It is time for my personal finance and investing journal update. Let us examine the State of my Stash…
Stash Status
As a reminder, I ended February at about $347,000.
I did not get my March update published before the end of April. I am thinking about going to a quarterly update on these posts. Despite being pretty formulaic, they do take a bit of time to pull together and I think I might rather free up that time for different types of posts. I have also noticed that the monthly savings are kind of being totally swamped by the market moves, so maybe “zooming out” would be a good idea.
In March and April, I automatically saved about $4,000 each month. I continued my strategy of managing my behavior (and limiting the willpower required to stay on plan) by basically saving first and then dealing with the consequences in the rest of my budget.
With the savings and investment gains in March, I ended with around $355,000 in my investment accounts. I finished April up with about $367,000.
I am thinking of tracking the percentage growth of my stash including combined savings and investing gains. My “Beardstown Ladies return,” if you will (google if interested, they are/were an investment club who made national headlines in the early 2000’s for their reportedly phenomenal returns, but upon closer examination, it turned out they were including contributions in the cited investment returns).
This is a weird metric to track for most use cases, but it’s easy and really it does reflect both levers that I am trying to use here (saving and investing). While swings in the market could totally overwhelm my savings efforts (or savings could obscure crappy investing), I think it makes some sense to track it. It should pretty well tell the tale over time. If you have any thoughts, favor me with a comment.
In any case, my percentage increase in the stash from saving and investing for Q1 2021 (12/31/20 through 03/31/21) was ~7.5%. That’s some progress, but a little worse than I would have done if I was 100% in the $SPY. About 3.6% of the increase is due to savings, so the investment increase was about the same as the EAFE. That’s not terrible considering I had a good chunk in bills and cash.
CURRENT PORTFOLIO Allocation
As I’ve mentioned before, most of my stock exposure is through index funds. I continue to hold a good chunk of 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. This is nothing crazy; about 30% of my total invested accounts is allocated to foreign stocks.
Most of this exposure is via EAFE stock index funds. I am trying to limit exposure to China (and some other emerging markets). Nothing has really changed with respect to my asset allocation.
EFA was up 3.99% in Q1 2021. The S&P 500 was up 6.35%. The completion index (basically everything not in the SPY) was up 7.81%. I am allocated to all of these, and I have about 15% each in SPY and VXF versus 30% in EFA (this includes the investments via my value + trend account).
Value stocks mostly crushed the broader indexes in the first quarter. RPV was up 21.03%. QVAL was up 16.38%. I don’t actually have much $$$ allocated to value funds (though I do own both of these), but they tend to correlate closely with my active stock picks (about 10% of my allocation).
The remainder of my stash (~30%) is in bills and bonds. This is basically all a function of my largest retirement account. In that account I allow myself to change the allocation between 90% and 45% stocks based on valuation. I am at about 60% in stocks in that account. The fixed income is in mostly shorter term instruments. I don’t like the risk/reward on offer for locking money up for a long period of time when the people who print the money are telling you they are going to get to at least 2% inflation.
Minor Adventures in Capitalism
Speaking of my allocation to active accounts, I allow myself to “pick stocks” with about 10% of my overall portfolio.
My “fun fund” should serve as a decent proxy for how I’m doing in this bucket (and it’s easier, since I track that more closely than the other accounts in this category). As I previously shared, my Fun Fund was up 18.56% in Q1 2021.
Value + Trend
I also manage some of my portfolio based on a very simplistic, systematic trend and value strategy. The account is divided equally: 33% each to the S&P 500 ($SPY), the Dow Jones Completion Index ($VXF), and foreign stocks (basically, $VXUS).
If the valuation of one of these indices/funds is rich (as determined by me, based on a somewhat discretionary “process”), then I apply a simple moving average trend-following rule.
The idea is to have some risk management in place when stocks are expensive by selling when they have negative time-series momentum/trend (for example, when stocks are down over the last 12 months).
When stocks aren’t “expensive” I just want to be long and strong. I only allow changes once a month in an effort to limit the number of “whipsaws”(when I sell and am forced to buy back into the equity exposure at a higher price).
If you’re interested in learning more about trend-following, I would recommend you start by searching for info on Alpha Architect and Meb Faber’s site.
I have about 20% of my investments in this account/strategy. I am prioritizing contributions into this account. So, it should become a larger allocation over time (unless the relative performance stinks).
I have been “full long,” in this account since June 2020. In Q1, this account was up 6.91% beating the primary benchmark I’m using: $AOR, a Blackrock ETF tracking a globally diversified version of a 60-40 portfolio. AOR was up 2.61%.
That’s a Wrap
So anyways, that’s the current state of my stash. Value continued to rip in Q1 2021. I made nice progress, but I have to admit I see some pretty big expenditures coming on the horizon. We are thinking about a kitchen renovation and I think I’m going to need a car. Hopefully, we can wait to see if some of these covid production bottlenecks clear when things continue to open up. Thanks for reading!
Quarterly updates are probably the way to go and would provide just as much context to how you are doing overall. In my personal portfolio I only update prices once a month to help filter out the noise, doing so once per quarter would filter it out more.