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June, 2020: 6 26
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. |
6/6/20-Since the prior entry (5/31/20), there have been no changes in our basic 25 holdings. They therefore remain: ACCO; AWF; AYX; BAC; BHK; BPOP; BSRR; CAL; CRWD; CTBI; DDOG; HBQ; OKTA; OPBK; PFBI; QQQ; RCII; RSP; TSBK; VBF; VCIT; VIOO; VMFXX; WFC; and ZM.
Total portfolio dividends are gradually increasing toward our year-end target of at least a 13.5% annual increase (as calculated from the latest, 12/31/18, base amount of $37,500). We are hoping to do better than that this year, aiming for total income from the portfolio of $50,000.
Our liquid assets have increased in market value to $1,486,993 since 5/31/20, a gain of $62,069 or 4.36%.
Net total assets (including real estate and all other holdings), at $1,800,603, are down 5.40% or $102,830 from our 2019 end-of-year level.
Analyzing my investment approach so far in 2020, I realize I made a fundamental error. Intellectually, I know that market timing seldom works to our advantage. Nonetheless, in March, when the stock market was plummeting and the economic news looked dire, I sold off a lot of our holdings (though some were down significantly or even had a net loss) in order to raise reserves that might be used later for purchases. I thought I could foresee there would be substantial bargains later in the year.
Our intended method of adjusting the portfolio to major shifts in the market had instead been to rebalance when equities would have significantly risen or fallen relative to a target allocation, in this case above or below 66.67% of total liquid assets. I was greedy last January, though, and so did not sell off stocks then to get them back to two-thirds of our portfolio, even though by then they had added several percent to that target level.
Yet had I sold the excess above target in January, as I should have done, the portfolio would have been in good shape, having extra reserves and bond holdings, when it would have been time to rebalance again in March, once great prices in depressed stocks were by then available. I would, through selling in January and buying in March, have achieved the ideal for investors of selling when prices are up and buying when they are down. That technique would almost certainly have had a better outcome than my sell-off after prices were already down toward the end of March and in early April. The loss noted above of over $100,000 since the end of 2019 might well by now have been a gain of that much or more.
With 20/20 hindsight, I am ready to admit my mistake and so expect over the balance of 2020 to gradually increase equities back to the previous allocation of 66.67%, notwithstanding that, emotionally, I am as yet quite concerned that the recent leap in stock prices is but a bear market rally, and that we shall before too long see a resumption of the selling that started two or three months ago.
If I am right about that, however, I hope next time to respond with a cooler head, simply waiting for a big drop in our intended percentage for stocks and, when it occurs, rebalancing to raise equities back to the correct level using some of the reserves and bond assets (which at that point would be higher than desired portions of the total).
6/26/20-Since the prior entry (6/6/20) there have been no changes in our basic 25 holdings. They remain: ACCO; AWF; AYX; BAC; BHK; BPOP; BSRR; CAL; CRWD; CTBI; DDOG; HBQ; OKTA; OPBK; PFBI; QQQ; RCII; RSP; TSBK; VBF; VCIT; VIOO; VMFXX; WFC; and ZM.
Total portfolio dividends from current assets are close to their year-end target (a 13.5% or greater annual increase [as calculated from the latest, 12/31/18, base amount of $37,500]).
Since 6/6/20 our liquid assets have fallen 1.27% or $18,886 in market value to $1,468,107.
Net total assets (including real estate and all other holdings) stand at $1,781,927, down 6.38%, or $121,506, below their 12/31/19 value.
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Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.