My portfolio – May update

It’s the second Sunday of the month and that means it’s time for another portfolio update!

This Sunday also happens to be Mother’s day so I have a nice brunch to look forward to as well before another hectic week at work begins! Make sure to send your Mom your love if you haven’t yet!

The market started off strong after our last update but lost some steam towards the latter days in April and ended up going nowhere for the month. Apple’s lackluster earnings and poor stock performance in that month certainly didn’t help the S&P 500 or my portfolio.
I wasn’t every active this month beyond my usual automatic retirement and taxable account contributions that go into mutual funds and ETFs. Apple’s recent stock drop has made me interested in picking up some more shares as the valuation is now quite attractive despite the poor earnings and sour reception. I think the company still has a bright future ahead of it but I’ll try to talk about that in another entry sometime in the near future when I can find the time.
Let’s take a look where we stand this month.
As a reminder last month’s total was $312939.32, a 2.3% improvement over the previous month.
I’m not overly concerned with month to month performance as a long term investor but it’s always nice to see steady progress in an upward direction. I saw an increase of 1.38% in my portfolio total despite relatively anemic market performance so a lot of this increase is driven by contributions.
My overall portfolio total is now $317281.55, not a bad number considering I started below 300k just a few months ago.
The graph above is very interesting as well as it shows the volatility of the overall market and supports the theory that time in the market beats timing the market.
The market can swing up and down very quickly and missing those huge short term gains by being out of the market due to fear or panic selling can have a huge impact on your overall return. I went from $293k in December all the way down to $273k in February; a 7% reduction in size in two months and that’s despite continuing contributions through that time that reduced the drop. I certainly could have panicked and sold but kept buying instead at lower prices and saw my portfolio benefit rising all the way up $317k today, a nearly 16% increase since February.
As a long term investor I actually like these dips since they allow me to buy at a lower price and actually improve my long term return. Lower prices generally mean I’m buying higher yields(for those concerned about dividends) and reducing my risk by paying a lower price for my reoccurring contributions that I would have bought anyway.
My taxable account this month increased 1.7% while my tax-advantaged account increased 1.66%. The poor performance of Apple in my taxable account was offset by decent performance of some of my other individual securities as well as my ETFs. My cash hoard went down a bit as I bought a few shares of ETFs to help fix my asset allocation and now makes up 7.9% of my overall portfolio. That’s down from 8.1% last month and 9.5% two months ago.
I’m still sitting on more cash than usual as I actively search for good long term values that are somewhat hard to find these days as investors are willing to pay higher prices due to lack of attractive investments in other places(Bonds).
Now let’s take a look at the asset allocation and where I have to make adjustments.
It was clear to me from the start that my asset allocation fix will take some time but I sure have made a ton of progress towards that goal.
When I started in December, I had asset classes that were 5%+ off target and most were 2%+ off target. Now I’m just down to one that’s 3% off target and the others are all within 2% of the target and that’s all in the span of a few months. The near term goal is to get as close as possible to these targets and then direct future contributions to asset classes that are underweight with respect to my targets. Once the targets are “fixed” then market movements will dictate deviations from target more so that poor tracking on my side. That means I can more effectively target my contributions to asset classes that are potentially under priced by the market from a long term perspective.
Here’s where I am versus where I want to be on these asset classes this month.
  • US Large Cap at 39.3% versus 42.5%(-3.2%)
  • US Mid Cap at 11.8% versus 10%(+1.8%)
  • US Small Cap at 9% versus 10%(-1%)
  • US REIT at 8.8% versus 10%(-1.2%)
  • International Developed at 16.2% versus 15%(+1.2%)
  • International Emerging at 5.6% versus 5%(+0.6%)
  • US Bonds at 9.3% versus 7.5%(+1.8%)
What’s good about this month is that all the asset classes either improved or stayed the same in terms of deviation from target versus last month so things are moving in the right direction.
Mid caps are proving hard to fix because of their presence in a lot of small cap funds so I may have to manually adjust that again by moving some mid cap fund money into a small cap fund. I may also do some additional moves moving some of my bond money into some REITs to speed up the fix on those asset classes.
Large caps have been out of whack since I sold some individual securities a few months ago and while most of my new money has been going into large cap funds – that’s a slow fix due to the size of that piece of the pie. Apple’s attractive valuation may mean I buy some more shares soon especially if the price continues dropping into the $80 range making them an attractive long term dividend growth opportunity due to their strong cash position and FCF generation.
Here are planned changes for this month.
  • 401k contributions will continue be large cap heavy – potentially changing to 100% large caps
  • Move a small chunk of my mid cap fund into small caps which still have some mid cap exposure
  • Move some of my US bond fund into REITs
  • Use excess cash to look for attractively valued individual securities
Hopefully we can get to a point where I’m within a % away or less on all the asset classes sooner than later. It certainly won’t be easy but I know that getting to that point means contributions can be more readily used to target asset classes that have potentially fallen out of favor.
Next week – I’ll have my savings rate update for April which will likely be a bit disappointing and so far May isn’t looking too great either. My expenses have meant that I have had no excess cash last month or this month to contribute to my accounts beyond what automatically goes in there via my paycheck. That’ll mean a poor savings rate for both months!
Thanks for reading. Let me know what you think about my strategy here or share your own as well! See you all in another month for another portfolio update.


4 thoughts on “My portfolio – May update

  1. Nice detailed report.

    It looks that we have a very similar approach focused on ETFs. I also use our monthly buys to invest in the asset class that is below target. This is indeed a form of rebalancing.
    I do have some extra cash hat can go into undervalues stocks or sectors. Gold mines are my most successfull move here. Looking into other classes as well…

  2. I think now is an interesting time for alternative sectors especially in the commodities area(miners, oil, fertilizer) but I don't necessarily target those business most of the time although some have gotten on my radar now. I think I have some exposure there in my small-cap and mid-cap funds and did have some gold miner funds(GDXJ) in the past but sold out when they started looking iffy. I do like the idea of a small % of overall portfolio in a riskier sector but haven't taken a super close look as to where it's worth it in the long run. There's certainly a lot of volatility with those sectors.

  3. It's not a bad number at all. Starting at $300k a few months ago and being at $317k is fantastic. There have been a few bumps in the road the past few weeks. Earning misses are on the rise, and with it comes market uncertainty. The fact that your still making money each month is a testament to a sound strategy. Nice work.

  4. Great looking report and great looking portfolio. Got to love how quickly the value of the portfolio has grown, considering it was less than $300k not so long ago.

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