1500 Days to Freedom

Think different and escape the rat race.

Performance Update 11 of 50: November Wane and Book Drones

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My main goal is to build a portfolio of $1,000,000 in 1500 days, starting from 1/1/2013. Every month, I provide an update on my status. My goal for 2013 was to get my portfolio up to $672,750, from a starting point of $586,043. I accomplished this in June and then raised my goal to $727,750 to account for the money I made selling our last home that I plowed back into the portfolio. Time to look back on the month of November.

Since the beginning
Since the beginning

The markets continued their prolonged march upward in November. The S&P 500 started the month at 1756 and ended at 1805 for a gain of 2.8%. The investment part of my portfolio started the month at $781,569 and ended at  $788,823 for a gain of .9%. My under-performance is largely due to Tesla Motors. Tesla literally caught fire and fear of a government mandated recall sent the stock spiraling downward.

November
Personal Capital chart

Overall, I’m up to $839,261 and this is my 7th consecutive month of gains. But it’s not just me. 2013 has been an incredible year for everyone in the markets. Before you pat yourself on the back, remember that it’s only 1 year. I repeat, 1 stinkin’ puny little year. 2014 could be equally bad or worse. Invest for the long game, not for quick money.

Here are my numbers as of November 30th:

  • Days elapsed: 334
  • Days remaining: 1166
  • 2013 gains: $253,218 (including my contributions)
  • Left to go (2013): Goal accomplished!

Pondering my Portfolio

I’ve been thinking a lot about my portfolio lately. Last week, I read an article called the 50 Unfortunate Truths About Investing. The list is pretty great and some of the items resonated:

31. The low-cost index fund is one of the most useful financial inventions in history. Boring but beautiful.

38. Twenty years from now the S&P 500 (INDEX: ^GSPC ) will look nothing like it does today. Companies die and new ones emerge.

39. Twelve years ago General Motors (NYSE: GM ) was on top of the world and Apple (Nasdaq: AAPL ) was laughed at. A similar shift will occur over the next decade, but no one knows to what companies.

50. The most boring companies — toothpaste,  food, bolts — can make some of the best long-term investments. The most innovative, some of the worst.

As a stock picker, I’ve done really well. I bought Google when it IPO’d at $85. It now stands at over $1,000. I’ve also beat the markets with Apple and Facebook. However, I ascribe most of my success to educated luck. I bought Google because I’m a computer geek and thought the company was cool. If the iPhone would have been a dud, I would have lost a lot of money on Apple. Facebook has yet to prove itself long term.

BOOM!!!

I’m playing a dangerous game. No empire lasts forever. The lifespan of most companies is much, much shorter than your average empire. How many companies can you think of that have been around for over 50 years? Now, how many of those companies have stayed dominant over that entire span. I can’t even think of 10. The vast majority of companies that have ever existed have failed.

No-one really knows which companies will still be around and relevant even 2 decades out. However, even if you’re 45, you should expect your portfolio to fund you for at least 50 more years of life. That is the paradox my friends.

Google won’t be around forever. Neither will Apple or Tesla. Holding these stocks is a bit like holding a stick of dynamite with a lit fuse of unknown length. Someday, the tide will turn and that dynamite will go BOOM! Will you still be holding it?

So, 2014 will be the year where I change things up. I’m still sorting it all out and will fill you in after I’ve decided what to do. In the meantime, Brad from RichmondSavers.com had a nice post on Vanguard along with a book recommendation by it’s founder, John Bogle. I have this book on reserve at the local library and I can’t wait to set my eyeballs upon it. I’m so eager to read it, I almost gave in and bought it. Almost*.

 

*If I could get a drone to deliver it, I totally would have bought it. Just to watch the drone**.

**Does Amazon have a chance in hell of pulling this off?

Join the 10s who have signed up already!

Subscribing will improve your life in incredible ways*.

*Only if your life is pretty bad to begin with.

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Comments

    • Yeah, and I think I’m sitting on a big old time bomb right now. Like one in the movies. I do admit that it’s hard to move on after making big money for a while. Bad brain, bad brain!

      Reply

  3. Definitely playing with fire when you target high growth stocks with the *hopes* of higher or better future performance. I think a low-cost indexed approach is ideal for most, and while I blog about P2P lending and dividend growth stocks, I still maintain other investments and positions, including low cost index funds.

    In your position I would probably find a split between the index investing and other direct investments.

    Also, loved the 60 minutes with Bezos… how cool would that little drone be? And what would stop someone from grabbing it? Perhaps a little R2D2 arm to shock you with if you attempted to commandeer one?
    writing2reality recently posted…Trades – INTC, OHI, TAL, CSCO, and ARCPMy Profile

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    • “In your position I would probably find a split between the index investing and other direct investments.”

      Yep. I’m thinking of a REIT as well.

      “And what would stop someone from grabbing it? Perhaps a little R2D2 arm to shock you with if you attempted to commandeer one?”

      These things need to be equipped with cameras. How about dimwitted men with shotguns after downing a case of Crud Lite of Friday night: “Hey Jeffro, I dun gonna go drone hunting. Yeeeeeeee haaaaaaaaaa!!!”

      Reply

  4. The good times have been had by most this year and I just hope a lot of the “dumb money” doesn’t remain blind to the fact that markets go up AND down. The long term trend is up, but there are definitely times where you need to put on your Depends and get dirty. Those drones kind of freak me out. Will they also take returns that way? If so, don’t send your child out to give it the package.

    Congrats on all the progress you’ve made this year!
    JC @ Passive-Income-Pursuit recently posted…Dividend Update – November 2013My Profile

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    • “but there are definitely times where you need to put on your Depends and get dirty.”

      Hilarious!

      “Those drones kind of freak me out. Will they also take returns that way? If so, don’t send your child out to give it the package.”

      Dunno! Also, what if the drone gets mad because your house is hard to find or out of the way? Will it leave your package in the birdbath or on the roof? Will it get distracted by squirrels? 🙂

      Reply

  5. Great post and sanity check…

    I rolled out of my prior company’s 401k last summer thinking I was getting out on a high…but that big lump (big to me) is sitting in a money market fund at Vanguard waiting for the market to tank…who the heck would have thought it would still be climbing?!?!?!?

    I’m cranky because it’s sitting there doing NOTHING yet I can’t pull the trigger and invest it…not even smaller chunks over time. Argh…I keep thinking “what goes up must come down” so I’m trying to be patient.

    Congratulations on your great success in 2014 and I’m pulling for you that it will continue 🙂

    Ree
    Ree Klein recently posted…A Simple 2-Step Test to Ensure You’re Prepared for RetirementMy Profile

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  6. If (and it’s a big if) you stay on a similar trajectory as now, you’d be done way before 1500 days!

    Good old Tesla – one of my friends used to work there, and I got to hear lots of insider science info (nothing that would breach and NDA) that I found so interesting.
    Alicia @ Financial Diffraction recently posted…Financial Update – November 2013My Profile

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    • “If (and it’s a big if) you stay on a similar trajectory as now, you’d be done way before 1500 days!”

      Ha, what do those mutual fund diclaimer always state? “Past performance is not indicative of future returns.” This year had been incredible and I don’t think I’ll top it for a long, long time if ever. Seems to me that we’re due for a down year soon. Things are out of whack: http://www.multpl.com/

      “Good old Tesla – one of my friends used to work there, and I got to hear lots of insider science info (nothing that would breach and NDA) that I found so interesting.”

      Oh wow! Oh wow!! Oh wow!!! Elon Musk is my hero. I’ve wondered what he’s like in real life. I must sent you a note now.

      Reply

    • I CANNOT WAIT to read that thing!

      I got that link because I liked the Business Insider page on facebook. BI has a lot of really great stories.

      Reply

  9. Great job in 2013, and great insight on investing (thanks for writing it in an understandable way!). I’m not too sure about the drones – while cool in theory, B brought up a good point that wouldn’t people try to mess with them from the ground to try to get the goods? Not that B ever would, mind you, but I could see how that could have a higher risk for tampering!
    anna recently posted…November Updates – Debt Repayment, Fitness/Running, and WeddingMy Profile

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    • Oh, I think that people would definitely try to mess with them. I suspect that drones will be equipped with cameras though and the drunk guy with the shotgun would quickly be apprehended…

      Reply

  10. I dig the dynamite analogy. We only hold one single stock investment, my company stock, and only like $400 so far. They give a 15% purchase discount with a 6 month lookback option, so I figure, hey, why not throw a tiny amount in there just to see what happens? Other than that, everything’s in index funds. Boring, like the quote says, but beautiful.

    And yeah, I want to see a drone at my front door, too. 🙂
    Done by Forty recently posted…November Net Worth UpdateMy Profile

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    • A 15% discount is pretty substantial. Even if the stock just stayed the same, you could make great returns.

      The day I can get a drone to come out to my house, I’ll be ordering something. Anything.

      Reply

    • “If they fail your index is the buffer, if one or two take off they pay for the failures.”

      Yep, and I think this is the key. The index is always being optimized, so no need to worry.

      Reply

  12. Amazon will succeed. The drones need to someone be connected to the buyer’s smart phone GPS so it knows exactly where to go. That is my thought. I should have sold it to Bezos.

    There will be drone pirate ships and drone snipers so Amazon will have to develop some sort of protection like armed escort drones.

    Amazon’s big money maker in the coming years is going to be fresh grocery delivery. I would have loved that when my children were little. It will completely change the way people buy food and stores attempt to sell.
    Jane Savers @ Solving The Money Puzzle recently posted…It Costs Me Money In Taxes When People Just Don’t Want To WorkMy Profile

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    • “Amazon’s big money maker in the coming years is going to be fresh grocery delivery.”

      This is a hard nut to crack though. Many have tried that business here in the states and have gone down in flames. If anyone can do it, it’s Amazon though.

      Reply

  13. I think it’s difficult to recognize that some of the most successful companies of our time will lose all of their value within 20 years. Since I’m only 25, I haven’t seen a lot of this first hand, except for Blackberry. If you had asked me where Blackberry would be in 10 year, 10 years ago, I would have mentioned world domination… I can’t wait to see what sort of innovations beat out Apple and Google.

    As far as book drones go, it seems quite technically simple. If you gave me a bunch of parts and a month I bet I could build you one. I’ve been wondering for a few years why we haven’t seen it go main stream. As long as Bezos can convince the FAA to write their rules faster, I think we’ll see this within a few years.
    CashRebel recently posted…The lost art of self relianceMy Profile

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  14. Impressive gains! Let’s hope the market keeps up next year. I remember when Google went public. Sadly, I was young and broke.

    “Someday, the tide will turn and that dynamite will go BOOM! Will you still be holding it?” I own shares of V and although it’s been really good, I often find myself asking this question.
    H recently posted…5 Tips to Save Money on LaundryMy Profile

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