State of the Stash – August

It is well past time for my monthly personal finance journal update, so let’s get to it. August was another of those months where the grind was real. I wasn’t able to make much progress due to the fluctuations of Mr. Market.

All of the prior updates in this series are available on the Savings Diary page.  The first, I’m Just Saving…Personal Finance Diary kind of provides the “origins story.”

Prior Update

In the July update, I was riding high from the bounce in the markets. I ended the month at about $219,000. I ended the update by stating, “July was nice, but as I sit here writing to you from the future (i.e., August), things are getting a little rocky.” Well, the month continued to be pretty rocky. Lots of tweets about fake meetings…the usual.

CURRENT PORTFOLIO

I remain “overweight” foreign stocks.  See Media Pin of the Week – More GMO,  Weekly Media Pin – Grantham on Graham,  Best Foreign Value Factor ETFs,  Resource Roundup: More CAPE, and Foreign Value Factor ETFs Update.

Overall, about 50% of my overall portfolio is allocated to non-U.S. domiciled stocks. I also manage a bit of my portfolio based on a little systematic, trend and value strategy. The trend stuff is all long. I’m down a little exposure in the value based strategy.

I recently bought some Tapestry (“TPR”) and it promptly tanked. To be fair, it tanked both before and after I bought it. As I type today, I’m basically break-even on it. So, it has been an interesting ride.

TPR just fired the CEO and the Chairman took over (former Goldman banker). I can’t tell if it is “in play.” The media reported the explosion in the shares was due to this move, but if you compare it with Capri (formerly Kors) or TIF, or any of the other luxury goods sellers with big perceived China exposure they look identical.

I’m not sure I follow why they fired the CEO (other than because the stock was down Bigly) because the dip in Kate Spade looks a lot like what happened to Coach before he returned it to solid growth and fat margins. Anyways, TPR is just a little play position. The thesis is basically super high ROEs, gross margins, etc…seems really cheap because of trade war and/or concerns about fashion trends. They are buying back stock and paying a fat dividend. I basically think we are status seeking monkeys and they will continue to prosper. I round tripped this from ~$30 to $50, a year or two back, so I may be falling victim to some sort of recency bias. Then again, if 90’s logo accessories comes all the way back, as a trend, this would probably be a 5x in short order.

Another quick update: My BRX position is sort of crushing it YTD (with all REITs) but i’m up only about 15% since I put on the position (almost exactly 1 year ago). Coty and CAG are doing aiiight too. I’m down a little and maybe looking to exit COTY but not at this valuation.

I’ve been watching lots of FundSmith videos on youtube (like…all of them). I think this might be a strong signal of peak “quality/compounder bro” enthusiasm. I’m also a bit of an Anglophile, so maybe that’s the attraction.

THIS MONTH

Nothing unusual happened on the income and spending fronts. In August the equity markets kind of tanked. The S&P 500 was down about (2.0%). Foreign stocks were down more: (2.6%) for EAFE, and (4.9%!) for EEM. Bonds were ripping, with the AGG up 2.6%!

I shortened up the duration of my bonds a lot (although that’s more for friends and family accounts that I help with, as I don’t have a lot of traditional bonds in my AA). I understand that rising prices attract buyers, so this could go on for a while, but I just don’t get taking more duration risk for lower yields as an individual investor with no investment mandates.

A little tip is that one can usually get materially higher yields on CDs with the equivalent maturity to whatever treasury you are looking at. I am using a mix of CDs (brokered ones through Fidelity mostly…for convenience) and treasury bills.

I think it is interesting that REITS were up 3.4% last month. Many people/academics will tell you they are just stocks and there is no added diversification there. They were wrong AF in August, no matter what their database says.

I ended the month basically flat at $220,000, so thanks for less than nothing Mr. Market.

ONWARD

So far, September has seen a strong bounce back. It would be nice to hit another round number. Based on this pattern of the last several months, maybe September will be a strong month. If not, I will just continue to lean into the wind.