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January, 2025: 8 16

Disclaimer - IMPORTANT - Read this first!

Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing.

Over the course of our marriage, that is since our initial total assets of about $10,000 in 1985, this nest egg has increased at a compound rate of roughly 12.6%. Of course this rate of increase must be taken with several grains of salt since, on the one hand, we have been partly living on our assets since I retired at the end of 2001 and, on the other, we have made contributions to investments throughout, and these have affected the outcome in varying ways).

Though grateful we are doing OK, I am humbled when looking at this result for I realize that, had we simply invested in a good combination of mutual funds, for instance, 25% each in VSMSX (VIOO), VSIAX (VBR), SCHD, and VMVAX (VOE), rebalanced annually (or after a year and a day in taxable accounts), we ought to have done substantially better, perhaps having now a nest egg worth $5-10 million, and I would have saved a lot of hours too that have been spent trying to find the best stocks to buy and sell at opportune moments over the years.

With that in mind, I am putting a third of our liquid assets into those four mutual funds or ETFs, will start with another third in reserves and money market funds, and will devote only the final third to the best I can find of individual value assets. As the major indexes inevitably fall into correction (down at least 10%) or bear market (down at least 20%) modes, I shall invest more at the then relatively bargain levels, thereby getting to nearly 100% investment once such significant market set-backs have occurred. If later it turns out that the mutual funds or ETFs portfolio is beating the individual value holdings, I shall switch all our investments to those funds/ETFs.

Meanwhile, the core 25 holdings remain as in our last entry until 1/15/25. The plan is simply to post them till they have been held a year and a day. Once again, they are as follows:

Dividend Assets CHK; CMCSA; F; FINV; JWN; NXST; SD; WFC;

Value Assets ALSN; BOOT; CPE; GPOR; INMD; INSW; JKS; NEXN; PBF; SBOW; SWN; ZYME;

Growth Assets CELH; MNDY; NARI;

Exchange Traded Funds [ETFs] QQQ and VBR.

1/16/25- Last year's core 25 holdings have now been sold (a year and a day after acquisition). Overall they had gains but not up to those of the S&P 500 Index. I asked a Schwab rep for advice on how to be doing better with our portfolio returns. He suggested a better allocation among all the sectors, whereas ours till then have been more heavily in just five, especially energy and industrials, and they were also dominantly my preferred deep value assets. Value beats growth in the long run, but for a number of years has been lagging the market. He suggested stocks that are not as well recognized as those with high flyer super growth characteristics, such as big tech securities, but also ones not necessarily as poorly traded as those that have mostly comprised our purchases.

With his guidance in mind, I shall be gradually buying shares of stocks within the full array of market sectors, shares of strong businesses which also, however, are currently undervalued, even if they are not at the steepest of bargain levels.

This past several days, then, I have looked at two sectors and found within them above average investments with excellent value characteristics. Their tickers are: 1. in the Communication Services sector, CMCSA, T, and TGNA; in the Consumer Discretionary sector, ADT, LKQ, PVH, and M. I have been, and expect to continue, buying shares of one stock from a single sector weekly, purchasing with the same amount each time, till have rotated through all the sectors, then to repeat for the following several weeks, etc. In the course of a year at least four promising stocks will thus have been bought in each of the eleven sectors.

Am continuing as well to hold shares of VIOO, VBR, SCHD, and VOE and will be buying more as/if their combined market value decreases substantially over the next several months. These ETFs too have a decidedly value orientation and historically have done better than the market during corrections or bear market declines.

Meanwhile, our portfolio is up $51,556, or 2.28%, so far this year. Total liquid assets stand at $2,310,390. My wife's and my nest egg of all assets, including real estate, is worth $2,870,283, a gain of $51,696, or 1.83%, since the end of last year.

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