What the end of the world looks like

Sand blowing on to Great Highway in San Francisco, CA
When Great Highway is closed, it’s because of the sand

Along Bolinas Ridge

Sometimes I have a story to tell, and othertimes I just want to post a nice photo.

Bolinas Ridge Trail, somewhere between McCurdy and Randall
Somewhere between McCurdy and Randall

Snowy Plover Triptych

Triptych of snowy plovers on Ocean Beach, San Francisco, CA
Snowy plovers on Ocean Beach (previously)

Hamburgers are cheaper

I recently stumbled upon another great Warren Buffett excerpt from the 1997 Berkshire Hathaway Chairman’s Letter:

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

When we sold our condo last October, I invested 100% of the proceeds in Schwab’s S&P 500 index fund (SWPPX). It was pretty exhilarating to watch it climb in value practically every day, all the way through January 26th, at which point it had increased by 12.3% in only 3 short months. Since then, it’s been no less exhilarating to watch it drop precipitously in value, essentially retreating back from whence it came, in only 2 short weeks. This seemed like the perfect opportunity to contrast the volatility of value against the stability of ownership. Though the market has risen and fallen dramatically over the last 4 months, I still own the same number shares—in fact I actually own almost 2% more than I started with, because I reinvested the dividends and capital gains that were paid out in mid-December.

Percent change of S&P 500 value versus shares from October 24, 2017 through February 8, 2018
Percent Change of S&P 500 Index Fund Value vs. Shares

Learning how to save, eleven years later

I’ve been writing these annual reports for 11 years, starting in 2006. But if you looked only at a graph of my investment contributions over the same time period, you might assume that I’ve been really serious about saving only during the last 4 years. And there might be some truth to that.

Chart of investment contributions from income by account, 2006 through 2017 (Note: 401(k) contributions from 2008 through 2011 are actually rollovers from accounts for which I no longer have contribution data separate from gains/losses)
Investment contributions from income by account, 2006–2017

The trigger for the change, counterintuitive as it may seem, was Stephanie quitting her job in 2014. My reaction to this voluntary reduction of our collective income, coupled with an indeterminate timeline (we thought 8 months—if Stephanie completes her graduate program as planned, it will be 8 years!), was to impose a savings-based austerity program on my income. I increased my 401(k) contributions, I funded both of our Roth IRAs (through “the backdoor”), and I invested “The Rest” in my brokerage account—starting in 2014 and continuing every year since.

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