Portfolio Review – September 2018 – Domestic Stocks reign supreme
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Domestic stocks continue to kill it this year leaving everything else in the dust. That was no different this month as domestic stocks outperformed foreign equities again.
The information below from Personal Capital shows what I’m talking about.
Since the last update, both the S&P 500 and Dow were in positive territory while foreign stocks lagged again. That’s no different from what I saw last update when I finally started lagging the market for the year.
Having a 20% allocation to a struggling foreign stock base will do that to an investor. Still, the You Index, which represents my returns was positive this month and that’s always nice. I might have done better being in all domestic stocks but having some bonds and international is nice for that good ol’ diversification.
YTD, the story remains similar as seen below.
Foreign stocks are a real stinker this year as trade wars weigh on both developed and emerging markets. It’s hard to tell who’s “winning” with all these trade issues but the markets sure seem to punishing foreign stocks a lot more.
I’ve had some winners in the foreign category like Softbank, and FCAU but also some losers like Tencent and Baidu. China in general has been a bad market to be in this year as have a lot of other emerging markets. That likely means some good values in the long run but the performance is likely going to be poor in the short term.
It’s a good thing I’ve got a long term outlook. It’s likely that I’ll be buying bonds and international stocks for a while based on the performance figures above but we’ll see when I look at my asset allocation.
My portfolio last month broke the 550k mark ending at $550,092.88 so let’s see where it sits now!
My portfolio now sits at $558,278.67!
It’s another new record month. There were a few slightly turbulent months to start the year but we’re back on an upward trajectory. This really is quite the investors’ market.
That’s a 1.49% bump over last month which is higher than the S&P 500 over that same time frame but includes contributions. As shown above, my You Index performance from Personal Capital means I lagged the market again this month and am behind YTD as well.
Taxable accounts were up 4.4% due to strong performance in the market and some individual stocks like UNH.
I also opened an M1 Finance account and have been putting some money into two portfolios I created there. M1 Finance is a cool little tool that allows you to create portfolios that include as many individual stocks as you want in what they call slices. That means if I’m interested in video game stocks, I can create a slice of 8 video game stocks and put money into all 8 stocks based on any weighing I choose. The great thing is that you can buy partial shares which is great for investors starting with a small amount of capital that want to invest in multiple stocks. Best of all, it’s all free and there are no trading fees!
Tax-advantaged accounts were up 0.8%.
Cash was down 7% as I put some money to work buying shares of FCAU and more shares of Tencent as the stock fell into the low 40s. China is risky now but I like the long term prospects of that company. There’s a reason why most of my recent purchases are international stocks as I find some values there and my asset allocation in that area is lagging.
The aforementioned M1 Finance account was also a source of additional cash infusion.
Cash makes up 5.7% of my portfolio which is below my 10% maximum. I still have plenty of dry powder in case good values arise.
Let’s take a look at my asset allocation now.
International continues to lag way behind as domestic stocks keep rising. Bonds are also a bigger laggard this month as well. That’ll happen any time there’s strength in stocks.
Despite additional money flowing into international, my position there has actually gotten a good deal worse as seen below.
US large caps are the clear winner shooting up quite a bit despite little in terms of contribution. Most of my money last month went into international and that has only fallen further behind.
I’m not in a spot where I need to sell anything. However, if we see continued domestic strength then I might get there in a few months. Right now, the plan is to fill these shortfalls with additional contributions. That hasn’t worked that well the past few months but this terrible international run can’t last forever, can it?
That means the plan for next month is as follows;
- Buy international funds/stocks/ETFs targeting both developed and emerging markets. Tencent and BAM remain on my list as potential additions.
- Buy bonds in tax-advantaged accounts.
- Cash is at 5.7%. Look for individual values in the market.
I’m up 8k this month so it’s a solid month even if I lagged the market. It’s hard to be upset when your portfolio grows so much any given month. Overall, YTD performance is still great and I’m up over 100k since the last September update and that’s crazy. It’s basically 1/3rd contributions and 2/3rds growth and that’s not a bad ratio!
I’ve got my wedding coming up at the end of this month so contributions will likely be nonexistent. There’s a lot of expenses that go along with that!
Still, I’m not too far from another milestone and at this pace, I might be able to hit it sometime in the first part of next year. That’s assuming the stock market doesn’t take a little pause to unlock some value for us long term investors.
I won’t complain either way since I’m in this for the long haul. I like seeing larger numbers but I also like buying stocks at a lower price. That’s what I’m doing with international now and I know that strategy will work out well in the long run.
Thanks for reading and let me know how your portfolio did this month or if you have any suggestions for international stocks to check out.
I always like your visualisations on your allocations. You show a different way of looking at your portfolio which I find helpful for my own review. Keep up the great work Time!
Would you consider lessening exposure to foreign / emerging markets when the dollar is so strong? Could be helpful to use the US10YR rate as the signal. Something like 3% I decrease.
I try not to market time so I generally stick to my allocation unless something looks absolutely awful.
I don’t think foreign stocks are in that spot yet. However, I do a yearly asset allocation review and we’ll see where I’ll go with that in 2019.