Stock purchases & going forward strategy

Nibbling went well, here is what I actually purchased and total gain loss since purchase.  This represents a VERY small part of my portfolio.

Stock Total Gain/Loss
AMZN 23.30%
BABA 6.04%
JPM 6.29%
LULU 12.02%
UL 5.00%
V 0.75%
GSK -4.39%
GILD 4.46%

So most of this happened just a few weeks ago (1/27/2020).   AMZN, LULU and GILD have all been held a bit longer, but the others were just nibbling when the market dipped.

GSK is the only one trailing the market, but I do still like the annual div yield of 5% GSK.  GILD has also been a relative loser in my portfolio, but again, I like the dividend and still see long term upside and value in these.

So lets make another comparison to see how terrible I am at stock picking.   Since Jan 27th I have earned 3% on my stock picks.   QQQ has gained 6.8%, SPY 4.3%.   Not impressive at all.   Hence this is why this is less than 1% of my liquid holdings.

Another comparison, and this is unfairly weighted.   My total portfolio (everything is less than 1 year purchase) is up 41.2%, QQQ is up 37%.   So I am beating the market, but that is because my largest holding is the largest holding of QQQ which is on fire as of late (MSFT).   This does not include dividends either.

Last comparison.   My ‘stable’ portfolio is up 12% in 10 months.   It also pays a 2% div.   This is clearly trailing the market by quite a bit, but this is by design, with an expectation of less drawdown when the market retreats.    This portfolio maxes out returns at about 19%, with a max draw down (2007-2008) of 11.4%.

This same portfolio from above will be re-balanced during a 25% or more decline will shift to the portfolio that returns 40%+ plus a year.   Once the 40% return is achieved from re-balance, will shift back to the more stable return profile.   

The above statement requires a lot of discipline, but I believe it make sense.   It is basically a move to higher proportion of stocks on a decline, with a reverse out of taking profits at approximately a 30-40% increase in portfolio.   This is done with a little bit of leveraged funds, but still only has a downside risk of 28% over the entire portfolio (vs 50% or more).   The Sharpe ratio on these strategies tend to be in 1.3-1.5 range, with Sortino ratios > 2.

Executing that portfolio will likely be done in 5% increments, at a 25% decline move 5% to more leveraged buys.   At 30%, move another 5% and so on, until you reach 40%.  40% may never happen, or you may go lower than 40%, but it doesn’t really matter.   Once your leveraged index recovers that loss (could be months to years), you start cycling out of it.   The leverage can be done using 2x/3x index funds, or 2-3 year options.  I will have to do a further analysis of this to determine what is the best way forward, or proper mix of those two instruments.  Options would be the less expensive route, but are time limited so harder to calculate proper execution.

Market up — killing my projections

Markets are up, and I’m killing my savings metric/projection.   My first projection back in August of 2019, was a high metric level of 59.3K and 120% for the end of this month.   I am currently sitting at 87.2K and 129.5%.   So I am roughly 28K and 10% ahead on this projection.   In this projection I am already ahead of where I anticipated in August 2020.

The next projection I did was from last month, and we are ahead on that one as well.   Projecting for end of July 2020 to be in these ranges 85.9K-109K, 129%-138%.   We’ve already hit that range.

So I am due 2 bonuses in the between end of February and Mid-April that total 37K in stock after taxes.  Adding just those two in, without taking in to account reduction of debt would put us at a metric of 124K and 142%, crushing my 2nd projection.

Much of this is due to really great stock appreciation in the last few months.   Sky seems to be the limit, but my gut also tells me this market seems too exhuberent and you need to continue to move money from your stock holdings in to your more stable portfolio (which still has quite a bit of stock).

Nibbling on Researched Fun

Took a few nibbles on some stocks with recent pull back.  These represent a VERY VERY small percentage of my portfolio, but sort of satisfies my appetite for owning some individual stocks.   This makes up less than 3% of my liquid portfolio, and less than 1% of my entire holdings… it’s more just a bit of what I would call ‘Researched Fun’.

So this is what I own from an individual perspective.

  • AMZN
  • BABA
  • GILD (Likely to sell)
  • GSK
  • JPM
  • LULU
  • UL
  • V

So a big financial institution JPM.   AMZN and BABA – big new companies.   GILD and GSK – pharam.  LULU retail.  Unilever – food and beverage.   V – payments, finance.   I am definitely missing exposure to certain sectors here, and these are all big names so nothing crazy.

A few  notes.   Likely to sell GILD and shift some of it in GSK.   BABA was a total flyer.  AMZN I’ve owned for a few years.  Cloud business still impresses.   LULU, saw lines out the door black friday.   This is a brand people want!   V – card payments aren’t going anywhere, people still carry too much CC debt.    UL – big stable food and beverage company.  I like boring.   Looking for more boring big companies with great financials to hold longish term.





I’m feeling a bit stupid today looking at that ratio I’ve been tracking.   Debt / Liquid Assets.   This all came about because I was curious what the average change over the last 12 months to that ratio has been.

Currently the metric sits at 1.2.   Which is doh… 120%.  I have 20% more liquid assets than debt.   If I had a 2.0, I would have 100% more assets than debt.  Psychologically going from 1 to 2 seems like a more difficult goal than going from 100-200.   This may be pure preference, but going from 100 to 200 makes it easier to view the numbers and those small changes that occur more palatable.

So the answer to my original question.   In the last 12 months, the average change is 3.3%.   Going back 24 months, 2.3%.  Going back 36 months it is 1.8%.  Over the entire period I’ve tracked .9% (should probably chart this as a moving average of sorts).

So time to hit 200%?   At rate of the last year = 24 months, at rate of last 2 years = 34 months.   With the trend having been what it has been, and nothing goes awry will hit the mortgage payoff goal from the last post with a metric above 2.0 or 200% .

So why would it increase.  Part of it is the amount of principal vs interest paid over the last 10 years.  Acceleration of mortgage payoff.  Doing a bit with excel I can see it started as .15%, and now at around .65%.   So that will continue to accelerate from the mortgage perspective

The other parts are increased income & bull market.  I don’t have all the numbers to track that, but I know my compensation from a stock standpoint will peak this year.

The last part, the bull market. If that were to end, Let’s say a max draw down of 20% on my portfolio (based on how I have things allocated now… that’s a pretty bleak scenario something like 2008 where stocks tumbled over 50%).   A major stock market tumble would effect my metric short term and also income (since  a good portion of it is stock).  In that worst case scenario The metric essentially goes back to 1 or 100%.  Perhaps a bit lower.

On the bright side, I have a plan in place to re balance at this point (move more bonds in to stock, etc).  It’s an opportunity to return a bit more profit if I start making these decisions as the S&P drops by double digit percentage.  I’m not trying to catch a bottom, but rather trying to buy value after a drop.

Then you wait to lock in some ‘enhanced’ profits over a period, and rotate back in to my modified all-weather portfolio after locking in some of those profits.  Patience is the key here….


One other topic that’s been on my mind lately, and I need to research quite a bit more.  My real estate holdings only account for 5% of my entire investment picture.  The more I read about REIT’s, it seems like there is a good case to increase that number for my portfolio.   Perhaps 10-15%, maybe as high as 20%.

The last recession involved a housing crisis, so real estate did not fare well.  However over longer periods Real Estate has been less correlated to stocks and bonds, and has fairly consistent returns.

Chart below shows SPY to ICF correlation.  It fluctuates like all correlations.   Lately in my hunt for investments I look for less correlated investments that have had good track records over long periods of time.   Real Estate generally fits that bill.  REITs add a layer and often operate differently, and have different characteristics than other investments (ie, Taxes for me).



Mortgage payoff in 36 months

Always setting goals, and no better time than end of year.    Drum roll… I am setting a date of  Dec 30  2022  (a Friday)  to pay off the mortgage.   Putting things in writing like this tends to solidify the goal (even better if you physically write it somewhere).     I’ll be 46.

My original goal when I started keeping track on this blog 31 months ago was to payoff the mortgage at the end of 2020.   At that time, I calculated we should be left with 60K in the bank.    Currently we are only 5K away from the 60K left scenario one, so I would say we are roughly 11 months ahead of schedule.    With any luck we can continue to stay ahead of this original projection.

Re-evaluating things though, I want a much higher amount of invested assets when we actually pay off the mortgage.   I track a ratio of liquid assets to total debt and want that to be in the range between 2 and 3 before I consider paying things off (36 month should put us at a ratio between 1.9 – 2.6).

We will owe 211K in December of 2022 with our extra payments.  This will be in year 13 of our mortgage.    We have already saved 51K in potential interest payments by paying down principal early.   Table next breaks down that calculation (I wish I had kept better records of early payments made, I suppose I could fish them out of my tax statements).

Loan Orig Date 11/10/2010
Total Mortgage Cost 687,299
Orig Principal 406,000
Total Interest on 30 year 281,299
Current as of 12/31/2019
Current Owed Interest 99,823
Current Owed Principal 279,815
Total Owed 379,638
Where we should be based off original Amortization Table
Total Interest Paid 130,105
Owed Principal 328,006
Interest Left (based on 30 amortization table) 151,194
Interest Saved to date by making early payments 51,371

By paying off at the end of 2022 under the current plan of additional payments we would save an additional in 71K. A total savings of  ~122K.    51K (original savings from early payment), plus 71K additional saving on 36 month accelerated payoff.

Not bad, but only a 17.7% saving on the total cost of the mortgage.  If I paid it off tomorrow we would save 22% over the total cost of the mortgage.    

F*#@$ mortgages are genius for the banks.   By the time most people are able to pay them off you’ve already paid most of the interest making the payoff less valuable.     I suppose this is the point, and why lending is such a profitable business.

Projections say our liquid saving will be between 430K-610K.  Median of  520K.  Being over the median will be a  prerequisite  to making this happen.   This will still leave us with just over 300K in liquid assets.   This seems like a better than good cushion, probably  3-4 years of of ‘normal living expenses’.  Perhaps 6-8 years or more if living frugally.

Even without housing costs just taxes, utilities, food, transportation, etc add up to a ton of money. At the low end we look at 2700 a month.   I think giving it a cushion and bumping it up to 3300 a month seems like a more likely minimum.   Very few scenarios see us cutting our expenses beyond that.   Possible to live more frugally yes… likelihood of that happening unless forced, not much.   To be more honest, there are few scenarios where I see us spending less than 5K a month (religious school + dues, music lessons, kids activities, vacations, etc etc).    These are choices, but choices we have accepted and not likely to change.   To be even more honest, and this is hard for me to swallow, but we spend more like 10K a month at the moment excluding the mortgage (this includes things like our car lease).  I’d really love to take a look at this and see if we could cut that to 8K a month.   Save another 24K a year.  Yes we are already savings, but there are some easy hacks where I can chop a few thousand off (cutting the cord was about 1200 bucks a year). 

A little more analysis.   For the house alone, taxes are 8300 a year, or 700 dollars a month.  Home owners insurance is about 180 a month.  75 bucks a month for HOA dues.   So even after the mortgage is paid off we are still paying around with a thousand dollars a month for the house (not including utilities, maintenance, etc).

This is good for now, as always I will revise.   I originally wrote this by accidentally thinking December 2023 was 36 months away.  It is not, and I like our financial picture much better at that point.   HOWEVER I think with any luck our financial outlook will look more like December 2023, in December 2022, given that we are already 11 months ahead on project.

Best thing I think we can do now is accelerate the savings as much as we can.



Projection with ranges

Along the line of yesterday’s post. Expected metric in K dollars, with ratio in a range format.

Date Total Range Metric Range
Aug-19 6.6 K to 6.6 K 1.02 to 1.02
Feb-20 35.3 K to 47.3 K 1.12 to 1.20
Aug-20 64.3 K to 88.3 K 1.22 to 1.39
Feb-21 93.5 K to 129.5 K 1.34 to 1.59
Aug-21 123.0 K to 171.0 K 1.46 to 1.82
Feb-22 152.6 K to 212.6 K 1.60 to 2.07
Aug-22 182.5 K to 254.5 K 1.75 to 2.34
Feb-23 212.6 K to 296.6 K 1.92 to 2.64
Aug-23 242.9 K to 338.9 K 2.11 to 2.98
Feb-24 273.5 K to 381.5 K 2.32 to 3.36

As of 12:45 today 12/12/2019:

Current Ratio: 1.16

Current Total: 48 K.

Right in the middle of the metric range for Feb 2020.  The total is above target for the same period.   Hard to say where that will end, but I only see that number going up.

Keeping in mind the above targets are based on averages over a fairly long period of time, and they account for the possibility of a decline in markets.  Adjusted target for Feb 2020 given events since August:

Total:  76.5 K

Ratio:  1.25

That would put us close to the middle of the 6 month goal.   Ahead by  4-5 months.

Corrected 6 month projections

I had an issue with my math from a September 2019 post.  This is the corrected projection through 2027 based on current averages (this chart changes depending on average savings rate over the last 4 years, so saving it off here).

Date Metric Ratio
Aug-19 6.6 K 1.02
Feb-20 47.9 K 1.16
Aug-20 89.4 K 1.31
Feb-21 131.1 K 1.47
Aug-21 173.0 K 1.65
Feb-22 215.2 K 1.84
Aug-22 257.5 K 2.06
Feb-23 300.2 K 2.29
Aug-23 343.0 K 2.56
Feb-24 386.1 K 2.87
Aug-24 429.4 K 3.21
Feb-25 472.2 K 3.60
Aug-25 516.9 K 4.08
Feb-26 561.0 K 4.64
Aug-26 605.4 K 5.31
Feb-27 650.0 K 6.15

This is with  a 5K average saving per month.   60K a year.

I’ve hit the February  benchmark of 1.16 last month.   Bonuses that hit in September were the reason for this acceleration.   And the market doing well helped.

Again, looking at this chart, everything stays on track, plan might be to entertain paying off the mortgage in February 2022 (in 26 months).   This is when the ratio reaches 2.     I don’t think I do it until it reaches somewhere between 3 and above that I might actually pull the trigger.

Of course with the relatively inexpensive 3.875% mortgage, I may never actually do this… If I think I can earn 8% or more


I have several projects around the house I am begrudgingly trying to price out.  Here are the larger projects with some very rough estimates:

  1.  Door + windows main living area 10K-20K (2020). Door glue is coming out, and doors are essentially failing.
  2.  Exterior concrete/brick entryway fix .  No idea (2021?)
  3.  Fridge/oven/range upgrades 5K-10K  (2021-2022)
  4.  Exterior Paint and Rot replacement (2022) – every 10-12 years:  6-12K
  5. Carpet and Flooring (2023-2024?)

Bunch of smaller projects that will add up too.  Storm doors, garage door replacement, gutters, plumbing and electrical fixes etc.   I need to find a better way to plan and pay for these things as they come up as the above are pretty big ticket items.  Rather than doing all at once, I should just tick off a couple a year .   One big one small per year.

This will help rather than trying to do it all at once when we eventually try to sell this house (10 years in , thinking 12-14 to go).