State of the Stash – June

It is time for another update to my personal finance journal. Tracking my net worth and savings is important to help me to stay motivated and on track. I hope it is also interesting for you to follow along on my (long) journey. This month I continued to save, but Mr. Market did most of the work growing my portfolio!

In the prior update, I ended May at about $242,000.

CURRENT PORTFOLIO

In June, stocks continued to rise, but at a slower pace than May. As you can see in the chart below, value stocks (VBR, RPV) and foreign developed stocks (EFA) under-performed the SPY by a little. Nothing, it seems, can beat the Nasdaq 100 (which was up almost 6%!).

I am still “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. This is nothing crazy; about a 30% overall allocation to foreign stocks (about 50% of my equity allocation).

TREND + VALUE ALLOCATION

I also manage some of my portfolio based on a little systematic, trend and value strategy.

In essence, I apply one of the simple moving average signals (thanks to covid-19, everyone is very familiar with moving averages) and combine that with a valuation trigger/overlay.

The goal is just to have some risk management in place when stocks are expensive and have negative time-series momentum/trend (e.g., when stocks are down over the last 12 months).

As of the first week in June, due to the positive price trend, I have been long U.S. stocks in this account. The account has about 10% in cash/t-bills. The remainder is divided equally: 30% each to the SPY, the Dow Jones Completion Index ($VXF), and foreign stocks (e.g., $VXUS).

I have about 15% of my investments in this account/strategy, but I am maxing contributions to this account. It is tax-deferred and there are no per transaction costs. I only make changes once a month to try and limit the number of “whip-saws”(when you sell and are forced to buy to get back into the equity exposure at a higher price/level). I made a change in June to go back “full long” after moving to t-bills with the U.S. allocations in the account back in March.

The account is down (9.74%) YTD. This account/strategy continues to lose YTD versus the 60% – 40% allocation that I use as a benchmark. The benchmark is only down (.08%) YTD (this is a 60% – 40% version with 20% in foreign stocks, 40% in total U.S. market index and 40% in the $AGG). SPY is only down (1.99%) YTD.

Overall, I have about 30% in t-bills or their equivalent. In my larger 401(k), I allow myself to slide the allocations based on valuations (within limited bands). I’ve also got about 40% of my fun fund in cash and I have some cash in my HSA.

THIS MONTH

I ended June at ~$257,000. I saved a little over $5,000 this month. So market appreciation and income from investments added about $10,000 to my ledger in June. Not bad!

GOALS!

With the new year/decade, I established some goals for 2020.

I am on pace with my 60% savings rate goal (or right around it) and $50K in annual savings/contributions to investments. My body composition goal is status quo…

As for the reading goal, YTD I have finished:

When Genius FailedConcentrated InvestingFactfulness, the Rebel Allocator. Last month, I read Walden by Thoreau. I’m not sure I’ve read this classic before, but it is definitely one to adding to your list. Obviously, many of the ideas Thoreau discusses, concerning Stoicism/minimalism/materialism, are very influential in the personal finance “F.I.R.E.” community. It is a quick read and could be very influential in your life, especially if you have not had a chance to really step back and evaluate the materialism and consumerism that are likely embedded in your life and whether they are helping you lead a fulfilling life.

My “take away” from reading Walden is to plan to take more (some) camping trips. Thoreau basically relocated to the woods for a few years and lived very simply. Jacob Lind Fisker from Early Retirement Extreme did something like Thoreau, relocating to a vehicle in the desert, to reset his frame of reference on life (my characterization).

I think a similar (albeit, much less intense) exercise that I would like to try and incorporate into my life is going on camping trips (like, in a tent….with no WiFi). I suspect that this will serve as a sort of “hedonic reset.” For example, I am likely to appreciate my current mattress and/or hot water heater much more after “roughing it” for a few days in the woods. I also may discover I am happier with fewer of these items and “comforts.” Should I attain a higher level of enlightenment, I shall report back.

I am also still reading Towers of Debt (about some famous Canadian real estate developers who blew up) and a couple of other books that I will mention when I finish.

ONWARD

I made some pretty decent progress in June. I always think it is cool when the market does more work growing the portfolio than I do grinding at my “9-5.” My portfolio continues to remain conservatively positioned, given valuations and what is going on in the world.

I am planning to put out a quarterly update for my Fun Fund in the next few days. I am also thinking about posting some “rules” for managing this account. Finally, I think I am going to conduct a semi-annual “audit” of my spending, just to check in and see what is going on at a more detailed level.