*Had to update this as by the end of day March 2, 2018, along with some further trimming of some stock positions and an infusion of new cash into the accounts, cash has increased further from 62%.
As of the end of the day this Tuesday, cash now makes up
62% 70% of the entire portfolio, up 12% 20% from 50%. An old rich white guy once said:
“It takes character to sit with all that cash and to do nothing.
I didn’t get to where I am by going after mediocre opportunities.”
I’m neither old nor rich nor white, so I’m not sure if that advice applies. Anyways, my gut feeling is that the calm, steadily rising markets of 2017 to late-January 2018 are over. Volatility is back. It should open up opportunities to grab some core holdings at decent prices.
So, I sit in cash and wait for prices to reach my range.
As always, the only advice I have is to do as I say (index, dollar cost average, DRIP, and forget) and not as I do (what I’ve just written about).
You know what would be fun? Listing out all the stupid things I’ve bought and the total money I have lost doing so. I’ve probably made a bunch of errors of omission, but let’s take a look at those errors of commission.
Berkshire Hathaway is the company I know the best. This is the company that I would feel 100% fine with holding if the stock market, for some reason, closed for a few years. I would not lose any sleep in that type of scenario. I don’t know if there are any other companies I could definitely say that for with such conviction. 2014 is when I started buying shares. Then, I did an equal amount of selling and an equal amount of buying in 2015 – dumb. Then in 2016, I sold a bunch, like an ass, to buy stuff like Chipotle, which was a big mistake as I eventually sold the Chipotle position after a year at breakeven while Berkshire rose a bunch in 2016. After that, I learned my lesson and implemented my “Never Sell Berkshire Stock” rule: never sell Berkshire, unless it is trading at such an obscene premium that it would make Microsoft at the height of the dotcom bubble look amateurish. Berkshire is a foundational piece in the portfolio. Foundations shouldn’t be messed around with. Oh yeah, and one of these days I should probably get back to recording those shareholder’s letters…
Ever since I started engaging finance and investing in 2011, I’ve been tearing through the sea of literature on the subject. The evolutionary steps that have come along with the years went something like this: ignorant>low cost index funds>individual stocks>fundamental concepts of value investing. While I think I’ve learned a lot in the preceding 4 years, I still feel like an impostor. While I have some confidence in the knowledge, wisdom, and experience I have gleaned, I still question if I really know what I’m doing. In order to discover whether I know what I’m doing or not, I need to test my hypothesis. And that’s where Judgement Day 2020 comes in: this is the deadline I’ve set for myself to gauge how our portfolio has performed on a total return basis in 5 years time.
So remember last weeks post where I
begged advised entertained you to not buy the iPhone 6? And remember how I told you that you could invest that money instead and let it compound for 50 years and end up with over $170,000? Time to separate the sharks from the sheep: who is a sheep? Common, admit it and raise your hand if you bought an iPhone 6. Ok, now, who here is a shark? Alright. Good. I’m a shark. And let me show you what I bought instead of an iPhone 6.