2 Annual Letters and Warren Buffett’s Hero

When I was in my teens Momma PoP told me that there were two authors that I should read if I wanted to understand investing. We’ll get to the second author at the end of this post, but it shouldn’t surprise anybody that the first was Warren Buffett. Over the years I’ve printed out and read through each of his 50 plus annual reports; they’ve formed the backbone of our investing strategy and are just great reading.

This year’s letter is no different (download it out here). The highlights for me this year are Buffett’s thoughts on his 10 year, million dollar bet with a hedge fund manager, as well as a reminder that,


If I was a better writer, I’d tie this picture to some sort of investing lesson or fable. But which one!?

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”

He was speaking about himself and Charlie, but Mrs. PoP and I take this advice to heart as well. Friends are making good money flipping houses or joining tech startups and it’s tempting to join in. On the other hand, we know that sooner or later this run will end, and we’ll be there once more, waiting with our washtub.

But Buffett’s letter isn’t the only one in town! For the last few years I’ve loved reading the annual letter from the Bill and Melinda Gates Foundation. Gates and Buffett have had a close friendship for decades; Bill is on the board of Berkshire and Buffett has pledged nearly all of his wealth to their foundation when he dies.


In Yosemite you get tired of unpacking your camera every time you see something like this.

This years letter from Bill and Melinda is a letter of thanks to Buffett as well as a fantastic ROI analysis on their foundation. It’s fascinating to watch Bill and Melinda talk about money in a way where the ROI is the number of lives saved instead of how much more money is acquired. Mrs. Pop and I donated to charity for the first time in 2016, and used GiveWell to guide our gifts. We think that giving that is guided by rationality and data instead of feelings and marketing has a bright future, and the Gates foundation is leading the way.

It’s clear that Warren Buffett is a hero of Bill and Melinda, but who is Warren Buffett’s hero? In this year’s letter Buffett calls out the other person who Momma PoP told me to read all those years ago…Jack Bogle!

“If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle…He is a hero to them and to me.”

Jack doesn’t do a annual letter, but you can read what he thinks about being called a hero, as well as his thoughts on current market valuations and growth rates right here.

So what have you guys been reading this past month?

Happy National High Five Day!

While some of you may be celebrating other holidays today (looking at you, Ben and Jerry), in the PoP household we are celebrating National High Five Day!

Sure, none of us knew that such a grand holiday existed until we heard it mentioned on NPR a couple of mornings ago.  But instantly I knew we needed to celebrate it.  After all, I love a good high five, and it’s pretty much Kitty PoP’s only successful trick.  (If this doesn’t bring him Maru-level fame, I don’t know what will.)

Today, we’ll celebrate by doing what we do most days… Continue reading Happy National High Five Day!

Happy (Last) Friday – Joshua Tree National Park

Last Friday, Mr PoP and I got the chance to go to Joshua Tree National Park in southern California. We were in the area for a combination vacation/work trip and were able to grab a day to see some of the wildflowers that have been blooming thanks to the rains that absolutely soaked parts of California this winter.

While it was a few weeks past “peak superbloom”, it was still absolutely lovely. And Mr PoP kept laughing at me as I walked from flower to flower saying, “Really babe – the desert isn’t usually this colorful all at once, I swear!”

Here are a few of the sights that we enjoyed while there.


Continue reading Happy (Last) Friday – Joshua Tree National Park

Buying a Classic Supercar-The Emotional Parts

This is Mr PoP’s follow-up post to Buying a Classic Supercar-The Money Parts

I’ve wanted an Acura NSX since I first read about them in 2010. Back then they were even more obscure, and, because of the financial apocalypse, were selling for as low as 25k (mine was 38k and prices still seem to be rising).

While obscure, the NSX is also unique. In 1992 it combined performance that beat Ferrari at their own game with reliability of an early 90’s Honda. The chassis was designed with the help of Cray supercomputers and the suspension was fine tuned by Aryton Senna, one of the best F1 drivers that ever lived. Honda packed technology from their F1 race cars into a 100% aluminum chassis, and achieved something that is part technology, and part art. Gordon Murray, one of the best car designers of the latter half of the century said, “To this day, the NSX is still a car that is near and dear to my heart…The NSX is a landmark car. It awoke not only a lazy Ferrari, but Porsche as well and sparked advances in usability, ergonomics, and handling.” The NSX is the favorite supercar of the person who designed your favorite supercar. If it were a band, it would be the Velvet Underground. It’s also weirdly popular in the financial independance blogosphere, with both Pete from MMM and Carl from 1500 days wanting one at different times.

Unfortunately, none of this mattered in 2010. Mrs. PoP and I were basically broke, with me either unemployed or working a minimum wage job.

“I realize, of course, it’s no shame to be poor… but it’s no great honor either.”

So I got a Jeep, Mrs. PoP got a Miata and we both started putting in long hours at work to build our net worth. In 2014 Mrs. PoP started riding her bike, we sold the jeep and I started commuting in the Miata. A Miata is like a moped-lots of fun, but you don’t want your friends to see you on one. Every time somebody would ask me if that was my red Miata I would smile say, “No, it’s my wife’s car.”

NSX vs. Porsche?

So when we made the decision that Sunny, a Mercedes Benz that had been in our family for generations, was too rusty to be restored I put all options on the table. The NSX was something that I had wanted for almost 7 years, but a friend had gotten into Porsches as well and we actually ended up driving 3 of them.

I won’t bore everybody with the details,but we were pretty underwhelmed with all but the newest generation of Porsche. If there is anybody out there looking to spend 20-40k on a cool car, here is the skinny.


Pretty cars, but…

  1. Holy shit these things are unreliable. We were looking at models from the years 1998 to 2006; all of which suffer from multiple well known design and manufacturing defects related to the engine. Estimated failure rates on a single of these defects (IMS Bearing) range from 2-10% over 100k miles, depending on the year. This means that in some years 1 in every 10 911 will suffer a spontaneous and catastrophic engine failure by 100k, regardless of how well you took care of the thing! And Porsche didn’t even admit there was an issue until they were sued!
  2. Holy shit these things are expensive to repair! If your engine does tear itself apart in a fit of tuetonic rage from any one of the manufacturing/design defects it can be between 15k and 20k to get it fixed! There are some really great companies out there (looking at you, Flat 6 Innovations!) that specialize in making these engines reliable, but it’s a shame that it is required at all.
  3. The seating position, manual shifter, and interior of the 97-2004 models (that’s the 996 version for you porschephiles) weren’t really that great. The seating position made you feel like you were sitting on a (very fast) skateboard, the shifters all felt worn out, and the interior was pretty low-rent. The 2005 and up model corrected the interior issue but still suffered from the design/manufacturing issues.

The Porsche owners all seemed to really love their car, but also were in deep denial about the above. It was like a version of stockholm syndrome, but with their vehicle. This actually makes certain models of porsche the value stocks of the car world; they’re probably beaten down below their actual value, and if you understand the risks they might be a good buy for somebody. In the end, the reliability issues were part of the decision to go with the NSX, but I hadn’t dreamed of having a Porsche for the last 7 years, I had wanted an NSX.

Minutes before I bought it

The buying process was interesting, partly because it was tough for me to get a test drive. Two dealers that had an NSX refused to let me drive it, both of them basically accusing me of just wanting a joy ride, or not having my loan paperwork completed(!). I know I don’t look like I’m dripping money, but I got a laugh out of it. The dealership that I eventually bought from was accustomed to having their clients spend 100k-250k on Ferraris and Porsches without even seeing them, much less going for a test drive. But after some arm twisting they let me take it for a spin and get 2 inspections done; one mechanical, and one for the body. It passed with flying colors, we agreed on a price (cash, thank you very much) and I shipped it home.

Spending 38k (plus taxes and travel costs to ship it home!) on a car isn’t something that I do lightly. Three things stick out to me about this purchase:

  1. It was keeping a promise I made to myself. In 2013 I promised myself that if I got a promotion I would get the NSX. Three promotions later and it was time I came through on my word.
  2. Delayed gratification only works if you actually get the gratification at some point. Mrs. PoP and I could keep stacking money to the moon, but what is the point unless we reward ourselves occasionally?
  3. It makes me feel wealthy in a way that having money in the bank didn’t. I’m still processing this one, but flexing your spending muscles after wanting something for almost a decade feels good.
  4. It could go up in a ball of flames tomorrow and it wouldn’t really change the trajectory of the next decade or so. I may end up working for a few months longer to justify this purchase, but 38k is only 2.8% of our current net worth. Most people have far greater percentage tied up in a vehicle that depreciates far more quickly.

Having said that, it’s a thing and will be treated as such. If it stops making me happy when I walk up to it in the parkinglot, or I get tired of people taking pictures of me driving it (not kidding, this happens) I’ll sell it to the next person who has a bucket list that includes a Japanese supercar.

So the only thing left to do is name the thing. We’re thinking about KonMari (or CarMari?) after Marie Kondo’s book on simplification but are open to suggestions!

So dear readers, what should Mr. PoP name the NSX? 


PoP Balance Sheet – March 2017

Welcome to our March 2017 Balance Sheet!

We use the structure of a monthly income statement and balance sheet in tandem to make sure we are keeping our expenses low and planting our pennies wisely. If you’re not already tracking your finances using these two methods, go to mint.com and get started today! If you have any questions about how we do this just post a comment and we’ll be sure to help!

The big change on the balance sheet this month is the car loan.  We mentioned that we were going to probably do this when we talked about the money aspects of Mr PoP’s NSX purchase, and we finalized the loan paperwork this month.  Opting for a loan against something that we could have paid cash for isn’t our traditional modus operandi, but the 1.49% interest rate on a 36 month loan from our credit union was tough to pass up.  Over the course of the loan we’ll pay in the neighborhood of $600 in interest total.

This feels pretty cheap in terms of allowing us to keep a little more liquidity – though it does come at the price of pretty high payments.  And by that I mean obscenely high.  Even when we had 2 car loan payments back in 2010, together they were not this high.  So this will be a new feeling.  However, we do get to delay that feeling for a month since the first payment isn’t due until April.  =P

Here are the numbers for March:

  • Our total assets up $46.6K
  • Our total liabilities went up by $26.3K 
  • Net worth went up by $20.3K 
  • Total net worth as of the end of March is $1,360.9K, which represents a 1.51% increase for the month

For the details…

Continue reading PoP Balance Sheet – March 2017