The State of the Stash – January 2019

It is time, yet again, for the monthly airing of my private financial laundry (I am actually a few weeks late on this one).  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. 

All of the prior updates in this series are available on the Savings Diary page.  The first, I’m Just Saving…Personal Finance Diary kind of provides the “origins story.”

I am planning to do an annual net worth update over the next couple of weeks.  I’ve just got to value a couple of less liquid assets.  I am also planning to do some more investing posts as I am long COTY, AVP & WETF, so there is some stuff to say.

Investments

In December, everything kind of tanked.  I ended up down at $179,000, despite contributing about $3,000 to my investment accounts.  Ouch.

I remain “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 got killed even more than you home-biased valuation agnostic, new era, type investors.

I have a relatively small portion of my portfolio that I run in a little systematic trend strategy that last month was 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 (the foreign stocks allocation is still long because of valuation).  I actually have flipped that back long as of February, but that won’t show up until the next update.

I do have another very 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 still long.

January 2019

That being said, let us turn to the savings update. As of the end of December, I was knocked back to about $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 am going to mark those in an upcoming post.  I have a deferred compensation arrangement which is essentially an annuity or pension.  I will have to make some assumptions and then discount the future cash flows back to value it.

This month I ended up saving about another $3,500.  The market also came roaring back in January so I ended up with a balance of about $188,000.

As I’ve noted before, The Capital Speculator does a helpful summary of asset class returns on a monthly basis.  In January, the S&P 500 was up about 8%, with emerging markets stocks up more and foreign developed up about 6.6%.  My biggest tailwind was the REIT exposure I have (I am long BRX and VER…as I’ve discussed before).  REITs also got creamed in December though, so it’s probably a wash.

Onward

To sum up, January was a nice bounce from a nasty December.  I am really hoping for a nice long nasty bear or at least for non-U.S. stocks to revert to historical norms and catch up with the U.S. markets.  My overweight to foreign developed basically amounts to an underweight of the FAAANG and Chinese tech stocks and has not served me well for quite some time, despite lower valuations.