1500 Days to Freedom

Think different and escape the rat race.

Performance Update 22/50: October asterisk overload edition

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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 as well as my goal for the end of 2014 and 2015.

Last month, I wrote about how boring my performance update was. October proved to be the opposite. Stock portfolios experienced wild gyrations. One company I owned even went belly-up-bankrupt! Although I finished the month at $965K, that little mini-correction sent me down to $900K on 10/15. Whoah.

Woweee!!
Woweee!!

In October, my portfolio resumed its march upward. I started the month at $948,294 and ended at $965,210 for a gain of about 1.7%. I under-performed the S&P 500 which saw a gain of 2.3%. My poor showing this month is attributable to facebook and another stock which I’ll tell you about in a moment.

Screen Shot 2014-11-02 at 4.40.44 PM
Chart from Personal Capital**

Facebook had stellar earnings, but Mr. Market did not like the fact that the company will be investing heavily in its business in 2015. Remember that Mr. Market cares most about the next 3 months. For someone who looks a decade out, I couldn’t be happier that facebook is investing in itself. Long term thinking baby.

Anyway, here are the numbers:

2014

  • Days elapsed: 304
  • Days remaining: 61
  • 2014 gains: $95,575
  • Left to go (2014): Goal accomplished!

Since the start (1/1/2013)

  • Days elapsed: 669
  • Days remaining: 831
  • Gains since 1/1/2013: $379,167
  • Needed for $1,000,000: $34,790
  • Net worth***: $1,165,210

$5,000 down the toilet

I’ve come to believe index funds are the way to go and I’m about to illustrate why with one of my dumb mistakes. Better to learn at my expense than yours.

Earlier this year, I learned that Apple had contracted with a company call GT Advanced Technologies (GTAT) to supply sapphire glass for the iPhone 6. “Great!” I thought. Apple is the most profitable cell phone manufacturer in the world. GTAT stock will surely benefit over the long term.

The new iPhone came out without sapphire glass. Hmmm, not good. A short time later, GTAT announced it was going bankrupt. My sure-hit was now a penny stock. I flushed almost $5,000 down the toilet in the couple of milliseconds it took Wall Street trading robots to send the stock crashing.

-95%! This is one example of why you probably shouldn't buy individual stocks.
-95%! This is one example of why you probably shouldn’t buy individual stocks.

I stopped the stop loss order

In last month’s update, I mentioned that I had put a stop loss order on Apple and facebook because I own way too much of these companies (1/3 of my portfolio!). While I need to rebalance, I’m not excited about the tax implications of selling. In my ideal world, I’d wait to sell for another couple of years when I’m retired and I won’t have to take a capital gains hit. A stop loss order is my solution, only selling if a stocks go down.

However, I also also didn’t want to sell just because of a general market correction. When the markets started tanking in October, I cancelled my stop loss orders. I’ll put them back in place after the first of the new year.

I learned something about myself

I used to freak out during stock market crashes. When things were crashing in 2008/2009, I didn’t sell, but I stopped maxing out my 401k. Now, I clearly see that was a dumb move. However, since the market has done so well since, I hadn’t tested myself to see if I’d stick to my buy low, sell high guns. It’s one thing to say what you’re going to do given a situation; it’s quite another to actually do it.

On 10/1, I had $948,000 socked away. On 10/15, this had dropped almost $50,000 down to $900,000. Without thinking, I logged on to my retirement account and bumped my 401k contributions up to the maximum****. A couple minutes later, I thought back to what I had done. My mind is now in the right place.

 

*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.

**This is an affiliate link. If you sign up, the blog makes a little bit of money and I can afford to feed my dinosaurs. You wouldn’t want the dinosaurs to go hungry, would you? I didn’t think so. With that out of the way, I would never recommend anything I didn’t use myself and completely believe in. Personal Capital is totally free and an awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone.

Here are the tape measures that I can currently locate.
Here are the tape measures that I can currently locate.

***The numbers on the right side of the page only reflect my investments and cash. Net worth includes, but is not limited to:

  • home equity
  • cars
  • bicycles
  • extensive collection of tape measures: Tape measures and I don’t get along well. I lose them, buy more, and then find all the lost ones the next day. I’m sure I have at least 10. This problem would be easily remedied with my tool belt. Anyone know where that is? (Mrs. 1500 note: It’s in the Master Bedroom closet. Where else would you keep a tool belt?!?)

****I believe that the best idea is to max out your 401k as soon in the year as possible. However, our home renovation projects frequently drained our bank accounts. Now that most of those expenses are in the rear-view mirror, I look forward to maxing out my 401k for 2014 in December and for 2015 over the first quarter of the year*****.

*****I’m a contractor and my contract is up for renewal this month. While my client likes me, the company that owns my contract would love to show me the door and replace me with someone cheaper. If the company wins over the client, early retirement may start in about 4 weeks… (Mrs. 1500 note: I welcome that scenario******. I have a honey-do list a mile long. His work just gets in the way…)

******I’m a bit terrified of this scenario. I’m also apprehensive about what surprises await me on this mysterious “honey-do” list that Mrs. 1500 has never mentioned before…

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Comments

  1. I am glad we are not the only ones with a large tape measurer collection. Our household doesn’t have the excuse of building things for a living (or recreationally) and yet has at least five tape measurers. At least.

    Reply

  2. White Coat Investor had a great piece the other day highlighting some comments of folks that had bet far too heavily on GTAT, Definitely a good reminder that diversification is a good thing.

    Also we completely empathize with your tape measure scenario. At least twice Mr PoP has instructed me to buy a couple of tape measures because we kept losing them throughout the day. When we redid the garage we located about 7. We’ll see if we can keep track of them all during the kitchen remodel, though!
    Mrs. Pop @ Planting Our Pennies recently posted…PoP Income Statement – October 2014My Profile

    Reply

      • The thing is, Mr. 1500 has a very specific set of skills that his team needs. He also has more than 11 years of experience working with this extremely sensitive product, and it would take anyone just walking into the project at least 6 weeks to just catch on, to say nothing of catching up. I think (hope) the contracting company will jerk him around for a while, not knowing he is thisclose to retirement anyway, and think he will cave. He won’t, and they will be forced to because the client will demand that he be rehired. I would be surprised if he spent more than one day “retired” at the end of this current contract. But I can dream…

        Reply

  5. I keep one tape measure in my jewelry box. I have no idea where the others are and I live alone so there is no one else to blame.

    Are you secretly hopeful that you will retire suddenly? If you feel you aren’t ready for full on retirement you could always take a break of a few months before you look for a new position.

    Reply

    • “Are you secretly hopeful that you will retire suddenly? If you feel you aren’t ready for full on retirement you could always take a break of a few months before you look for a new position.”

      I think about these things every day. I am not ready, financially or emotionally. I wonder if I ever will be emotionally though? If I don’t get canned, I’m just going to have to take the plunge someday. Like you said, I could always go back to work if it didn’t sit well with me.

      Reply

  6. Wow – millionaire status coming soon. Very good job man. This is one of the very blogs I continued to follow even after a couple months. Keep it up and though I don’t post often I felt like doing one today to remind you how many lurkers exist on here.

    I also just maxed out my 401k (for the first time) and I’m pretty excited about it.

    Take it easy

    Reply

  7. Good luck with the contract coming up, I love that you are ready and have choices available to you if they go with the younger cheaper you, would that be Mr. 15,000 Days? I’m pretty surprised you took the gamble on GTAT, while I’m a gambler myself, I pictured you more as a Slot machines are for suckers type of guy. What would Warren say? Possibly take off your hat with my logo on it? This year you can’t come to the Berkshire Meeting? or just maybe he would say something really smart while Munger would stay quiet not dignifying a response!
    Even Steven recently posted…31 Day Writing Adventure, Life HappensMy Profile

    Reply

    • Thanks Even Steven!

      “I’m pretty surprised you took the gamble on GTAT”

      “Gamble” it the key word here. I thought that their affiliation with Apple would guarantee success. Dumb, dumb, dumb.

      I do hate gambling. I’ll never give a slot machine or any other game even a penny. However, GTAT was a bet too.

      Warren and Munger would not approve. I’d probably have to give back the hat. I wonder if I’d have to give back the Buffett/Munger underwear too (yep, I own those as well)?

      Sigh…

      Reply

  9. Thanks for the update. I sure hope you can get to “all index funds” without a big “happening” with those big individual stock holdings. I would take some of the tax hit in 2014 and some in 2015 and try to make the transition.

    I am 2 weeks from my second “early retirement” in a year. I quit last Sept 30th. I took 3 months off and then went back to work in January working from home. I liked the working from home, but the work itself was not what I wanted to do long term. So I put in my notice again.

    It is interesting, but our financial picture (sans individual stocks) is very similar to yours. We are a few hundred k ahead in the investments/net worth category. My wife has the “good job” so I am bouncing around trying to go between flexibility and bringing in some income. It is a good place to be.

    Reply

  11. The key is to never panic on any market sell off. My test came in 2008/9 when my entire portfolio was deep in the red. I simply continued to invest every month like I always do and averaged down on my positions. I did not sell a single share nor froze and stopped investing. Always stay the course.
    DivHut recently posted…Dividend Income Update – October 2014My Profile

    Reply

    • Very smart DivHut! If I were more like you during that crash, I’d have a lot more now. Hindsight is always 20/20.

      Reply

  12. First, congrats on being so close to your goal. I wish I could say that we are in the same position. But we are still steadily working that way….

    And, kudos to Mrs. 1500 for knowing exactly where the tool belt was located. I would hazard a guess that she can also locate the favorite hair accessory from your girls that hasn’t been seen in two weeks, so as to avoid a meltdown as you’re trying to walk out the door because she just HAS to have it today!!
    Mrs. Maroon recently posted…Goals: November 2, 2014My Profile

    Reply

    • Ha, you know us well! I’ve been running around like mad lately, sooooo busy. This is not an efficient way to work though.

      Thanks for the kind comments; you will get there…

      Reply

    • I know, right? Look at what Apple did. I own way too much of it and that accounted for a good percentage of the drop.

      Reply

  15. Hey 1500 –

    When I read your update about one of your stocks going BK, my first thought was “That has to be GTAT”. It looked promising for a while (I almost bought some, but didnt) and then all of the sudden the floodgates opened and that thing dropped like a rock. There were a LOT of people that thought the relationship with apple would propel that stock to new heights, but it got snuffed out when they announced the BK. There were a lot of rumors in mid sept (actually during fincon) that apple was using gorilla glass, but not a lot of people acted on it. It’s unfortunate, but these things happen.

    Also – I find it interesting that you’re about 1/2 way to the 1500 day mark, yet you’re 96% of the way to your savings goal (pre mortgage), and you may get laid off. Getting a great severance package could tip you over the edge – which is awesome.

    I too have about 5 tape measures, but people I’ve hired to do some projects at the house seem to be the ones that leave them here, I keep track of mine.

    Reply

    • I do remember those rumors, but figured that Apple would still use the sapphire, but in the iPhone 6S instead. Oh well. I’m glad it was only 5K. Some people totally lost their asses.

      “Also – I find it interesting that you’re about 1/2 way to the 1500 day mark, yet you’re 96% of the way to your savings goal (pre mortgage), and you may get laid off. Getting a great severance package could tip you over the edge – which is awesome.”

      I do contract work, so no severance package. They don’t treat us well when it comes to severing ties. The way we find out is that we go to login one day only to find out that our account has been disabled. Sigh. If the end is near, it was fun while it lasted.

      Reply

  16. Whichever way the contract situation rolls out, I’m sure you’ll find the silver lining and turn it into a positive. You’re crafty like that. Best of luck, and I really want to thank you for these transparent views into your investments & the thoughts behind them. I get a lot out of them, especially the latter.
    Done by Forty recently posted…House LustMy Profile

    Reply

    • Thanks DBF! Some days, I wish they would let me go. However, I’m not quite ready for retirement yet. More on that later.

      Thanks for the kind comments too. I always worry that I’m putting people to sleep with these updates.

      Reply

    • Yeah, this is tough for me. I’m not quite where I want to be in terms of retirement. I also greatly enjoy the flexibility that I have with my current gig. I should have an answer very soon…

      Reply

    • Hi Henry-

      Alibaba seems like it has a lot of potential, but I just don’t know enough about it. I’m staying away from most stocks from here on out. Note that I make an exception for Berkshire.

      Reply

  19. Hey 1500

    I have some engineering buddies that work for some pretty large companies and was surprised to learn that they’re all on contracts linked to their projects, more or less making them corporate freelancers (the same way I was a freelancer in the film and TV industry). I never would have thought engineering to be as crazy employment-wise as the production industry.

    Anyway. You write of not selling your stakes in Apple and FB due to cap gains until you’re retired. Hypothetically, if losing your contract forced you into retirement this year, could you then take those gains at a lower tax rate and then go back to the work world at a later date?

    Reply

    • Oh yeah, consulting/contracting is a bit insane. The pay is good, but you better perform or they’ll show you the door. I’ve seen people fired for every reason in the book including not blowing their nose and body odor.

      Yep, I could take part of 2015 off and then dump them. I’d rather not do that though. I’d love to have another 2 years of employment before I bail.

      Reply

  20. That’s funny you mention the sapphire glass (or maybe not so funny). Great minds think alike. I had the same thought with the new iPhone coming out. We went a slightly different direction, however, and invested in NXP Semiconductors. They build the chips for the new Apple Pay feature on the iPhone 6. We only invested 10% of what you did. I’m too afraid to stray far from index funds. We just thought it would be an interesting experiment. So far, so good. It’s not skyrocketing, but is is moving in the right direction.

    Reply

    • Nice bet; I think Apple Pay is going to be huge.

      Agreed about index funds. My own portfolio friggin’ terrifies me.

      Reply

  21. You’re quickly approaching your target of $1 million, congrats on that! Good luck with the contract renewal, and if not I’m sure you will be prepared to find another contract if needed. Either that or it sounds like you have a new “job” that is ready to be started too.

    My household has a ton of tape measures too, though I’m not sure why. I know we have at least 4 and there’s probably another one floating out there somewhere…
    Debt Hater recently posted…Make Money With SwagbucksMy Profile

    Reply

  22. I agree with DB40’s comment – this is one of the most interesting ‘net worth’ updates I’ve read – I wish I’d come across these sooner! Great example with GTAT, and a good reason to diversify and / or stick with index funds. No matter the wisdom that is shared by seasoned investors, it’s not until you experience these things yourself that you know what you can handle and how to deal with it in future. Must admit though, I enjoy investing in individual stocks too much to shy away from these sorts of risks – it’s what makes the whole game so fascinating!

    What you’ve achieved with growing your portfolio is brilliant – look forward to seeing the momentum continue!
    Jason @ Islands of Investing recently posted…Relishing ‘The Game’ (and it’s all just a game, isn’t it?)My Profile

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  1. […] just read a fascinating performance update post from Mr 1500 Days, he shared a great example of one of his stock investments in a company called GT Advanced […]

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