Net Worth Update: August 2018

Monthly Summary

After spending a good portion of August on vacation visiting family, hiking, boating, swimming, and eating great food, I'm back to the real world of work, research, and writing.

After some contemplation, I decided to post an email address back up on the blog for readers to contact me.

While I had an email up a long time ago with some good contacts, there was the inevitable onslaught of bot spam and promotional requests that ended up taking too much of my time. So I got rid of my email and kept things more private.

However, I'm now averaging well over 1,000 readers a month, including some very successful individual investors, financial advisors, and professional portfolio managers. The learning opportunities to be gained by opening up contact are probably to pass at this point.

I am looking forward to your questions, comments, and insights! If I don't get back to you right away, don't be upset; I have a busy life and I prioritize my family and myself before this blog.

I've done a fair amount of research and writing on Dual Momentum strategies in the past couple months. This included posts on adding more assets to Dual Momentum, taking a closer look at the drawdowns, analyzing how a Japanese investor would have done following my Time Averaged Dual Momentum model in the aftermath of the 1980s bubble, and seeing how leverage would change the results of my TADM model.

In August, markets were positively on a roll. Particularly in the U.S.. Everything from the S&P 500 to small caps to the tech-heavy NASDAQ 100 did extremely well. There is no doubt, the U.S. is still firmly in a bull market!

The U.S. markets continue to hit new highs, but International markets are still lagging. Both the EAFE and Emerging markets have been struggling and hit new lows for 2018 during August. They are both essentially flat over the past 12 months now.

I'm still keeping a close eye on these markets, watching for an entry signal if one appears. It's a reminder that good investing is a patient game.

Thanks to following a version of my Time Averaged Dual Momentum in about half of our portfolio, I achieved a relatively strong return for August. My allocation to the NASDAQ 100 also did well, pulling up our non-registered account.

My small bet on oil looked good at first, but then turned and has gone into the red. It hasn't hit my exit indicator yet, so I am still holding the position. We'll see if the bet turns and begins to show profits, or if it continues to fall and I get kicked out to try again another time.

Earlier this month I moved most of my cash from U.S. dollars to Canadian dollars. My U.S. dollar trade was profitable, earning about 2.5% in roughly 5 months plus a small positive spread on the interest.

While most investors would probably put their money in a bond fund, I am quite happy playing the currency markets with a couple trades each year. Currency trading is cheap to execute, more flexible than fixed income, and more efficient from a tax perspective.

In July, we finished the month with a total of $691,890 in our investment accounts. We had a pretty good month in July and saw a gain of nearly $15,000 in net worth.

That momentum continued into August where we saw a good monthly investment return of +3.35% on our portfolio. This means we are positive for 2018 on an investment return basis.

Of course we also contributed more money to our investment accounts as per our usual practice.

I hope through sharing our real numbers you will be inspired to start saving and investing young—it pays!

The Current Numbers

Here are our current Investment Assets as of the last trading day in August. We invest in TFSAs, RRSPs, and a non-registered joint margin account.

We use a version of Dual Momentum and a moving average/breakout trend strategy to determine what we buy and when we sell our ETF positions. I often employ leverage in positions, so our results tend to swing a bit more each way than the underlying indices.

January 1 of the current year is in brackets to help illustrate the change during the current year. Net Worth Change reflects the total increase/decrease of this past month including new contributions.

The Investment Return is the total year-to-date return on our investment positions, corrected for new contributions at the end of the month. Due to the end-of-month adjustment, the true rate of return on a daily adjustment basis would be slightly different dependent on the intra-month return on the new contribution.

Total Investments:  $720,094  ($670,856)
Monthly Net Worth Change:  +$28,204
30x Rule Safe Annual Income:  $24,003  ($22,362)
YTD Investment Return:  +0.41%

Background Story

My wife and I are late-20s professionals working in the public sector. We don't earn enormous salaries, but by keeping our spending under control we save a large portion of our incomes each month. Our Investment Assets are 100% the result of our own hard work and the return on investments; we have not received any gifts or won any lotteries.

While we both work in pension careers, for this purpose we don't include pension values in our net worth nor pension contributions in our savings. Our investment assets and contributions are from our net paycheques.

We invest primarily with index ETFs using a dual strategy portfolio that I personally developed and maintain. To keep our investing costs as low as possible, I use Questrade and Interactive Brokers as my online brokerages. Questrade is my go-to choice for registered accounts. Interactive Brokers offers powerful tools, low commissions, and low margin interest for our joint margin non-registered account.

Comments & Questions

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Net Worth Update: July 2018

Monthly Summary

I can hardly believe we're already more than halfway through 2018! For a chunk of this past month and well into August I'm on vacation; the longest vacation I've ever had which is pretty amazing. I feel a little like the Europeans interviewed in Michael Moore's Where to Invade Next comedy documentary film.

We have seen some pretty cool action in the tech stocks this month. Thanks to a roughly 30% exposure to the NASDAQ 100 which I've held for quite a while now, I was able to benefit from the new highs being hit over and over. But then, near the end of the month, we saw Facebook getting walloped with a 20% drop in a single after-market trading session.

It's a little strange that a relatively minor disappointing result for one earnings quarter can see a $130,000,000,000 readjustment in valuation for one company. In my view, what more proof do you need that markets are not always efficient.

Maybe the most interesting part is that the valuation readjustment stuck and is still declining. Often we see at least a partial rebound after an enormous, fast drop like that. Other direct-to-consumer tech names like Twitter, Tesla, Netflix, Baidu, and a few of the others also had a downside adjustment. These were real stock market favourites, so it will be interesting to see where things go from here in a segment that has been a major U.S. stock market mover.

More positively, we have seen a small bump upwards this past month in all the major market segments. The U.S. indices, Developed International, and Emerging Market equities saw small increases which may indicate further strength down the road. There seems to be a fair amount of fuel in the markets with the tax cuts, corporate buybacks, record earnings, and other positive fundamental indicators.

However, by my technical metrics both Developed International and Emerging Markets are still in a downtrend. For this reason, I don't have any allocation to these equity categories. But if the rebound continues I will definitely dip a toe in and see where it goes.

In other updates, I took a small short position on oil in July. I don't predict oil will go down, but my technical markers told me to take a short position. It's a roughly 5% exposure as a percentage of my total portfolio because I am always more cautious on the short side. Naturally there is a close stop loss marker to limit any losses.

As I've mentioned before, I follow two different strategies across my accounts. In our registered accounts I follow a version of Dual Momentum. In our non-registered account I employ a trend strategy with use of leverage.

Our registered accounts are still holding U.S. stocks, as per the Dual Momentum signal. But our remaining portfolio sits mostly in cash, aside from the moderate allocation to the NASDAQ 100 and small allocation short oil.

In June, we finished the month with a total of $677,224 in our investment accounts. That was the first month where we got back over our starting point for the year. This month we saw a moderate investment return of +1.43% on our investments. We also contributed more money to our investment accounts as per our usual practice.

I hope through sharing our real numbers you will be inspired to start saving and investing young—it pays!

The Current Numbers

Here are our current Investment Assets as of the last trading day in July. We invest in TFSAs, RRSPs, and a non-registered joint margin account. We use a version of Dual Momentum and a moving average/breakout trend strategy to determine what we buy and when we sell our ETF positions. I often employ leverage in positions, so our results tend to swing a bit more each way than the underlying indices.

January 1 of the current year is in brackets to help illustrate the change during the current year. Net Worth Change reflects the total increase/decrease of this past month including new contributions.

The Investment Return is the total year-to-date return on our investment positions, corrected for new contributions at the end of the month. Due to the end-of-month adjustment, the true rate of return on a daily adjustment basis would be slightly different dependent on the intra-month return on the new contribution.

Total Investments:  $691,890 ($670,856)
Monthly Net Worth Change:  +$14,666
30x Rule Safe Annual Income:  $23,063  ($22,362)
YTD Investment Return:  -2.84%

Background Story

My wife and I are late-20s professionals working in the public sector. We don't earn enormous salaries, but by keeping our spending under control we save a large portion of our incomes each month. Our Investment Assets are 100% the result of our own hard work and the return on investments; we have not received any gifts or won any lotteries.

While we both work in pension careers, for this purpose we don't include pension values in our net worth nor pension contributions in our savings. Our investment assets and contributions are from our net paycheques.

We invest primarily with index ETFs using a dual strategy portfolio that I personally developed and maintain. To keep our investing costs as low as possible, I use Questrade and Interactive Brokers as my online brokerages. Questrade is my go-to choice for registered accounts. Interactive Brokers offers powerful tools, low commissions, and low margin interest for our joint margin account.

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.