Category Archives: Performance Tracking

Performance Tracking June 2017

For calculation methodology see this post. Tracking growth stocks and fixed income CEFs started in April’17.

For June my total portfolio returned 0.9% exceeding both SPY at 0.64% and 60/40 at 0.38%. YTD the total portfolio is at 8.3% vs. 9.18% for SPY and 6.43% in 60/40. In terms of stock picking, growth stocks lagged this month as can be expected from the headwind faced by leading tech stocks. The DGI stocks were strong in part because of the realization of dividend payment (cash basis on when they were paid, shifting about 0.3% from last month). When the growth and DGI stocks were taken as a whole, they slightly exceeded SPY for the past three months which was better than expectations. CEFs continue to be a highlight of the portfolio as previously mentioned. Cryptocurrencies were a positive driver despite entering a correction since BTC reached $3000.

AllocateSmartly is now tracking 37 different tactical and static allocations. In June, 0.90% would have placed my portfolio at third overall, albeit a distant third. YTD 8.3% would have been 11th out of 37. The active accounts’ YTD gain of 10.29% would have been 2nd overall.

Going forward I see a difficult summer ahead with continued consolidation in erstwhile leading stocks. Gold may finally find a bottom in July. I have been hedging my miners using DUST and I’m finally looking to buy more gold coins for my passive accounts. To be discussed further in an upcoming market commentary.

Performance Tracking May 2017

For calculation methodology see this post.

S&P exceeded March highs and is now firmly in the 2400s territory. SPY gained 1.41% and AGG 0.69% resulting in a very respectable 1.12% gain in May for the 60/40 bench mark. My portfolio did well despite weakness in PMs which I expect to continue for another month. The total portfolio gained 1.76%. However the number is deceiving as gains from cryptocurrencies accounted for most of the extra over the benchmark. The DGI portfolio continue to struggle under the weight of energy, financials and pharma. Fortunately the growth stocks, which are tech heavy, are balancing them out. Overall the individual stocks about matched the S&P. CEFs, at 1.53% for May, continue to be a bright spot. Cash position in the active account stood at 8%. Funds are almost fully deployed for individual stocks. PMs including miners are counted separately where I’m currently underweight by 10.5% actual vs. 15% targeted. The cash position also includes funds set aside for more CEF purchases.

AllocateSmartly hasn’t yet updated numbers for May but I expect my portfolio to come out in the top half. So far the gains are on pace with my year-end goal: reaching a total invested portfolio of 20X, where X is my projected retirement spend. However, I would like to put more distance between me and the benchmarks. With the bull market unfolding according to plan there are opportunities to get the extra oomph, e.g. options. So far my model is pointing to the end of summer as the appropriate time to put on those positions.

Performance Tracking April 2017

For calculation methodology see this post.

Stocks had a good back half of the month in April, gaining almost 1%. Bonds almost matched that giving the 60/40 benchmark a 0.96% gain for the month of April. My passive accounts gained 0.7%, dragged down by PMs. PM miners provided a greater headwind to the active accounts. This is the first month I broke out growth stocks and fixed income CEFs from within the active accounts. The blended total of DGI and growth stocks slightly bested SPY. There is still cash to be deployed and I have been making changes to the DGI portfolio. The FI CEFs are again outstanding. The last big batch of purchase was around the hick-up on Mar 9th and they’ve been going up ever since. I still have some money to be allocated in them and will complete my purchases at the next hick-up which typically occurs every two or three months. The active accounts gained 0.85% leaving the total portfolio up 0.78% in April trailing the benchmark. YTD the total portfolio is up 5.32% vs. 4.86% for the benchmark.

Compared with the strategies tracked at AllocateSmartly, my April return is in the bottom quarter while YTD is still in the top 1/3. There is some cash drag in my portfolio: cash position is 14% in my active accounts; in addition, I count the emergency fund as well. This month I decided to pare down my emergency fund allocation and moved a CD to the active accounts to better take advantage of this bull market. I expect to be fully deployed by July.

Performance Tracking March 2017

For calculation methodology see this post.

March capped off one of the best quarters for stocks with SPY returning almost 6% YTD. But the strength came in the first two months and March itself saw a gain of only 0.13%. My overall portfolio returned 0.69% for the month, significantly above the 60/40 benchmark which returned a barely-above-flat-line 0.05%. Compared with the myriad of strategies tracked at AllocateSmartly, mine would have ranked 2nd in March which pulled its YTD return of 4.67% into the top quartile. Overall, I’m pleased with the performance and hope it continues climbing out of the hole it dug for itself in 2H’16.

One thing I realized as I poured over these numbers was that I was using “cash basis accounting” for my DGI stocks; i.e. recording the dividends in the month of the pay-date rather than “accrual basis” which would have recorded them in the month of the ex-date. It’s a wash in the long run but in the short run it moves returns from February to March since the 3rd month of the quarter has the highest dividend payouts. I’m making a note of it and will just leave things as they are.

Even though there is only a 9-months history, I am concerned that the DGI performance is lagging that of SPY significantly. As such, I’m taking the opportunity arising from re-jigging my asset location to revamp my DGI stocks. Since they will all occupy taxable space, I’m eschewing current payout for growth. It is consistent with my view of where we are in this bull market.

Active Allocation and Performance Attribution

I have more or less fixed the asset allocation in my active accounts: 15% PMs, 24% fixed income CEFs, 45% DGI stocks and 15% growth stocks – defined as those that don’t pay a dividend. There is an additional 1% that I’ve allocated to alternatives that is currently comprised of options and crypto currencies. I’m dabbling in the latter and will write up my experience in a future post. The allocation being the goal, there is still 12.6% cash waiting to be deployed into CEFs, DGI and growth stocks. My plan is to do so gradually into the names I’ve already picked out, effectively DCA’ing during what I anticipate to be an intermediate correction (see here and here).

In the monthly summary table, I’ve been breaking out the “Passive w/o PM” as the more traditional Boglehead-like 85% slug of the passive portfolio. By inference, it also tracks the PM allocation which is 95% comprised of bullions in the passive portfolio. For the active portfolio, starting from next month, I’ll also track the growth stocks and the FI CEFs in addition to DGI stocks in order to pin-point the sources of over/under-performance. CEFs vs. AGG and the stock picks vs. SPY are the key head-to-head comparisons I’m after.

Financial Independence Progress Report

Financial Independence is a term you see a lot these days, but the definitions vary which is problematic. On the Reddit Financial Independence forum, it is defined as the combination of assets and other income streams that together generate a passive income that covers one’s basic living expenses. The level of assets is typically derived from the 4% rule. Then there are others that require the passive income to cover one’s current standard living expenses. It is this latter more stringent definition that I subscribe to. To make matters more confusing, there is the notion of “retire early (RE)” which together with FI makes the catchy FIRE. In principle, RE can happen at any time, but more commonly RE is concurrent with or follows FI.

I’ve always like this progression of financial milestones from Radical Personal Finance:

Stage 0
Financial Dependence
Stage 1
Financial Solvency
Stage 2
Financial Stability
Stage 3
Debt Freedom
Stage 4
Financial Security
Stage 5
Financial Independence
Stage 6
Financial Freedom
Stage 7
Financial Abundance

See the original post for definitions. So where am I on this journey? Below I’ve put my own “numbers” around the terminology. I couldn’t help patting myself on the back for what we’ve achieved in 15 years after my first “real job”. I’ll admit to having indulged in some Excel porn in coming up with the target dates of the future milestones; but hey, that’s the most fun anyone’s going to have with MS Office, right?

Disciplined savings and prudent financial decisions were largely responsible for our initial success but going forward the returns should matter a lot more. 2016 saw our highest income to-date but the contributions were still overwhelmed by the returns; and 2017 will be a below-average year in terms of bonuses. Equal if not a greater concern is to limit draw downs as the dollar amounts will be large and I’ll have less time to make them up. Hence the allocation to PMs, CEFs that are night and day from TBM, market timing moves, etc. While a large chunk of my passive portfolio is something even a Boglehead might approve of, the overall portfolio is probably as complex as an individual, non-professional investor can make it. I realize it’s not for everyone, God knows it took me two decades to get to this point. I’m still learning and evolving and my portfolio will too. That’s the fun part.