February 2018 will go down as one of the more volatile months in recent U.S. stock market history. Almost out of nowhere, the stock market took a few sizeable drops and, by February 9, was solidly in "correction"—when the S&P 500 index drops more than 10% from its peak valuation. Any investors aggressively trading inverse volatility (making financial bets that the market would be very stable) were nearly wiped out.
The velocity of the drop, combined with the absence of external factors, proves once again that market stories and predictions are worth nothing. By any account, the U.S. economy is doing extremely well and stock prices were solidly going up. No one predicted a stock correction of this magnitude. However, I'm sure by February 5 the big networks (CNBC, Bloomberg, BNN) were already explaining the reasons behind correction and busy predicting where it was headed.
Well, starting at around noon on February 9, things quickly changed again. The markets turned around from their quick drop and started to climb day-after-day. Again, not very predictable. However, the price action hasn't actually been that favourable. At this point, the TSX, S&P 500, Dow, and NASDAQ are all showing signs that the trend might be bending.
The reason why I bring this all up is because I invest my entire portfolio following a system that uses price only. I don't watch CNBC, BNN, or Bloomberg because everything they say is either irrelevant or detrimental to my profitability. I don't need predictions and explanations in 3-minute story format to get me all worked up about the stock markets. I make my trades based on price and the metrics I use told me to stay in the market.
I hope you stuck to your plan through this quick correction and wisely ignored the noise and headlines. If your strategy called for you to stay invested, chances are your portfolio is roughly flat so far this year. You would have stuck to a system—whatever that system is—and went about your life with confidence.
In January, we finished the month with a total of $739,108 in our investment accounts. We were up +8.53% that month. This month I added a regular contribution to our joint non-registered account.
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 February. We invest in TFSAs, RRSPs, and a joint margin Account. We use a trend investing strategy to determine what we buy and when we sell our ETF positions.
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: $679,573 ($670,856)
Net Worth Change: -$64,535
30x Rule Safe Annual Income: $22,652 ($22,362)
YTD Investment Return: -0.94%
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 trend strategy 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.
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