The Quick Takeaways
This month savings rate: 51 %
This month leverage: 100 %
Rolling savings rate since February 2016: 55 %
Total value of portfolio: 550.000 DKK (84.000 $)
Years till I hit a 7 % SWR: 2.6 Years
% Change since last month: 1.8 %
So What The F*** Happen This Month
I think we all know this month has been a rowdy one. Stock wise. Excluding this day (where everything seems to go up) my portfolio is down 25.000 DKK (3.800 $).
I have been quiet excited about the market drop. I have taken this quote from Warren Buffett quiet serious.
Be fearful when others are greedy, and be greedy when others are fearful – Warren Buffett
All stocks has pretty much only gone up for a long time.
The Shiller PE 10 were at the second highest ever recorded.*
So I can have a hard time justifying buying stocks. And because of that I have decided to have some of portfolio in cash. Around 10 %. There is several reasons for that:
- By having some cash I can rebalance if the market should take a big dive.
- And I think it is a responsible thing to do when I leverage my investments by 50-100%. It means that I can afford the leverage. If everything tanks, I still got some cash reserves to make sure that everything is good.
- Plus I would like to have a 1-2 years of cash when/if I quit my fulltime job. And this resonates very well by having 10 % cash. So if I end up with a portfolio of 2.500.000 DKK (380.000 $) I would have around 250.000 DKK in cash. Which is equivalent to two years of my spending.
When the market did drop this month, I could finally justify buying some stocks. And Morningstar begins to call that the general market is undervalued**
I don’t practice market timing. So I will buy whatever the market does. But I would lie to you, if I said that I didn’t feel an inner resistance when everything just goes up and up and up. And that’s where my 10 % cash allocation feels good.
Just Bring Another 2008
I think this month would be similar to something that happen back then. We just need to experience them for 9-10 consecutive months.
But this month has just proved that my portfolio can decline 4-6 %, and still be able to make the portfolio rise.