It is time for my monthly personal finance journal update. October was pretty exciting. I increased my savings over the last month due to a bit of a small income windfall. I also had some help from Mr. Market. I am getting close to a pretty big milestone.
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.”
Prior Update
In the September update, I was riding high from the bounce in the markets. I ended the month at about $230,000. The market was up nicely and my savings continued on the automated pace I’ve set; with a few mental accounting/behavioral tricks I play on myself adding additional tailwind.
CURRENT PORTFOLIO
No major changes in the portfolio. 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.
Overall, about 50% of my overall portfolio is allocated to non-U.S. domiciled stocks. I also manage a bit of my portfolio based on a little systematic, trend and value strategy. The trend stuff is all long. I’m down a little exposure in the value based strategy.
I bought some Tapestry (“TPR”) in August and it promptly tanked. Since then it has been down almost 20%, at one point, and is now up around 10% from my purchase price. So, it has been an interesting ride.
My BRX position is sort of crushing it YTD (with all REITs). I am now up about 25% since I put on the position (almost exactly 1 year ago). I am mulling over an update article on this one discussing the position and whether I should sell it. I really liked their conference call but it is now getting in the range of fair value and I am weighing other opportunities with likely higher CAGRS.
Then again, I am trying to be very conservative in selling. I am even toying with making a written rule (for psychological conviction) for one of my discretionary accounts that prohibits any selling. I think one of the keys in stocks is probably to let the positive skew (unlimited upside versus capped 100% down) work in your favor over time.
I’ve been thinking/reading about DIS, AXP, EBAY, EXPE (after earnings collapse), TIF (before LMVY buyout offer), WFC, and USB. The CNBC Buffett archive is searchable, so you can like enter American express and see what he has said about it in recent annual meeting and interviews with the network.
I am accidentally re-reading Damn Right, the Janet Lowe biography of Charlie Munger. I just wanted to look up something about his timeline and got sucked in. It is pretty mediocre, but it is kind of all we have and the subject is fascinating. Really wish someone like Ron Chernow would do a Buffett and/or Munger book. (I’m also reading the House of Morgan and man is he good.) I’ve also been watching some Charlie Sharf (new WFC CEO, videos on youtube to try and get a feel for him.
Finally, I just finished How Children Succeed by Paul Tough. It is sort of a good survey, introduction to the behavioral and positive psychology movements (like Angela Duckworth et. al. and a little bit drawing on the school of Kahneman and Tversky, etc…) as well as the work of like James Heckman (econ nobel from Chicago) on early child interventions and then the power of character or basically positive psychology programs in schools. I was interested both as a parent and just a citizen of the world. It is a good book to just listen to while doing other things if you are familiar with a lot of the research in the area or are looking for an introduction.
THIS MONTH
Something a little unusual happened on the income fronts. I received what amounted to an unanticipated gift/bonus of about $10K net. So I had to decide what to do with this newfound $$$. I decided to save this via a second tax advantaged account available to my wife. This should end up saving us over 30% of each dollar in taxes. I saved about an additional $2K out of this money in October (so I ended up saving about $5K versus my run-rate ~$3K).
In October the my tilt to foreign stocks (and value) paid off. The S&P 500 was up 2.2%. Foreign stocks were up more: 3.6% for EAFE, and 4.2% for EEM. Cheaper stocks were up more in a lot of instances. For example, QVAL was up 5.20% in October. IVAL was up 5.34%.
I ended the month at $249,000. Mr. Market did nearly 3x the work that I did last month in increasing my liquid savings and that is pretty neat.
ONWARD
I really could see international stocks and value romping for a while (like maybe a decade), but no one knows. It would not be inconsistent with observations even in my investing lifetime for Glamour stocks double from here (based on what happened in 2000; or even dwarf that if you look at what happened in the Nikkei bubble). Thus, I am just trying to focus on the higher carry and earnings yield of those stocks versus the glamour/growth stocks.
It would be pretty exciting to finish out 2019 at $250K, but it is also probably not too healthy to place a ton of weight on the portfolio fluctuations. The trend over time looks pretty good, so I will try and focus on that. I may need to transition to quarterly updates as the market fluctuations start to dwarf my savings contributions.
To my American readers: Have a Happy Thanksgiving! This is an underrated holiday in my estimation, especially with what I’ve recently learned (and experienced) concerning how cultivating gratitude can really increase your feelings of happiness and satisfaction. Maybe I will write a post about that sometime.