It is time, yet again, for the monthly airing of my private financial laundry. My hope is that maintaining a journal of my savings will help provide additional motivation to save and allow me to spot trends. It will also serve as a record, so that I can look back and analyze.
In September, my portfolio basically sucked wind due to the underperformance of foreign stocks. In October, they were down even even more. As I have mentioned before, I am “overweight” foreign stocks. See Media Pin of the Week – More GMO, Weekly Media Pin – Grantham on Graham, Best Foreign Value Factor ETFs, Resource Roundup: More CAPE, and Foreign Value Factor ETFs Update.
I still have a large portion my liquid assets allocated to foreign stocks. Foreign stocks were down about 8% in October (versus about 7% for U.S. stocks). As I mentioned before, The Capital Spectator does a good monthly asset class returns summary. As they said, there was no place to hide in October (other than cash).
I did move a relatively small portion of my portfolio that I run in a little systematic trend strategy to cash. This was based on the rules triggering, not because I made some market call. Basically if the market is expensive and in a downtrend, I am out (with that account).
That being said, let us turn to the personal finance diary.
In our last episode (end of September), I was able to work up to a little over $188,000 in investments. As a reminder, I only include liquid investments in these monthly figures, as I don’t think it is very helpful to start marking my real estate and other illiquid assets monthly. I will mark those at year end.
As of the end of October, I was down to just over $179,000. Oof. Spending was pretty average so I contributed about $3,000. I was down about 5% from a static state, but including the new contributions I down more like 6%.
To sum up, this month was kind of a drag from a returns perspective. I made about $3,000 in contributions to my investment accounts and ended up $10,000 poorer for the effort. I was down less than the broad markets but “you can’t eat relative returns.”
I have a fair amount of my assets in sort of tactical/conservative investments but others are in value investments and even more are in foreign investments which have been hammered more than the broad U.S. indexes, despite the fact that they started the year from much more modest valuations.
I am just trying to focus on the fact that for expected returns to go up, we need valuations to come down. Most of my securities buying is probably in front of me, so I need to force myself to root for a big sale.