My main goal* was to build an investment and cash portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.
Most of July was a great month for my finances. On July 24th, my portfolio was up over $60,000 for the month. For. The. Month. To put this in perspective, my annual gross salary was less than this for the first 5 years of my career in software development.
Anyway, there was a loaded word in that last paragraph:
So, you know something bad is about to happen. Kinda like you’re the guy wearing the red shirt in Star Trek and you’re about to beam down to the mysterious planet. Or, you’re the person in the horror movie going out to inspect the strange noise in the woods.
Queue the ominous music!
The thought I had on July 23rd was this:
I’m up $60,000. Facebook reports earnings tomorrow and Amazon the day after. If they both have solid earnings, I could finish July up $100,000!
At the time, my Facebook shares were worth about $300,000, so a good report combined with good news from Amazon would easily propel my portfolio over the $100,000 mark.
So yeah… +$100,000 didn’t happen. And by didn’t happen, I mean quite the opposite happened. My stock portfolio took a huge kick to the groin, erasing all of the gains for the month and then some.
Half of me isn’t worried while the other half is terrified.
I’m Not Worried
Every company has ups and downs. To expect every quarter to be a winner is ridiculous. I’m a long-term guy through and through.
Facebook has a lot of momentum (and untapped revenue potential) in Instagram. Some say it’s worth more than $100,000,000,000 alone. That is billion with a big “B.” Facebook’s entire market cap is about 500 billion.
And don’t laugh at my crappy month just yet. If you bought Facebook at IPO like I did (1,000 shares at $42), your returns are the S&P 500 x 5:
But my returns are even better because I bought an additional 1,000 shares for an average price of $20. Here are some of my purchases:
I’m Terrified Because
Facebook is tapped out. They have over 2 billion active daily users. China isn’t going to let it in. There just isn’t much more room for user growth.
Facebook doesn’t have a huge moat. People get bored of social networks. Remember Myspace and Friendster? Facebook and Instagram will eventually be displaced.
And most of all, Facebook has behaved poorly. The company was careless with user data and wasn’t transparent about the problem. Naughty, naughty. Do I really want to own a company that behaved like this?
What To Do
I blab all the time about how I’m an index investor now. It’s true. My stock holdings are a holdover from my days as a stock picker.
I’m slowly selling off my individual stock portfolio to avoid capital gains. It will take me years to sell off my Facebook shares, but unless new information comes along, it will be the first to go. I feel a lot better holding Amazon, Google, and Berkshire Hathaway.
In the meantime, I may be in for a roller coaster ride and that’s ok; I enjoy some occasional drama.
July Performance Update
Facebook thrashed my portfolio like a chew toy in the mouth of a Doberman Pinscher. My net worth started the month at $2,149,222 and ended at $2,142,950 for a loss of $6,242. Queue the sad trombone.
I forgot to take a screen capture of Personal Capital showing my net worth, so you’re going to have to settle for this crappy drawing:
2018 (as of 8/1/2018)
- Days elapsed: 213
- Investment portfolio gains: $100,249 (including 401(k) contributions**** of $26,723)
- Net worth gains: $150,249 (investment portfolio gain of $100,249 + home appreciation of $50,000)
Since the start (1/1/2013)
- Days elapsed: 2037
- Investment portfolio and cash: $1,627,920
- Gains since 1/1/2013: $1,041,707
- Needed to quit work ($1,120,000 in investments): Mission accomplished!
We have a diverse portfolio that includes real estate:
- mobile home park (elevated home living to the easily offended)
- private loan (only one outstanding)
- syndication deals
And stock market holdings:
- individual stocks (old thinking)
- index funds (most money goes here now)
Here is the breakdown:
- Stock market: $869,395
- Monthly gain: –$9,583
- 2018 gain: $79,609
- Real estate: $738,555
- Monthly gain: $3,291
- 2018 gain: $20,640
- Cash reserve: $20,000
This is the first month since I started keeping track (earlier this year) that real estate has beaten stocks. My real estate holdings aren’t setting the world on fire yet. but they spit out reliable income. Also, as the investments age, they will start to produce more money. Syndications mostly payout out at the end and the trailer park was cash flow positive this month for the first time (it needed a lot of TLC).
One Other Thing
Out of all the stupid things to blow money on, cars are about the worst. But, I did it anyway. Last year, I bought a nice example of my childhood dream car, an Acura NSX:
But, I always loved the car. It’s lightweight, handles like a dream and Honda reliable. I figured I’d buy one and work it out of my system.
In any case, I’ve had it now for 16 months with no drama. It’s reliable and fun. I haven’t been arrested for driving like a maniac yet. But one thing I didn’t count on was potentially making money from the hunk of aluminum. Earlier this week. Mrs. PoP (a fellow NSX owner) sent me this article:
I have no idea if the NSX will outperform Facebook (or the Dow), but it’s a helluva lot more fun. Plus, it won’t sell anyone’s data to evil organizations or skew any elections.
*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. So, if I were to quit my job now, I could spend about $60,000 in my first year of retirement.
**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off. My compromise is to have enough money put away to cover the mortgage at the time of retirement. So, to retire today, I would need about $1,120,000.
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****My 401(k) contributions include my own, Mrs. 15oo’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.
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