Stock markets continue to set new records, and so does our net worth. With over $26,000 gain in our diversified portfolio, coupled with strong cash flow production from Money Manager Co. and Perfect Future Publishing Co. but offset by some increased tax exposure, our bottomline improved by 30 grand in the month of May alone. In another record, for the first time, our net worth improvement over a rolling 12-month period exceeded $300,000.

MONTH-END BALANCE SHEET

(The above view was produced by Microsoft Money and an offline Excel template.)

HIGHLIGHTS OF THE MONTH

- We reduced our cash positions by more than 2 percentage points in May and increased our equity positions accordingly. Our portfolio continued to shine in this prolonged bull market.

- Another month of sizable appreciation of the value of our Employee Stock Option account. With MSFT hitting multi-year highs, is it time for a cash-out?

- Our sideline business has a mediocre month but our year-to-date billing has exceeded $40,000 in the first five months. June will be a seasonally strong month since some quarterly renewals will happen.

- It is a good use of my time to work with KPMG to finalize my 2006 tax return -- it is finally locked after KPMG corrected a couple of mistakes that reduced my tax (and increased my rollover tax credits) by over $2,000.

WHAT'S AHEAD

- I will be making a $10,000 SE 401(k) contribution in June before I file my 2006 tax return.

- The portfolio reengineering project is still in progress. We pretty much reached the desired foreign equity allocation. More works need to be done for domestic equity positions.

- Our son is finally reaching school age. He is accepted to a private school and his parents are on the hook of $5,000 tuition payment in June for the fall semester.

- The household is also planning to move to a more spacious apartment. We will still be renting, but will have enough space for a guest bedroom and a dedicated study. Monthly rent increase: $500. There will also be some short-term cash-flow hiccup as we will be paying out deposits for the new place before we can get the deposits of our current apartment back.

- The family's hearts are in Hawaii … it will be a good place to celebrate the solid first-half performance.