My portfolio – July Update – earnings season

Q2 earnings season is upon us. The first few reports have been decent but it is way too early to know whether the expected growth rate of 6.5% is realistic. Q1 results were strong and if that continues through the end of the year then we could be in for more solid performance in the stock market.

My portfolio has been the beneficiary of that performance as I’ve seen 9 straight months of growth. The S&P has been positive in 7 of those 9 months as well so that certainly helped. It wasn’t just tiny increments either as 5 of the last 7 months have seen bumps greater than 10k. I’d be financially independent in no time with growth like that!

The market took a small break this month as the S&P 500 return was back to a negative, coming in with a -0.27% return since the last update.

The market will have its pauses and falls but I’m overjoyed with the growth I’ve seen recently. It’s impressive how quickly capital can growth once you hit a certain dollar threshold. The market barely has to move and my portfolio can spike $10k.

It also makes you realize how much I could lose if the market moves in the other direction. Something that’s always important to keep in mind. It’s easy to forget that in a market that has been so favorable for the past years. Doing these monthly updates and seeing the big jumps always makes me remember that dollar swings can be large in either direction.

It’s also great to see that my asset allocation has gotten to a point where everything is close to target. I can easily direct new purchases towards classes that fall below target. That means that I’m buying that things that are more likely to be undervalued in relation to other assets from a long term viewpoint. That’s good for my long term returns.

Let’s take a look at my portfolio today and where I’ll be directing money next month. 

earnings season

The portfolio now sits at $428,634.90!

It’s not another 10k+ growth month but it is the 10th straight month of growth which is great to see. It’s nice to see a 0.55% growth in a month where the market was negative even if a lot of that was driven by contributions.

UNH, one of my biggest individual stock holdings paid out a strong dividend as I talked about here and also continued its strong performance with a 3.58% return since the last update.

My ESPP(employee stock purchase plan) also came in this month. While I account for that in my portfolio total by estimating the purchase price, I’m often a bit off due to the way the discount functions. That means that my asset allocation will be skewed by that until I get rid of the stock and re-allocate the money.

The portfolio was up 0.55% and was driven by 2.8% growth in my taxable accounts. My tax-advantaged account had a -0.07% return. Cash had a 3% reduction as I continued to buy ETFs to fill my asset shortfalls.

Cash makes up 7% of my overall portfolio and I’m eager to find some uses for it. I mentioned in my dividend update that we were looking for a house and also made an offer on one. Unfortunately, it didn’t go the way we wanted and we didn’t get the house. Still, it’s possible that I dip into some of this cash to put down a bigger than 20% down payment. That’s a guaranteed 4% return on my cash.

I’ve shown little drive to purchase a ton in this market leaving my cash pile quite high. Using it on a down payment would force me to use that money as I’m obviously not super eager to buy individual securities right now.

If I do buy a house, these portfolio updates may transition to net worth updates. I’d like to see a big picture view of all my assets once a house comes into play but that’s a decision for another day.

Let’s take a look at my asset allocation.

Asset allocation july 2017

Bonds and REITs were the laggards last month and they’re still trailing. Now, small and mid-caps join them alongside the emerging markets this month.

Here’s a breakdown of each asset class versus target.

  • US Large Cap at 43.25% versus 42.5% target(+0.75%)
  • US Mid Cap at 9.77% versus 10% target(-0.23%)
  • U.S. Small Cap at 9.82% versus 10% target(-0.18%)
  • US REIT at 9.80% versus 10% target(-0.20%)
  • International Developed at 15.12% versus 15% target(+0.12%)
  • International Emerging at 4.92% versus 5% target(-0.08%)
  • US Bonds at 7.33% versus 7.5% target(-0.17%)

US large cap shoots up quite a bit due to my ESPP purchase which sends some of the other areas out of whack.

The ESPP my company offers is a great deal as it’s a 15% discount to the lower of two prices(the ending of or start of the ESPP period) and that means I can buy the stock with at least a 15% discount but often a far bigger discount if the stock rises during the period. There’s also no holding period so I can say right away.

I haven’t sold yet but until I do, the large cap will skew the weighing a bit. I generally don’t hold my company stock since I already have my paycheck tied up here and don’t want my savings tied up here as well.

As long as stocks continued performing well and if interest rates creep up, bonds and REITs will continue to lag the other asset classes in the near term so that’s what I’ll likely be buying for a while. The strong US dollar may also mean decent performance from international countries and mixed results from US companies that do a lot of business overseas.

The plan for next month is as follows.

  • Sell ESPP shares
  • Buy US bonds, REITs, mid cap and small cap to fix shortfall

That’s it for this month. It’s good to see another positive month and to remain close to my targets on my asset allocation plan.

How was the latest month for your portfolio? Are things looking good on your end as well?

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3 thoughts on “My portfolio – July Update – earnings season

  1. Hi timeinthemarket,
    Congrats on the 10th month of growth! Will a house purchase change your view of asset allocation e.g. would you consider your house as part of Real Estate in your asset allocation? That’s one of the reasons why I’ve avoided REITs in my portfolio.
    I’m recently more persuaded of not paying down my mortgage with extra money, so I’m back to investing the additional contributions I was making instead.
    Best wishes,
    -DL

    1. I’m not sure if I’ll cut back on REITs. I don’t really see the house as an investment and more as a hedge against future rental costs. I’m not sure they share similar return qualities either so I’ll probably keep my REIT exposure.
      I can see the appeal of investing versus paying down the mortgage(the long term return is probably better) but I have all this cash laying around and I’m just not all that excited about buying a ton of individual securities in the near term for some reason.

  2. Nice, you’re almost to half a mil! Which is something that the majority of people in this world will never hit, so congratulations in advance to all that you’ve already accomplished!

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