Saturday Linkage

9/12/2020

  1. Can the 60/40 portfolio still work (A wealth of Common Sense); Good analysis on this traditional allocation and its potential future.
  2. The Best Friend Investors never heard of (evidence investor); Interesting story of how poor/corrupt 401K administrators were finally held accountable
  3. Eight Secrets to a Fairly Fulfilled life (Guardian);
  4. Five things you can do with an old 401K (Physician on fire):
  5. The Work from Home backlash is upon us (A Wealth of common sense); Time to go back to the office….

Sometimes I hate to be right…

Well, Wednesday starts after several days of the tech stocks being hammered, resulting in the S&P 500 dropping about 7% over the last three sessions. This morning Amazon, Facebook and Apple each rose about 1%, but analysts still believe that, since their way above their valuations a year ago. Amazon is up 70%, Apple 54%, and Facebook 32% vs. an overall 3% gain for the S&P over that time.

Mike Wilson of Morgan Stanley stated “We think there is more downside over the next month but eventually leads to further broadening out of the bull market.” In laymen’s terms, they think the Tech stocks may drop somewhat, while other stocks in the S&P make gains commensurate with the improving economy. We can all hope that this market rally “broadens” as opposed to being concentrated too much in Tech Stocks. Again, I remember 2000 and the dot.com bust.

For most of us, this means “steady as she goes” in our investments. Continuing to put money away, dollar cost averaging, and watching our spending for the year. Hopefully your income hasn’t been too negatively impacted by Covid-19 shutdowns. If you can do that, you can weather most any storm.

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Mr. 39 Months

Saturday Linkage

9/5/2020

  1. When can I retire? (Financial Pilgramage); good article on the author’s analysis on retiring early, Coast FI, and the reasoning behind it.
  2. Debtor’s Prison (Humble Dollar); how being in debt stifles your creativity and ability to affect your life – like you are in prison.
  3. Real Cost of Home Ownership (Clipping Chains): good analysis of the numbers in 3 parts.
  4. How to “Refire” in retirement (ESI money); Book review of “REFIRE don’t Retire” book, which discusses steps to move to a higher gear in retirement.
  5. How to RV in retirement (Retirement Manifesto); I keep threatening Mrs. 39 Months that we’ll RV upon retirement – and she is not having it.
  6. When to Quit (City Frugal); Why do people not quit, and how to make that final decision
  7. Are you trapped? (Full time finance); Good article discussing the issues where you have started in one direction, and the things which affect decisions to move forward or step away.
  8. History of Financial Independence (Get Rich Slowly); Nice rundown of the history of the movement – its older than you think
  9. Quitting my job during a Pandemic was a win (Budget life list); actually it was more of a job change than retiring early
  10. Three reasons why the stock market is doing well while unemployment is high (Simple Dollar)
  11. Nine Symptoms of unhealthy relationship with money (Physician on Fire); I think most folks in the community have managed to avoid these.

Investment Update Sep 2020 – Back “in the Black!”

Well I’m back from my backpacking, and we are “back” in terms of our investments. Like most folks in our community,  I’ve been riding the slow, steady “up” of the markets for the last four months (May – August), as our finances have crept out of the hole that we fell into during the Feb/Mar crash. As long as you didn’t panic and sell everything, the market typically recovers – even from the crashes of 2000-2002 and 2008-2009. It never pays to panic and sell out. If you are uncomfortable, just adjust your asset allocation to a more conservative position, so you can sleep better at night.

With that said, we are back to a positive 0.8% for the year, even after all the money we have put into the market (we never stopped our regular, monthly contributions). The S&P 500 is up 7.5% for the year – so if we were 100% in the S&P, we’d really be up. However, five stocks are primarily responsible for that jump up (the tech stocks) and I was around for the dot.com bubble, so I don’t feel comfortable putting all my eggs in those 5 company’s baskets. I won’t do as well, but as I said, I will sleep at night.

So our allocation is as follows, as of July 2020:

Retirement Accounts: Remember, my allocation for these is:

  • 20% Bond Index Fund
  • 20.0% S&P500 Index Fund
  • 20.0% International Index Fund
  • 20.0% Small Cap Index Fund
  • 20.0% REIT Index Fund

My 401K doesn’t have REIT option, so its just 25% for each.

As you would expect, everything was up, though in different amounts.

  • S&P500: 7%
  • Small Cap: 4%
  • International: 3%
  • REITs: 1%
  • Bonds: -16%

My dividend account new allocation (as of Jan 2020) was:

  • 50% Dividend Stocks
  • 50% REITs

The dividend paying stocks varied (some up, some down) but overall the account gained 3% for the month (including dividends).

My value account with Vanguard was up 4.9%, so it was in line with most of the stock gains.

Overall, for July, I was up 3.8%, a nice bump. For the year, I’m at +0.8%. My expectation is a slow growth, probably ending around 3% – 4% for the year.

Hope everyone is healthy and your Sept turns our well!

Mr. 39 Months

Back to Square One

Well, the S&P 500, the benchmark that so many folks use to determine how well the stock market is doing, has gotten back to “even” for the year. Its taken five long months to dig out of the Mar 16th hole of $2,304.92 (a 32% drop from its Feb 10th high). If things continue along these lines, we could expect a 4% – 5% return for the year. So everyone is OK, right?

Actually, the situation is not so rosy. Yes the S&P is back, but in listening to Ric Edelman the other day, he noted that the five big tech stocks (Facebook, Apple, Amazon, Netflix, Google) were up 30% – 35%, but the other 495 stocks of the S&P were still down an average of -5%! So the market rally isn’t broad based, its concentrated in the tech stocks – and those of us around in 2000 – 2002 remember how quickly that can evaporate.

For us, we are still down a little for the year (-0.8%) primarily due t the fact that we are invested in International, Small-Cap and REITS (REITs are getting hammered with the Chinese Covid virus). Still, by diversifying, I think our recovery is a little more broad than just the folks that are in the S&P 500.

It will be an interesting time for the remainder of the year. We are starting to creep out from the lockdowns, but a significant amount of economic damage has been done, especially to small businesses, the restaurant industry, and the commercial real estate industry. I believe we’ll see  a waive of bankruptcies for the next 5 years as all of this is cleared out, and the economy won’t really start humming until these are cleared away.

Of course politics will also have a effect over the next 4 years. Going to be interesting….

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Mr. 39 Months

Saturday Linkage

August 15, 2020

  1. Is it a smart idea to pay off rental property (Route to Retire); goes through the numbers on making this decision
  2. What will you do all day in retirement? (ESI Money); Review of an interesting book with good advice on what  you need to do to set yourself up once you’ve retired.
  3. Work Less (Zen habits); The benefits of shorter lengths of “more focused” work
  4. Why you shouldn’t ignore “active” income (The Fioneers); How even small amounts of income from a part-time job will help you achieve your goals quicker
  5. Money Mistakes in your 20s to avoid (Simple Dollar); some of these are very obvious, but people still make them.
  6. Why chasing returns is sure way to lose (physician Philosopher); Good analysis with numbers to show how many folks chase the hot “item” but lose out, because its already peaked and on its downslope when it becomes “hot.”
  7. Median Income for the middle class mass affluent (financial Samurai); For the 80% to 99%, its not as high as you think.
  8. Why real estate will always be more desirable than stocks (Financial Samurai)
  9. Is this the last hurrah for bonds? (retirement field guide); maybe not right now, but its coming close. The Fed keeps rates low to battle deflation, and its killing bond rates.
  10. The sweet spot (Mr. Money Mustache) how to reach that point where you can work as you want on stuff you want to do, and enjoy your lifestyle.

Purging your Blogroll III – Aug 2020

Well, its August, and as I did in 2018 or 2019, its time to do a “blogroll purge.” As I noted then, one of the things which has always brought me a lot of pleasure is reading other FIRE blogs and seeing the different facets of the subject. It seems each blogger has a topic which motivates them, and they concentrate a great deal of energy on that topic. The result is some excellent reading and the opportunity to learn in-depth of a wide variety of topics.

It’s a sad thing that as people seem to hit FI, they take off and the level of blogging activity seems to drop. I’ve heard it said that many bloggers (and podcasters) don’t make it past six months. They say what they need to say, and then run out of ideas. When this happens, we often lose an interesting voice and set of thoughts. One of the reasons I enjoy the Post-FI blogs (near the top of the blogroll) is to see what life is like once folks hit the magic number/date.

What is nice is that there are always new people joining our community, and I want to make sure that I can include those in my blogroll (at right) so others can link to and see what they are saying. So I typically every 6-12 months do a blogroll “purge” where I clear out those blogs who haven’t updated stuff over the last 3+ months, and this frees up space for newer bloggers. So today, I’ll be doing my blogroll “purge” and trying to identify new and interesting folks for you to see.

Enjoy, and I hope you enjoy my writing and the writing of those I point out. Enjoy the rest of summer!

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Mr. 39 Months

Saturday Linkage

8/8/2020

Sorry I missed last week – got buried with landscaping work at home (dug up a lot of beds by hand, put down 5 cubic yards of mulch, planted perennials, etc.).

  1. Thoughts on passive investing “bubble (Early Retirement Now):
  2. Want to turn your finances around? (Simple Dollar);  8 things to remember at the beginning of financial changes.
  3. How to use Apps and websites to sell your stuff locally for free (tic toc life); Need to consider this for my side hustle
  4. Should I max out my 401K at the beginning of the year (Pete the Planner): What is the pluses and minuses of this strategy?
  5. Is our retirement in Panama Unexpectedly over? (Route to Retire); Some of the perils of retiring overseas.
  6. Why would anyone own bonds right now (a wealth of common sense); mirrors my own thoughts.
  7. The nine money and life lessons most people learn too late in life (CNBC);
  8. The Permanent Portfolio (the irrelevant investor); Interesting take on  a different type of portfolio to handle potential risks involving S&P500, one-month t-bills, long-term government bonds and gold.
  9. Celebrating Financial Independence wins along the way (Costa Rica Fire); Taking time out to celebrate the wins will keep the motivation high
  10. Action Creates Motivation (Get Rich Slowly); If you want to make changes in life, you can’t just plan, you must act as well.
  11. Seven Phases of retirement (Retire by 40); Good review of the progress from start to finish as you journey towards full retirement.
  12. Money Lessons they don’t teach in school (Four Pillar Freedom); Good list, including “owning assets leads to wealth” and Compound interest

Investment Update Aug 2020 – Getting back there

With the Fed flooding the US with dollars while also keeping interest rates low, is it any surprise that the markets keep shooting up? Bonds have nowhere to go but down, and banks won’t pay anything for CDs or savings. Folks have nowhere to go but stocks – or precious metals & commodities (see gold/silver). So like most folks, my investments have continued to go up, even as reports of US second quarter GDP being in the tank.

Again, I’m not surprised, but I’m also not jumping for joy with the recovery. We really won’t know the effects of all this for a couple of years – right when we are looking to retire early.

If there was ever a time which showed that the stock market is not the economy. The economy is going to be hurt for 2020, but it appears the market may rebound.

As you know, I switched my allocation at the beginning of July, lean more heavily on stocks and REITs and to pull back from bonds (see above).

Retirement Accounts: Remember, my allocation for these is:

  • 20% Bond Index Fund
  • 20.0% S&P500 Index Fund
  • 20.0% International Index Fund
  • 20.0% Small Cap Index Fund
  • 20.0% REIT Index Fund

My 401K doesn’t have REIT option, so its just 25% for each.

As you would expect, everything was up, though in different amounts.

  • S&P500: 5%
  • Small Cap: 5%
  • International: 6%
  • REITs: 4%
  • Bonds: 1.6%

My dividend account new allocation (as of Jan 2020) was:

  • 50% Dividend Stocks
  • 50% REITs

The dividend paying stocks varied (some up, some down) but overall the account gained 1.2% for the month. My dividend yield for the 2nd quarter was 4.7%, and the stocks were recovering (but still down about $20K from their January high).

My value account with Vanguard was up 4.9%, so it was in line with most of the stock gains.

Overall, for July, I was up 4.3%, a nice bump. For the year, I’m still at -2.3%, but at least my Net Worth has recovered back to where it was at the start of the year (counting on all my investments I put in for the year).

Hope everyone is healthy and your May turns our well!

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Mr. 39 Months