While January seemed too good to be true in many ways, February was a brutal month in more ways than one. February of 2018 was the most volatile month since January 2016. I remember that January, because it was pure turmoil and also the month that I had pulled the trigger to go into early retirement.
I wish I did my little project of tracking the daily fluctuations of my net, like in September 2017. But why? So you want to be a stock market millionaire? This would have been the perfect month to see the daily fluctuations that an over million dollar portfolio can go through when invested 99% equities. It would be a real gut check for many. So what do I mean by that. Well, not one single day this month did my portfolio not fluctuate +/- $5000, several days of -$25,000 and -$10,000, the worst day -$45,000 (no typo). Throw in several days of +$10,000 to $20,000 (the risk/reward trade off wasn’t there ). This would have been the perfect month to show the reality of what can happen in an all stock portfolio. Can you stomach the volatility? Be honest with yourself, many would abandon ship and make changes to their portfolio. Look at those numbers again, you’re making or losing more in hours of a day, than most people make in weeks or month of work. Those are the times when you have to “sack up” and be able to pull the trigger. I dropped about $30k on Feb 8th into my first index fund (SPY), because it was hard to decide on a single stock purchase. That’s actually netted about 6% so far. That purchase came from some cash, dividends, and 72(t) distributions.
So lets pull back the curtain and look at the month that was February…
January 1, 2018 I started with a net of $1,055,528.59. I would catch a high of $1,104,860.51 on 1/26/18 for a +$49.331.92 change, “only” to close out January at $1,089,986.62 for a one month change of $34,458.03.
Then there was February 2018. As of February 28th, I currently sit at $1,040,551.72 for a drop of -$14,976.87 or -1.42% for the year. From the closing value of 1/31 the drop is -$49,434.90 (hence the $ value in the title of the article).
If we look at the intra year high value from 1/26 to 2/28 we have a drop of -$64,308.79. Thinking about it another way, in about 5 weeks, more money lost than most households make in a year. The funny part, February 9th was such volatile day, the intra day figures would have looked worse (that Friday alone the day started out in the hole -$25k, but ended +$10k, a wild intraday move of $35k).
So here is the usual chart stuff…
Still want to be a stock market millionaire? Despite the one month fluctuations, I hope you still say yes. It is after all one of the ways that self mades get there. Here are the stats. It’s also a reason why the site does have a slant towards passive dividend income. The daily “noise” surrounding the markets can be sickening. However, knowing that my passive income coming in the door every month continually grows (without lifting a finger) and can provide for my lifestyle brings comfort in knowing that things will be fine during any rainy days.
I’m still optimistic on the year. Company profits, share buybacks, and dividend increases should come in strong due to the tax reform. However, I am cautious with the flattening of the yield curve, and the hostile language coming from the Federal Reserve.
Pointing to the spreadsheet above, I always like to point out how money does work harder for you over time. So looking at the last 5 years and 2 months, notice how that short time frame accounts for 61% of the growth of my net. The other 14 years represent the other 39%. My estimates over time will produce a greater disparity, meaning a shorter time period will account for a larger percentage contribution of my net, and a longer period of time accounts for less. Again money working harder for you over time, than you do for it. The catch… you have to start early. If you never start, it won’t ever happen and you’re a slave to your job.
So going back to the title, what does hurt more than dropping $50K in a short month? February 5th is a day I won’t soon forget. That’s the day I had my new biggest single day close of -$45,000 (previously Sept 2015 at $40,000).
But that’s not even it.
That night I had dinner with a girl that I’ve really cared for. Ironically she was asking about the $40k down day she read somewhere on the site (you gotta love when someone starts getting interested in learning personal finance). I told her about the down $45K happening that day and that it didn’t really bother me. It’s one day of many and there will be many better days than bad days in the markets. You can’t be afraid to take that risk, if you never do, you won’t see any payoff. She was surprised I even wanted to grab dinner that night and spend any money. But really what’s the point in having $ if you don’t use if for things you enjoy.
What hurts more than losing some money is realizing the person you care for so much, thinks so little of you that they’d rather just disappear, than talk about what’s going on. That would be the last night we ever spoke and the second time of getting my heart broken by the same person. Ironically, we had the tough conversations about what happened the first time around. You can never get your time back.
Maybe I can be a contestant on…
With that happening, I have 95 days left of contractual work. I was willing to change my plans and stay working for that relationship, but now it’s really just pointless. I’ve gotten a job that will be fun little part time work. It’ll allow me to have the right amount of free time to get back to doing my road trips, triathlon training, and epic national park hikes. Doing shit I enjoy and have been wanting to do, crossing off that bucket list. In a few weeks, I’m doing open mic night at a comedy club. Will I bomb, who knows until you try it (I’ll try to record it and post on the sites YouTube Channel). Before I lose my insurance, I want to ride a fucking bull. Seriously, that’s not a metaphor…
I’m currently working on about a dozen projects for the site as well. I’ll be taking a little break from working on really new material for a bit, but slowly release the projects I’ve been working on (inverted yield curves!), and maybe a sabbatical from any meaningful work for a while. I was talking to a buddy a couple weeks ago, and maybe in about a year, I’ll start up my own RIA practice and get back in as an advisor. Not sure 100% about doing it, but that would impact running some functions of the site, like the services. But at least this time, getting back into the field, I can at least do things my way vs a company trying to fit me, the square peg, into a round hole.Follow me on the social medias: