My Financial Journey

Well another year in the books and a bit of a bummer the second half of the year with regards to my nestegg growth and my investment performance vs the SP500. As you will see in some follow up posts – I had two of my largest stock positions from 2010 really tank in 2011 (Netflix and Dolby). I guess the good news is despite this somewhat worst case scenario I have found out that I am diversified enough where it did not do any irreparable damage to my portfolio.

Another observation is that I only contributed $16,782 to my retirement nestegg this year and even a bulk of that came from vested employer matching contributions. This is the lowest amount I have contributed to my retirement nestegg since 2005. The reason for this is I am currently saving a boatload of money for our next house and have been putting all of our excess cash flow towards this endevour. Heading into 2012 this is something I will have to reconsider as my house savings account is now at what I think is a pretty sufficient amount.

Overall my retirement nestegg shrunk by over 1% in 2011, but as I pointed out above I don’t have any worries that I am on the wrong path or employing the wrong methodology. The stock market gyrates back and forth in the short term, but long term I like the trend that I am seeing.

Anyway here is my monthly and annual report

Traditional Rollover IRA – $14,731.10 (-0.97%)
My Roth IRA – $45,012.64 (-3.40%)
Wife Roth IRA – $22,080.12 (-0.23%)
Current Traditional 401k – $88,653.17 (-0.18%)

Roth/Traditional % = 39.36 % (tax free)

Total Retirement Nest Egg $170,477.03 (-1.13% 1 month) (+4.78% 1 year)

Monthly Contributions $693.10 (401k)
SPY Performance +0.31%
My Monthly Investment Performance -1.53% (-1.84%)
My Monthly Individual Stocks Performance -2.14% (-2.45%)

My Contributions for 2011 $16,782.97
SPY Performance for 2011 -0.18%
Investment Performance for 2011 -5.53 (-5.35%)
Individual Stock Performance for 2010 -2.29% (-2.47%)
Total Investment Return -$9,000.84

Well another month where I trailed the SP500 (3 in a row). This does not give me cause for concern as over the long term I have been beating the market and up until the last three months I had a really good string of wins on my side – again broken horse but Netflix was one of my largest positions and has taken a serious hair cut here in the short term. While my portfolio was relatively flat up until a few days ago I was down about $15-$20k from last month but the market has been rallying a lot in recent days and brought me back near last months total. Goes to show you that short term gyrations (days, weeks, months, years) really mean nothing and you should not react to them or fear them.

Traditional Rollover IRA – $14,875.70 (-2.14%)
My Roth IRA – $46,604.10 (-2.80%)
Wife Roth IRA – $22,131.60 (+2.42%)
Current Traditional 401k – $88,818.48 (-0.47%)

Roth/Traditional % = 39.86 % (tax free)

Total Retirement Nest Egg $172,429.88 (-0.89%)

Monthly Contributions $693.10 (401k)
SPY Performance -0.27%
My Monthly Investment Performance -1.29% (-1.02%)
My Monthly Individual Stocks Performance -1.34% (-1.07%)

Well for the second month in a row my investments have lost out to the SP 500 index and for the second month in a row I am going to blame Reed Hastings

Traditional Rollover IRA – $15,201.22 (+15.08%)
My Roth IRA – $47,947.32 (+6.71%)
Wife Roth IRA – $21,609.15 (+11.21%)
Current Traditional 401k – $89,233.16 (+11.13%)

Roth/Traditional % = 39.98 % (tax free)

Total Retirement Nest Egg $173,980.85 (+10.21%)

Monthly Contributions $693.10 (401k)
SPY Performance +10.92%
My Monthly Investment Performance +9.77% (-1.15%)
My Monthly Individual Stocks Performance +9.25% (-1.67%)

Well I had a hunch this month was going to be ugly and well I was right. Overall the market fell 7.42% on top of the 7.79% that it fell last month so things are getting pretty exciting as far as being able to invest money at lower cost basis, but the bad news is this month I broke my streak of of seven straight months of besting the SP500 index and well I broke it in stunning fashion losing by 3.48% overall this month and my stock portfolio losing by 5.60% just this month. There is a pretty logical explanation for all of this and his name is Reed Hastings My best performing stock and also my largest individual stock holding Netflix fell about 50% just in the last month which has has a significant impact on my portfolio’s performance this month.

The good news I think is that I believe I have come a somewhat seasoned investor and having my largest single stock investment fall by 62% in a few short months and my overall retirement nestegg fall by nearly 20% from its all time high in April really gets no other reaction out of me other than a slight chuckle and some excitement that I might get the chance to make some very attractive investments in the next few months. I still very much feel like I am on the exact right track and I have kind of dealt with a somewhat worst case scenario (not saying thing won’t go lower), but things are sort of hitting the fan again in the market, my largest stock holding by far gets cut in half in a single month, and my retirement nestegg is still $100k larger than it was the last time things went to pot just a little over two years ago.

Also while Netflix was my largest stock holding it never really accounted for much more than 10% of my individual stock portfolio and maybe roughly 5-6% of my overall retirement nestegg so while I certainly felt things it didn’t permanently wreck my portfolio which I think is a good experience to go through and now going forward I will have a better understanding of how to handle diversification. And while it sucks to be down 60%+ on a stock in just 2 months its hard to get too upset when I’m still up nearly 450% on all of my Netflix investments and I personally feel the sky is not falling and Netflix still has a lot going for it and will very likely be a good performer moving forward.

So as to what I am going to do – I will probably follow the market a little closer than I did when it was constantly going up and will look to contribute more funds as the market is falling. I do have a stash of about $10k in cash in my 401k account kind of waiting for an opportunity like this and well I may put my house/land savings on hold if the market presents me with some attractive prices as I currently have $112k saved up for our next house so feel I can probably start diverting more money back towards our retirement nestegg going forward and still have the flexibility to jump on a land purchase if it presents itself. Overall with the worsening stock market and worsening real estate market I feel like I have put myself in real good shape over the last 5+ years to put myself in an even better position 5+ years from now.

Traditional Rollover IRA – $13,209.23 (-8.80%)
My Roth IRA – $44,930.66 (-10.54%)
Wife Roth IRA – $19,431.03 (-20.60%)
Current Traditional 401k – $80,286.67 (7.93%)

Roth/Traditional % = 40.77 % (tax free)

Total Retirement Nest Egg $157,857.59 (-10.50%)

Monthly Contributions $693.10 (401k)
SPY Performance -7.42%
My Monthly Investment Performance -10.90% (-3.48%)
My Monthly Individual Stocks Performance -13.02% (-5.60%)

Well a pretty exciting month for my retirement nestegg – though it ended up not finishing up quite as exciting as it looked like it might. I think at one point this month my retirement nestegg was down almost $40,000 from its overall high, but ended up making most of it back as stocks rallied the second half of the month. What does this mean for me? Well nothing really – other than I thought I might have some magical power over the stock market as the last time I mentioned about wanting to stocks to fall we had the crash of 08/09 and two months ago I wrote something similar and down we headed.

But anyway I will say it again I’m very glad I started tracking my performance against the SP500 as even in a down month like this where most people would be like oh crap my accounts shrunk by $11,000 – life sucks. I can be like awesome I beat the market by well over 1% again just this month. Certainly gives you a different perspective on things even though you shouldn’t even be looking at things in such a short period of time – it makes me feel good and makes me feel like I’m making progress and is 7 months in a row my performance has bested the SP500.

Here is my report

Traditional Rollover IRA – $14,485.30 (-4.44%)
My Roth IRA – $50,224.67 (-4.80%)
Wife Roth IRA – $24,469.87 (-9.48%)
Current Traditional 401k – $87,206.08 (-6.48%)

Roth/Traditional % = 42.47 % (tax free)

Total Retirement Nest Egg $176,385.92 (-6.27%)

Monthly Contributions $693.10 (401k)
SPY Performance -7.79%
My Monthly Investment Performance -6.64% (+1.15%)
My Monthly Individual Stocks Performance -6.08% (+1.71%)

Well another negative month for my retirement nestegg total, but again another month where my investment performance easily outpaced the SP500. These month to month results really mean nothing but all of these individual monthly one ups on the SP500 are really starting to translate into long term outperformance of the SP500 which is every investors benchmark and one that most investors fail to beat so I feel pretty good about that and makes me kind of glad that I didn’t follow my own advice by investing strictly in index funds (which is the smart thing that essentially everyone should do).

Traditional Rollover IRA – $15,157.54 (-2.47%)
My Roth IRA – $52,758.36 (-0.19%)
Wife Roth IRA – $27,032.05 (-1.52%)
Current Traditional 401k – $93,247.13 (-1.46%)

Roth/Traditional % = 42.40 % (tax free)

Total Retirement Nest Egg $188,195.08 (-1.09%)

Monthly Contributions $693.10 (401k)
SPY Performance -2.00%
My Monthly Investment Performance -1.46% (+0.54%)
My Monthly Individual Stocks Performance -0.73% (+1.27%)