuses to take a close hard look at a number of smaller biotech companies to help grow our own business through acquisition or partnering. We chuckled heartily since we had already analyzed said biotech companies up the wazoo and came to the conclusion that their portfolios consisted of assets that were barely an upgrade from snake-oil. To be fair, the off-site meeting afforded Mr. PIE the chance to add some weight to his own portfolio with endless servings of scrumptious hors d’oeuvres and lashings of fine wine to accompany the rare nuggets of information provided by the invited speakers.
The percentages reflect the increase relative to the amounts in that bucket at the end of June. In terms of real dollar amounts within each bucket, our taxable account increased the most. Our tax-deferred accounts continues to grow just fine based on each 401K being maxed out, corresponding company matches and market growth. In addition, the boys 529 plans get funded heavily.
Based on a solid Q3 layered on top of a stellar Q2 and mixed Q1, 2016 is shaping up to be pretty darn good. Not even the FIRE breathing Chickens of Doom can make the markets plunge. Mr. 1500, you appreciate hearing the wisdom of those chickens, don’t you….?
How was Q3 for you guys and gals? Did post-Brexit stability in the market surprise you? Have you ever encountered a Chicken of Doom? Let’s hear all about it in the comments.