I’m fast approaching the 2-year mark on my stock market project, so I thought I’d take some time to reflect on my experience so far. I find it interesting to monitor my level of engagement with the market. Some weeks it’s all I think about and I spend hours and hours in front of the computer going over my positions and potential positions. But sometimes I do the minimum to simply keep up. I’m not berating myself over this. I have a full-time job and other obligations, as well as other interests. I can’t be ‘on’ 24/7, and that’s fine. I’m pretty sure by this point that this will be a lifelong project, with ‘project’ being a rough term for ‘amassing enough wealth to retire very comfortably’. I enjoy the process enough to keep on top of it, and I believe I can outperform the market over time. And yes, I know how that sounds. I read A LOT of investing books, and many people say it can’t be done, or at least that it’s rare. Well, it’s good to have goals, right?
Having said that, it’s time to address the elephant in the room. Take a look at my
PORTFOLIO section and check out the chart. I’m beating the market, but lately my performance isn’t so great, and the market is catching up. I’ve been cautious on the market since the DOW was in the 18,000’s. That caution has cost me money. I sold a lot of my stock in August and November of last year. Some of what I sold has tanked, some has gone up, some hasn’t really done anything. But what I sold isn’t the problem. What I am competing against, THE MARKET, has done nothing but go up, while I sit on 65 to 70% cash. The paragraph that follows is full of whiny excuses, feel free to judge me harshly.
I’ve been kicking the market’s butt for about a year, and that’s while usually maintaining over 50% of my accounts in cold hard cash. That means I’ve been beating the market without even risking half of my money. This means that what I have invested in, I’ve generally been awesome at. So what if I would have been even better had I risked more money on my positions. I’m new, I’m still learning. The caution has thus been warranted. And so now that I’ve grown more cautious, have more of my accounts in cash, the markets have gone up, and that’s just not fair.
Anybody feeling sorry for me? I hope not. You see, these are the thoughts that can easily invade my head, make me feel better about myself, despite my relative underperformance these past few months. Underperformance that is posted here for the world to see. Now hold that thought. I want to tell you about a YouTuber I’ve been watching a little the past couple of months. A friend of mine is big into the ‘financial apocalypse’ narrative that always seems to be around in one form or another. We’re not talking the collapse of a few banks, we’re talking a total collapse of the system. A financial and government services ‘Mad Max’ kind of scenario. I’m not intending to belittle those who are into that, and indeed some parts of the world are like that, but it’s not my thing. I believe the stock market is overvalued and we have some serious problems, but I don’t think I’m going to walk into any empty supermarkets anytime soon.
This friend is horrified that I ‘play the stock market’, and has encouraged me to watch this YouTuber that he follows. So I have been. This guy is a financial apocalypse believer. He posts several videos a week, and often plays with his silver coins on camera. He believes in physical silver over paper money, or stock, or whatever. And much of his content is the same, week after week: playing with silver coins, talking about the coming collapse and how to deal with it. One of his latest videos deals with the recent drop in silver prices. He claims that the silver market is being manipulated, but he doesn’t care where the market is. He has his silver, and nobody is taking it away from him. He even thinks silver will be manipulated down even further. And then it struck me what he was doing. He wants to have his cake and eat it too. Let’s say that 6 months from now silver is significantly lower. What will this guy come on YouTube and say? “See, I told you. They manipulated it lower.” What will he say in 6 months if silver is significantly higher? “See, I told you. My silver is paying off. Paper money is going down, silver is up. I’m so smart.” He’ll be right either way.
And now back to me and my blog. I don’t have that same luxury. While some of the things in my whiny excuse paragraph might be true, so what? At the end of the day only one thing matters: my account value versus what I could have gotten simply by investing in the S&P 500. That’s it. So what if I’m new at this? So what if last year I crushed the market while holding a huge percent in cash. Big deal, what’s the bottom line right now? That’s how I know if I’m doing well or not. If I close out a position and take a loss, I’m wrong. If I close a position and make enough money, I’m right. Simple. I don’t get to be ‘right’ either way.
So that brings me to where I’m at now. It’s actually a pretty good place, I think. Given my experiences in the market, I’m confident I have it in me to make this happen. I still believe the market is overvalued, so I’m not going to rush out and buy buy buy, although I have been a bit more active the past month or two. There is value out there and I’m not afraid to nibble at it. I won’t be surprised at all if the marked passes me over the next several months. I’ll be looking at my monitor with a huge frown on my face, but I’ll be ok. I’ll stay the course and be on the lookout for companies I like that are ‘on sale’. That’s my strategy. It may not be the best strategy in this market, but it’s mine, and I believe it will serve me well over time. And I’m pretty well convinced that if I changed strategies, it would end up being the worst possible time to do so. That seems to be the way the world works.
As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Do not take action in the market simply because of what you read here. I write about what I am doing and what I think, I am not advising anyone to do anything. Make your own decisions, do your own research, and never rely on any single source for information. Some of my ‘picks’ and strategies WILL lose money, that’s the way the market works. I am not a financial professional, do not rely on me as such.
Michael Rowland, the Stock Picking Bartender,