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 October, my portfolio kind of tanked. Down 5%. 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. The relative valuation spreads are.not.helping.
Foreign stocks were down about 8% in October (versus about 7% for U.S. stocks). As I mentioned before, The Capital Spectator does a handy monthly asset class returns summary (link goes to November update).
In November, U.S. stocks (+2.0%) and Emerging Markets (+4.1%) bounced back pretty strongly. Foreign developed did pretty much nothing. I have some emerging markets but I am more strongly exposed to developed due to my comfort levels with the political/private property/capitalist systems.
I still have a relatively small portion of my portfolio that I run in a little systematic trend in 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). So that account is still about 2/3 in cash.
I do have another small account that I am experimenting with using another systematic trend + value system in and one of the signals I use is related to the yield curve. It is getting close to triggering a move to cash.
That being said, let us turn to the savings update. As of the end of October, I was down to just over $179,000.
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.
This month I ended up saving about another $3,000. Due to market gains and interest I ended the month up at around $185,000. So it was a bit of a rebound.
To sum up, this month was kind of a drag from a returns perspective. My overweight to foreign developed basically amounts to an underweight of the FAAANG and Chinese tech stocks. I am ok with that long term, and philosophically, but it made me miss the bounce in November.
Overall, I still 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 will conclude with a quote for the times. Here’s hoping for a bear market!
I think it is in the nature of long-term shareholding, of the normal vicissitudes in worldly outcomes and in markets, that the long-term holder has the quoted value of his stocks go down by say…fifty percent. In fact, you can argue that if you’re not willing to react with equanimity to a market price decline of fifty percent, two or three times a century, you’re not fit to be a common shareholder, and you deserve the mediocre results you are going to get, compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.
– Charles T. Munger