Portfolio Review – March 2018 – The Half Million Dollar Portfolio

Portfolio Review – March 2018 – The Half Million Dollar Portfolio

The Half Million Dollar Portfolio?

Less than $500 separated me from 500k before the market volatility in February shaved 16k off my total. However, since then, the market has turned around. We’re now back to a positive return for the year and things are finally looking good for me to cross that threshold. I might now have a half million dollar portfolio!

The market turning positive is a welcome sign to many investors. It reminds me a bit of what happened in February of 2016. Volatility spiked due to fears around China, oil prices and uncertainty around rates. Just like last month, that caused stock prices to fall. In the case of 2016, those falling prices turned out to be amazing buying opportunities. The stock market never looked back from the lows of 2016 until it hit the recent speed bump. Whether that turns out to be the case here is still an unknown.

What’s interesting about these dips is how quickly they’ve corrected. We see a quick dip, it doesn’t last long and then it starts rising again. That’s great for people who like seeing their portfolio go up and up on paper. It’s not great for people looking to keep buying stocks at a good valuation as a long term hold. A rallying stock market usually means things are looking good and there are some good things happening here. The economy is strong and earnings are growing at the best clip since 2011.

What interests me is how the market and investors and I will react to a prolonged downturn. Quick bounces are easy to get used to as that has been the case for quite some time. Investors keep buying whenever they see a drop because they “know” it’ll recover pretty quickly. The question is what will happen that one time in the future where the recovery takes a few years. I’m not complaining about rising prices but as a long term investors I’m always looking forward.

It’s nice to see these rising totals each month but the cynical part of me knows that it can’t last. Since I’m in it for the long run, I’m not overly concerned nor am I making any specific moves. I’ll continue to stick with my asset allocation, contribute monthly and buy things that my asset allocation tells me to buy. If we see a recession, I’ll do the same. Until then, I’ll enjoy seeing the numbers grow on paper.

Market returns will very likely propel me beyond the new milestone but contributions play a big part as well. My bonus was paid out in February and my 401k contribution for that paycheck was bumped to 50% meaning a big boost in money flowing into the market for this month. Combine that inflow with rising stock prices and baby, you got a stew going. Let’s check if that stew bubbled up to 500k this month.

As a reminder, my portfolio was at $482,642.91 last month. Continue reading “Portfolio Review – March 2018 – The Half Million Dollar Portfolio”


Portfolio Review – February 2018 – Stock market volatility makes a comeback

Stock market volatility came roaring back in a big way this week. We saw days where the stock market moved more in an hour than it moved on a weekly basis in the past year. It wasn’t wholly unexpected given the flat stock market volatility we’ve had for such a long time. As an example of these calm investing waters, my portfolio has gone up 16 straights months before this one. That’s a big testament to how good we’ve had it as investors.

The S&P hasn’t had a monthly loss of -1% or more since October 2016. That’s a crazy run of solid returns that had to end eventually. One has to look all the way back to January/February 2016 to find a month like this one. Back then the stock market fell over 5% and my own personal portfolio was down 4.5%. The good part was it rebounded in a big way the month after with my portfolio growing over 11%. Will the same happen here or are we due for a longer correction?

During times like these, it’s important to remember that the stock market is often volatile. Returns won’t always come as easily as they have since 2008. The recent week may seem horrendous but the S&P 500 is only down 4.8% since my last update. 4.8% seems like a lot but it wouldn’t even crack the top 20 of the worst S&P 500 losses in a DAY.

Losses on paper are just that if you’re a long term investor. History has proven that holding tight and buying more in times like these has rewarded investors. We’re still far from what could potentially happen as stocks have historically had a max reduction of 50%. If this month bothered you then know that it’s far from the worst that can happen if you’re fully invested in stocks. Keep that in mind going forward and maybe revisit your asset allocation if 4.8% sends you running towards the sell button.

The truth is that the Schiller PE ratio is still elevated and may give credence to further downward movement if worries about interest rates persist. The plus as I see it is that after years of stalled earnings, earnings growth is emerging again. According to factset, earnings increased 13% from 2012 to 2016. That’s not per year, that’s the total earnings growth for that time period! That’s a terrible rate any way you slice it and is one of the big reasons why the P/E 10 has expanded so much. Stock prices have soared despite earnings staying pretty flat. That changed in 2017. 2017 growth is nearly 11% and 2018 is slated to grow at nearly 19% due to the new tax law.

So why is the stock market dropping now?

Earnings growth is great news for sure but it doesn’t always mean growing stock prices. One of the reasons the stock market has returned so much over the past years are expanding P/Es. Low treasury yields and the lack of alternative investments have mean investors have flooded into the stock market sending valuations through the roof.

Now, we that we see growing earnings, we’re also seeing growing yields. Growing earnings mean a good economy and growing salaries and potentially inflation as well. On top of that, the fed is unwinding their QE program which impacts yields as well.

All that is causing yields to rise and giving investors another place to hold their cash. If yields on treasuries are suddenly more appealing then investors may not be as willing to pay such high P/E ratios for stocks anymore. I talked about this effect in a post before where I argued that low yields meant that the stock market isn’t expensive.

Now that the yield is rising, is the stock market expensive? Growing earnings SHOULD indicate high stock market returns but not if the market P/E shrinks closer to historical norms. P/E expansion has driven the stock market returns of the past few years. It’s possible that the shrinking of the P/E may mute the stock market returns of the future even as earnings grow.

As always, it’s impossible to say where the stock market goes from here. I’m not worried if they go up or down. As I recently on twitter, it may get worse, it may get better, as long as you’re sleeping fine, what’s it matter?

From the perspective of a long term investor, months like this aren’t bad. They allow me to buy securities at a better price and higher yield than I was going to buy them for last month. That’s not a bad deal.

From the perspective of someone who likes to see my portfolio growing every month, months like this aren’t great. I was $500 away from 500k last month and I’m pretty sure I’m even further away this month.

As a reminder, my portfolio was at $499,535 last month.  Continue reading “Portfolio Review – February 2018 – Stock market volatility makes a comeback”

Is this the start of the next stock market crash?

The stock market was down today and my office was awash with talk of a stock market crash.

dow jones

“There goes my retirement,” said one of my older coworkers, partially in jest but it was the younger crowd that seemed more worried. I work in a place where no one ever talks about their investments but today that changed. People know that I’m interested in investing but I rarely get any bites when it comes to investment conversations. Suddenly, I was deluged with instant messages from people asking if they should take their money out of the market.

“Is this the start of something bad?”

I didn’t really know how to answer that.

“This is the stock market,” I said, “this is how it works.”

It wasn’t a great answer but the best I could come up with. The truth is often just that simple. Sometimes and more often than not stocks go up but sometimes they go down. Sometimes they go down a lot and for extended periods.

“Is that time now?”  Continue reading “Is this the start of the next stock market crash?”

Time in the Market’s 2017 Year in Review Extravaganza

2017 has passed on, it is no more, it has ceased to be so it’s time FOR THE 2017 YEAR IN REVIEW EXTRAVAGANZA. 

What makes this an EXTRAVAGANZA? Will there be fireworks and fried dough? No, there won’t but there will be graphs and things like that and those are just as good; some might say better.

Thanks for the support bear friend.

Since I’m a resourceful chap, I kept track of my portfolio, dividends and expenses on a monthly basis. Now that the year is over and the December data is in, I can take take that data and compile it into a yearly view.

Don’t get too excited yet because there’s more than just that. I’ll also take some of this data and break it out into quarterly views and even calculate my portfolio performance for the year. Now we’re talking; it’s a party and everyone here is excited!

Let’s take a look at my portfolio first. Continue reading “Time in the Market’s 2017 Year in Review Extravaganza”

The Time in the Market portfolio – January 2018 update

It’s spreadsheet weekend and the weather is perfect for another portfolio review. It’s so cold that there’s no reason to be outside right now unless your hobby is to make ice sculptures.

I’m doing this a bit earlier than usual this month. The typical schedule is to do this update on the 2nd Sunday of the month but I think I’ll switch that up this year. The second Sunday of the month often falls late in the month. It’s on the 14th this month which would be over 35 days since the last update. I’d rather have it done earlier in case I want to make some changes to my contributions. That means the 2nd Sunday rule might not always hold if the Sunday falls particularly late. It’ll be more like the first Sunday of the month that falls after and including the 7th.

It’s a bit arbitrary but arbitrary things are what investing is all about so it’s a good fit.

The portfolio has had a ridiculous run lately as the market has continued to rise. I have had 15 straight months of consecutive growth which is pretty crazy. 9 out of those 15 months have also had growth of 10k or more and that includes the last four months.

That growth has propelled my portfolio from 366k in December 2016 all the way up to $483,999.27 as of the December update. That means I’m pretty close to my next milestone of 500k and I’m eager to see how much closer I got this month.

The stock market has continued to perform well with the S&P 500 returning 3.4% since the last update. I also had some pretty good savings rate months lately which bodes well for my chances at hitting 500k soon.  Continue reading “The Time in the Market portfolio – January 2018 update”