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 May.
What a difference a month makes. In April, I was down down down. Now, just a month later, my investments are almost at an all time high. I started the month at $854,049 and ended at $882,486. There is a lesson in this, but first, here are the numbers at of 6/1/2014:
- Days elapsed: 152
- Days remaining: 213
- 2014 gains: $12,851
- Left to go (2014): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 517
- Days remaining 983
- Gains since 1/1/2013 gains: $296,443 (including my contributions)
- Needed for $1,000,000: $117,514
Mainstream Money Media Monkeys**
I love to read the mainstream money media. I read it for the same reason I read The Onion; entertainment purposes only! If you took the stuff they write seriously, your portfolio would be in shambles. Here are some headlines I have read recently:
- The next four days could rock uneasy markets!
- 5 stocks to sell in June!!
- The smart money is preparing for a market correction!!!
The problem with each of these articles is that they all concentrate on the short term. Trying to predict short term market swings isn’t much different than throwing money down on the roulette table. For a better perspective, we need not look any further than Warren Buffett and Charlie Munger:
Our favorite holding period is forever. -Warren Buffett
You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time. – Charlie Munger
Buffett and Munger are far more successful than any of the “gurus” on TV or your favorite website will ever hope to be. One of their defining values is long term thinking. It has worked for them and it will work for you.
If you follow the herd, you’ll step in poop
So, the lesson is to stay the course. If I would have freaked out last month and sold some of my holdings, I would have missed out on some big gains. Unfortunately, herd mentality causes people to make horrific mistakes. As long as we’re on the topic of ‘horrific’, have a gander at my artwork*** where I attempt to show what not to do:
And what to do:
.Acknowledging that you can’t predict short term market behavior will take you a long way.
*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.
**I apologize to monkeys everywhere. You all are much smarter than the mainstream money media.
***These original pieces of art are for sale as well as signed reproductions. They make excellent fire-starters (camping season is upon us!) or door signs that will scare away vacuum cleaner salesmen and small children.
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