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