Hey, if you haven’t yet, let me know about who positively influenced your money habits. You may even win a Warren Buffett/Charlie Munger duck set!
My main goal is to build a portfolio of $1,000,000 in 1500 days with no debt*, starting from 1/1/2013. Every month, I provide an update on my status. My goal for 2014 is to get my portfolio up to $768,536. Because we saw exceptional returns in 2013, I have accomplished this goal. Time to look back on the month of April.
Whoah, I took it on the chin again in April as my tech heavy portfolio got kicked in its mouse balls (do they still sell mice with balls?). I started the month at $858,399 and finished up at $854,049. This may not sound that bad, but at one point I was down to $822,124.
I really don’t care though. A good investor ignores the short term noise and looks far ahead. It’s a bit like driving. A safe driver plans for far down the road. If you just pay attention to what is directly in front of you, you’re not doing it right. Think ahead, far ahead and the rest will take care of itself.
Here are the numbers as of 5/1/2014:
2014
- Days elapsed: 121
- Days remaining: 244
- 2014 gains: -$11,586
- Left to go (2014): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 486
- Days remaining 1014
- Gains since 1/1/2013 gains: $268,006 (including my contributions)
Apple
Apple is one of my biggest holdings and this month, put on a dazzling performance. Apple started the month at 537 and closed at 592. However, I think this dramatic rise is for mostly the wrong reasons. Its earnings were a mixed bag. iPhone sales were strong, but iPad sales missed expectations. What got Wall Street all hot and bothered were announcements around the stock itself.
Apple will:
- split the stock 7 for 1 in June
- buy back even more shares than previously planned
- raise their dividend.
The first two are troubling for me. A stock split doesn’t provide any additional value. Do you want me to cut the pizza in 8 pieces or 16? You have the same amount of pizza either way. Buying back shares is also not a strategy of growing companies. I admit that it will make certain figures look better such as earnings per share In the end though, it’s just financial manipulation.
The main thing that disturbs me is that Apple is being out-innovated. Companies like Google and Amazon are breathing down Apple’s back and moving at an incredible pace. Apple was the first to market with a good smart phone and tablet. However, competitors (mostly Google) quickly followed. It is no secret that the smart watch is expected to be Apple’s next big thing, however many companies are already out with them. Perhaps Apple’s will be better, but the first mover advantage is gone.
1500 Days and beyond
Despite my whole ‘1500 Days’ goal, I believe that if you’re going to buy stocks at all, you should only buy ones you think will be strong for decades. That is why I’m slowly relieving myself of Apple in favor of index funds, Berkshire Hathaway and rental properties.
I’ve been thinking a lot lately about how my whole goal of ‘1500 days’ has a big flaw. It’s much too short of a time period. If I succeed, I’ll look great. If I fall on my face, people will laugh and send me nasty emails. However, neither would be right. It is just too short of a time period. In my 1500 days, the markets could continue to go bonkers. On the other hand, some crazy Wall Street dudes or terrorists could spoil my party.
I don’t want quick gains, I want long term gains. I’m building momentum.
*I still owe something like $120,000 on my mortgage. Because I have a low rate, I firmly believe in not paying it off. My compromise is to have enough money put away to pay off the mortgage at time of retirement. So, to retire today, I would need about $1,120,000.
My understanding was that stocks that split do typically rise. I believe it’s just a psychological phenomenon but I’d love to see sone actual data on it.
Pretired Nick recently posted…Is a basement apartment worth adding?
The act of a split does nothing. Whether a forward split or reverse. There is no net gain or loss. What you are talking about is that many stocks after a split tend to continue their rise but the actual split does nothing.
DivHut recently posted…Recent Dividend Increases
Pretired Nick isn’t talking about the nuts and bolts here.
For instance, it may be a real effect that when a stock is split, more people feel as though they can afford it (which is why it splits in the first place) and that might cause a little rise above and beyond what it was already doing.
I can’t confirm this particular theory as I stick to index funds, but that’s the TYPE of thing Nick is suggesting, not that a stock rises because of the mechanics of the split in any way.
Dave @ The New York Budget recently posted…The Many Definitions of Saving
This is how I feel about the split. Right now, I cannot afford to invest more in Apple than I already have, at $600/share. But at $85/share? That is much more reasonable, and I would be more likely to buy more of it, even if the value of my existing stock doesn’t change in value. (And I do believe that, with the lower price, more people will feel this way and stock prices will go up again.)
Allie recently posted…Two Graduations
I too am heavily weighted on apple. I have been holding since 2011. Been quite disappointing since then. However things are happening. The iphone has been their number 1 income stream. The new Iphone 6 will be their best seller yet. The pent up demand for a larger screen model will do gangbusters. Also the iphone has penetrated newer markets in past couple years. The Iphone 6 will be the newest status symbol that people will rush to get. I plan on holding till 2015 and then possibly look for an exit in that year. Or just hold it and write covered call options out of the money till one day I get called.
Asset Grinder recently posted…US stock serious contenders for my money
I’ve had them since January of 2007 when Jobs announced the iPhone, so for me, it’s been a good ride.
I do agree that the iPhone 6 will sell very well. I wonder what they do after that though?
Similar to you, I’ll probably hold most of my shares through the end of the year. After that, we’ll see if they have any other catalysts for growth.
Calls sounds like a good idea.
Apple is an interesting stock. I don’t think the stock split bothers me too much. The BEATS purchase gives me pause, though. Seems a bit desperate. I think that if they release some sort of i-branded headphone for $200-$300 it will be good for the short term, but long term it just dilutes the brand. And the brand is 99% of Apple’s success. Not sure Jobs would have made that deal. They’re much smarter than me, so maybe it will be great for them.
Also not sure how I feel about the buy back. Even when it’s over they’ll still be flush with cash, offer a better dividend AND have a GREAT EPS. That screams BUY BUY BUY!!! Don’t know why I’m so hesitant, but I am.
Chris@ChattanoogaCheapster recently posted…The Joy of Living Slightly Behind the Times – A Tale of Two Laptops
Yeah, the Beats deal is a noggin scratcher; that’s for sure. Maybe they are trying to buy cool? In 5 years, it will either be brilliant or extremely stupid.
Yeah, dividend and EPS seem healthy and increasing, but all that will evaporate in a second if the phone business goes south.
All this talk about Apple is just noise. Sounds like something from the cheerleaders over at CNBC.
Stocks trade 3 to 6 months in the future. If you are trading a stock you are speculative trading what is going to happen in the future, not the past. So if you are looking at past earnings & deals you are missing how the stock is being traded today.
Look at the Nasdaq chart since March 1st…its gone down. What has happened to Apple? Its broken out of a wedge pattern (very strong chart pattern) and gone up. That should tell you a little bit about the strength of the apple stock. When the overall tech market is going down, Apple is going up.
The only thing that is a little concerning with Apple is the lack of volume. Volume proceeds price.
If you are getting nervous, sell some. Nothing wrong with taking profits!!
I personally would never buy Beats headphones but half my friends drool over them or have bought them. They have that same appeal the iPhone does.
They were talking about this on bloomberg this morning. Specifically that Apple really bought Beats for their fledgling streaming music business. Apparently downloads are on the decline, streaming is seeing double to triple digit growth. Also lets them compete/stiff arm Spotify. I wasnt too sold on the deal but i’m warming up to it.
Hey Mr 1500, love the blog. Just curious, do you post your portfolio ever? You vaguely reference whats in it and the total value alot. But seeing the allocation (or even buys/sells) of various people with various strats has always been fascinating to me. Just wondering 🙂
And BTW i also crack up everytime you mention SpongeSister. My youngest brother makes her look like a financial genius.
Ha, more coming soon. Perhaps you need to get into the blog business?!? 🙂
Thanks for the kind comments. Yes, I do need to post the portfolio. I just don’t want to give anyone my bad ideas, so am apprehensive.
I’m not convinced that 1500 days is too short… too short to measure what? And what about all the hundreds of days it took to build up what you had when you declared you were entering your final 1500?
At this point, for us at least, it sure feels like contributions and additions to the pile matter more than market growth most months, so it’s hard to get too disappointed if market returns fall off a little in the short term since it just means we’re buying more shares per dollar we put in.
Mrs. Pop @ Planting Our Pennies recently posted…He Said She Said: 2014 Berkshire Hathaway Annual Meeting
1500 days is only a little over 4 years. The common advice is that you shouldn’t even be investing in the stock market if you’ll need the money in under 5 years. I think one million by 1500 days is a great goal, but I do agree that it is a little short sighted.
Money Saving recently posted…April 2014 – Money Making, Saving, and Investing Report
But what of the years of work that the 1500s put in before they “became” the 1500s? Does that not count for anything?
Mrs. Pop @ Planting Our Pennies recently posted…He Said She Said: 2014 Berkshire Hathaway Annual Meeting
I started out at 586K, so I have to grow at 10%/year and contribute 24K/year to make the goal. I can control the latter. The former, not so much.
It’s still a fun game. I like to challenge myself and play with numbers.
So I understand what you’re saying when you say that 1500 days is too short – investing should be done over a long period of time, slow and steady.
However, your goal is your goal. If you reached $1,000,000 and were worried about a downturn happening right after that, then perhaps $1,000,000 is not enough! Or maybe you want to invest 5 years worth of that into something safer so that you can ride out any economic distress. In any event, if you have reached $1m, it doesn’t matter if you did it in 1500 days or 15,000 days! You still have $1m invested and past performance does not guarantee future results, so you are in exactly the same place.
I just don’t want to see you set up to push off early retirement for longer than you need/actually want to.
Dave @ The New York Budget recently posted…The Many Definitions of Saving
Yeah, I’m very cautious and I hope that I arrive at my goal during a downturn. I should just trust the 4% rule and shut up.
I think that 1500 days is a great timeframe to run your experiment. If you don’t quite make it, you could always start the 1500 days over! =)
Holly@ClubThrifty recently posted…Winning: How to Have a Successful Garage Sale
No no, sounds like Groundhog Day on a massive scale! I don’t want to start over! Worst case, 1500 becomes 1750 or 2000.
Anyone who laughs at someone because they failed to achieve a goal they worked hard at is a loser. I have a feeling you’ll make it, but even if you don’t you’ll have come awfully close, and that’s pretty impressive at your age. If they’re smart, they’ll hold off on the laughing and hate mail and learn something instead.
Jen @ Jen Spends recently posted…5 Ways You’re Not Really Saving Money
Ha, you should see some of my hate mail! Thanks for the encouragement though. I have a great life and nothing to complain about, even if I fall very short of my goal.
I agree that 1500 Days isn’t necessarily too short (and the name is catchy!), but I understand the sentiment. I don’t think that anyone reading this site believes you aren’t thinking about the next 30-50 years just because your time horizon is stated as ‘only’ 1500 days though.
I can’t imagine you making a poor investment decision based on the arbitrary 2/2017 goal date!
Are you divesting all your single stocks (Facebook, etc.) other than Berkshire?
Brad @ RichmondSavers.com recently posted…The Most Important Question: Is This Useful?
Yep, I’ll eventually get rid of it all. However, I have no timeframe. It may take years. I just wait until I get a feeling*.
*This is not quickly arrived at. I read lots and lots every day, sometimes taking years to make a move.
1500 days isn’t a very long time if your perspective is that of a 93 year old looking back, but is a very long time to a 5 year old looking forward. Therefore the time perspective doesn’t matter the only thing that matters is hitting your retirement goal. As for the haters, they only want you to fail so they can feel smart and validated for outrageous life styles. To those that “get it” whether or not its 1500 or 5000 days it doesn’t matter.
“As for the haters, they only want you to fail so they can feel smart and validated for outrageous life styles.”
Wow, that is right on. That sounds just like my Audi driving friend. Sigh…
Reading in between the lines a little, it sounds like there is more a fear of getting to that 1mm, then on day 1499 having the stock market lose 50% or even day 1501, similar results. I think it’s great that you are looking at diversifying into more index funds, the beta champ Berkshire, and rental real estate. I could see why holding so much of a certain sector or individual stock would make you cautious. “Future Me” thinks about this from time to time with my larger rental real estate holding and I have the same concerns, I get it.
Even Steven recently posted…Saving Money on Beer-The Brewery Tour and Craft Beer Week
Yeah, dunno. As I said in response to another comment, I should just trust the 4% rule.
What really terrifies me is the exact scenario you just laid out. What if I retire and then a horrible terrorist act takes place soon after? It’s only a matter of time.
Of course, I could just go back to work for a year or two to build some padding. I need to stop worrying.
Just curious how you came up with the 1m? Do you believe that will be enough to live on and support your family? How much pretax annual income do you expect to draw on that to live on? Does that amount just include investments and not your home? I was thinking we would need about 1.2m but maybe I should reevaluate.
debt debs recently posted…Worth it Wednesday ~ Dear Debt Letter
Hi Debs-
I did some calculations and ran the numbers and figured that I could on 40K a year if I had no other debt. I’m putting my trust in the 4% rule: http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/
I don’t include my home in my net worth or this number. I’d like 1,000,000 in a diversified set of investments (stocks, bonds, peer lending and real estate).
I think just having the goal is the important part, having something to work towards. You may or may not achieve the end result but if you didn’t have the goal I feel you would be less likely to achieve it.
Funny thing is, after starting to read your blog I set yearly goals for my investments, something I hadn’t done before. Instead of using a time frame, I used an annual return I wanted to achieve. After running my numbers I checked and it seems like we used the same percentage and I hadn’t checked your numbers until after I did mine. In looking at my portfolio I do not think it to be unrealistic as I achieve at least 5.5% from dividends each year so I then need to achieve another 10% from either contributions or capital gains.
Now there is always the possibility the market will drop and it happens, but then it usually goes back up again (in time). But having the goal keeps me focused and on track to “the goal”.
I’ve heard that some people like to consider their investments in five year chunks. The idea is that this large amount of time really indicates meaningful information about the health of companies which you might invest in. I don’t know what this would mean for your personal financial health, but its definitely better to think of things in the long run, and not the short term.
The Wallet Doctor recently posted…How to reduce your food costs
Always think long term, and it makes the ‘noise’ of today’s market just seem like hiccups.
I’ve been taking it on the chin too the last 3 months. My response? I couldn’t be happier! I get to buy my favorite stocks cheaper….whats not to like about that???
Brian
Long Term Brian recently posted…The most important day to work out
Right on! It took me years to learn this.
Congrats on the overall progress. Keep ignoring that short term noise and you’ll hit your goal in time. I think Apple will hit $100 per share post split relatively quickly. Only time will tell.
Hop you’re right about apple. With the new phone and watch/fitness tracker, this should be a monster year.
There are many statistics that say after a stock is split, it gravitates back to it’s original price.
And, after they buy back shares, that’s a bunch of stock being bought, which puts in a floor price.
Why not go with a QQQ, IVW or other ETF which is also heavy in tech? Most people cannot beat the market, not even the professionals.
No Nonsense Landlord recently posted…How to Find a Mentor for Financial Advice (or Not)
Hi, I log on to your blog on a regular basis. Your writing style is witty, keep
it up!
super-lisa, recently posted…super-lisa,