It’s been a while since I last posted and a lot has happened since. On the macro level, the stock market almost went into a bear market (defined as -20%) since the start of the year, Russia-Ukraine war started, home mortgage rates went from 3% to 5%, and baby formula cannot be found in some cities. On a personal level, my family finally caught COVID, my new home construction has been delayed by 4 months, I went through a re-org at work, I sold a ton of stock, I lost over $1,000,000 in portfolio value, I paid my $85K tax bill (not a typo), and I am now a father of 3 boys. In this blog, I’ll expand on my $1,000,000 loss, why I’m not concerned for myself, why I’m concerned for the bottom 90%, and what my plan is for the next 12 months.

You may recall that my net worth contains a significant portion of tech stocks, particularly FB (-41% YTD) and MSFT (-22% YTD). They made up over 7-figures in my portfolio. Luckily, I’ve been gradually selling my individual stocks as I have been expecting the party to end soon. As of right now, I’m sitting on ~$600K in cash. Partly because I’m going to buy a house soon, but mostly because I want my options to be open as to where I invest in this type of market. I was fully vested after the 2020 crash and that catapulted my net worth tremendously. I fully expect the same type of multiple during this downturn, but not in the same time frame. I think this is going to be a tough one for Main St and Wall St to recover from. But my guess is as good as Jim Cramer’s.

Why I’m not concerned for myself

I have a lot of reasons to panic. I am in the middle of buying a home in a rising interest rate environment. So it’s going to be expensive to borrow and there’s a good chance the home value will go down due to rising rates. I have a newborn baby. And I just lost $1 million!! At the end of the day, I still believe in the American economy. I believe a lot of our inflation problems are due to poor policy and that it will be mitigated in the next several years. And despite the massive decrease in my pay due to the company’s stock drop, 2022 will be my second highest earning year in my career–2021 being, by far, the best. I have plenty of ammunition to weather the storm. And I fully expect to come out of this significantly wealthier than coming into it. Finally, I still have a low 7-figure windfall from one of my previous startups which I have not included in my FIRE plans. 

Why I’m concerned for you

If you’re someone who is not making enough to invest meaningful amounts in the stock market every year, I am concerned for you. I consider $50,000+ a year a meaningful amount. As prices of grocery (9%), gas (39.7% in 2021 alone), houses (17.1% YoY in Dec 2021), and cars (new up 12%, used up 40%) increase you will increasingly have less to invest. I just don’t see the light at the end of this tunnel for another several years. China is still doing massive lockdowns, which disrupts the world’s supply chain. Interest rates are getting increased at a rate my generation has never seen before, making it difficult to afford anything beyond a starter home. America is no longer energy independent, and since energy is the backbone of transportation and storage, it will make anything reliant on it (which is most things) subject to higher price volatility. Ultimately, I concerned that many of you will give up on consistently investing because it will be even harder to find enough money to invest.

The next 12 months

First, I plan to fully enjoy my 4 months of paternity. I have another 6 weeks of accrued PTO and am trying to figure out if I should take that to make it a full 6 months. Second, I plan to move to TX in the summer–my new home construction is moving along fast right now and we’re pumped! Third, after I come back from paternity I see 2 realistic options for myself. 1) continue working at my high-paying job for another year to weather this storm and come out significantly stronger or 2) join a startup and maximize having fun on the job while still being able to responsibly weather this storm. However, I will not come out of this significantly stronger. And finally, I plan to be fully vested in the stock market in the next 12 months.

FIRE update

I’m still over $500k ahead of my FIRE schedule, but I’m not taking that for granted because just 5 months ago I was ahead of my FIRE schedule by $1.6M. 

Good luck to everyone!