Browsed by
Author: MFJ



Well a bit of a bounce back this year after last years pullback that halved our nestegg. We greatly exceeded the performance on the SP500 this year which is the 11th time in 17 years and the 6th time in the last 7 years we’ve accomplished that. Overall any individual years performance is nothing to get too excited about, but we now have a 17 year track record to look back on. Long term performance is greatly skewed by recent performance, but we have now exceeded the total return of the SP500 by 375% over 17 years and this is entirely driven by the outperformance of our individual stock portfolio that has now exceeded the SP500 by over 1400%!!

We still however are not at all-time highs as our nestegg lost 45% of its value last year and while 50% plus returns are amazing – we needed closer to 100% returns to get back to what we gave back last year. This is why looking at anything in a short time window of a few years really isn’t really going to tell you much.

Also despite our insane outperformance by picking individual stocks we continue to contribute 100% of our money to index funds and high yield stable securities and have done so now for close to 10 years. I feel like we have gotten very lucky with our individual stock investments and I’m not convinced I’m the second coming of Warren Buffett so we continue to follow the original plan of having the vast majority of our investments be in index funds which is what I would recommend to anyone.

We do however currently have 60% of our money in individual stocks and this simply due to the fact that our stock portfolio has now averaged 17.75% annualized returns over 17 years which has turned a relatively small amount of investment into an insane amount of value. We will continue to let these investments do the bulk of the heavy lifting and over time I do see more and more of this money being converted over to index funds, but for now I still feel very confident about our long term investments and will let them run for the foreseeable future.

I also realize at this point the only meaningful thing I can do to our portfolio is to screw it up by thinking I’m smart and taking risks that if they pan out wouldn’t meaningfully change our lives anyway. With this being said if all of our individual stocks went to $0 we would still be doing pretty ok. Also almost all of our individual stocks are actually now pretty big household name companies with many sources of revenue and global reach so I feel like as time goes on our individual stocks are becoming more and more stable (if you totally ignore last years 68% drop for our stock portfolio 😛 )

MFJ Returns By Year

YearSP500MFJ NesteggMFJ StocksMFJ Investment GainsBeat SP500
200615.79%14.37%14.20%$3,603.49 N
20075.49%5.50%7.25%$2,576.67 Y
200926.46%32.75%35.78%$22,455.55 Y
201015.06%24.60%36.94%$32,127.00 Y
201216.00%18.12%10.25%$23,895.25 N
201332.39%50.20%68.58%$114,752.78 Y
201413.69%8.91%7.91%$35,262.52 N
20151.38%7.34%14.34%$32,684.08 Y
20169.54%3.32%-4.57%$144,806.16 N
201718.42%23.31%27.49%$187,079.40 Y
2018-6.24%4.56%15.60%$41,237.23 Y
201928.72%32.46%37.07%$292,366.43 Y
202016.26%117.02%218.49%$1,481,868.23 Y
202122.61%30.45%32.74%$864,774.86 Y
202324.23%50.98%67.55%$864,774.86 Y

MFJ Cumulative Returns By Year

YearSP500MFJ NesteggMFJ Stocks

Annualized Returns since 2006

SP500 +8.73%
MFJ Nestegg +12.45%
MFJ Stocks +17.75%

My Best and Worst Stocks in 2023

My Best and Worst Stocks in 2023

In annual tradition I will list my best and worst individual stock performers for 2023.

My Best Performers
Bitcoin +154.96%
Crowdstrike +147.21%
Tesla +129.86%
Shopify +118.33%
Cloudflare +93.54%
Ethereum +92.82%
Amazon +77.04%
DataDog +68.37%
Chipotle +66.79%
Netflix +65.07%
Monday +57.26%
Apple +53.94%

Obviously a very good year overall for the entire market and a great year for some of my larger positions. I do have a few newish positions (only 3 years old) that had some strong performance with the cloud stocks (crowdstrike,datadog,cloudflare, monday) and the crypto that were high fliers this year, but what is even more telling for me is the massive performance by stocks I have literally held for over a decade in Tesla, Shopify, Amazon, Chipotle, Netflix, and Apple all coming in with 50% to 130% returns. Many of these are huge companies who have been growing rapidly forever and have made me loads of money already and here they are still in some cases almost 20 years after I bought them still propelling me rapidly to new nearly new highs.

This year will be the 20th anniversary of my first Netflix purchase and I’ve owned most of this bunch since the 2000s decade and some of them have gone up more than 100x in value from my original purchase. The only thing I had to do was do nothing. This is harder than it sounds as clearly we have to be staying up to date and listening to pundits and doing all kind of hard research in order to pick the best stocks and clearly the smart thing is to take profits off the table when a stock has had a huge run and companies can’t grow forever and it’s best to take money from those companies and invest in the next batch of up and comers and yeah……doing nothing is the hard part or at least it is initially.

I feel confident in the companies I’ve invested in and the leaders who run them. Picking out the best companies in the world is honestly not all that difficult. Great leaders running companies who only focus on making great products. You know those products when you use them. The first time you touched an iPhone, drove a Tesla, signed up for Netflix, ordered your first Amazon package, you knew deep down this was something at a completely different level that was going to change the world. Buy those companies and hold onto them forever – it will change your life.

My Worst Performers
Starbucks -4.78%

Starbucks is the only company who lost me money this year. Ironically after my sermon above I have never had a Starbucks coffee and don’t drink coffee so hard to get a strong conviction on this one other than I’m probably the only weirdo who doesn’t drink coffee and frequent Starbucks. I’ve also owned Starbucks since 2007 and it’s been a great performer for me over that time span.

Investment Holdings January 2024

Investment Holdings January 2024

In annual tradition I list all of my investment holdings. I do not do much buying or selling, but the percentages do change with market fluctuations though this year there really are not any drastic changes. The only real difference is my cash is now moved into SGOV primarily to try to get a slightly higher return. I did some very minor cleanup of my portfolio and sold some very small positions resulting in 0.4% of my portfolio.

I am long term buy and hold and honestly feel very comfortable with all of my positions. I am very hands off and that is by design, investing should be easy and I literally spent less than an hour total managing my portfolio this year and most of that was figuring out a good spot to store our cash. Despite doing nothing meaningful my portfolio grew over 61% this year. Passive compounding is the best!

My All Time Investment Performance January 2023

My All Time Investment Performance January 2023

As I mentioned in last years review, I really came to realize that all-time investment performance is heavily dictated by the most recent years performance. It’s just the nature of compounding. A really good or really bad year now will greatly influence my all-time performance, just because I am now dealing with much larger numbers. A 50% swing one way or another when your portfolio is worth $1M vs $10,000 moves the needle a ton and dwarfs all of the moves that were made in all of the years leading up to it. So bottom line one shouldn’t get too confidence or discouraged looking at long term annualized result as its greatly influenced by recent returns, which is kind of goofy.

So in that vein my all-time annualized stock return fell from 22.65% to 15.33% – which honestly is still quite spectacular and honestly higher than I had expected. The calculated risks that I talked about last year have at least in this short period of time looked like dumb decisions – keeping nearly half of my nestegg in a stock that is down 69% in the last year. Trust me I would love to have the few extra million that I had on paper last year, but this is a marathon and not a sprint and I still feel like long term I will outperform the market with these calculated risks.

I do however and have always acknowledged that I think I am probably more lucky than skilled and going through another one of these downturns will probably make me re-evaluate my investment allocations going forward. Not so much because I think that the approach is wrong from a profit maximizing standpoint, but from a risk/reward standpoint taking added risks and them paying off does not meaningfully affect my life where as if it turns out I am indeed just a lucky moron and I am completely wrong on most things going forward it can affect my life.

MFJ Returns By Year

YearSP500MFJ NesteggMFJ StocksMFJ Investment GainsBeat SP500

MFJ Cumulative Returns By Year

YearSP500MFJ NesteggMFJ Stocks

Annualized Returns since 2006

SP500 +7.89%
MFJ Nestegg +10.52%
MFJ Stocks +15.33%

My Best and Worst Stocks in 2022

My Best and Worst Stocks in 2022

In annual tradition I will list my best and worst individual stock performers for 2022.

My best performers
Starbucks -14.98%
Chipotle -17.93%
Vanguard Institutional Index Fund -21.25%
Vanguard PrimeCap Fund -23.59%
Brookfield Infrastructure Partners -23.91%

Well obviously it was a rough year if I have to celebrate the investment holdings that didn’t lose more than a quarter of their value in the year. I really only had 3 investments hold up better than the market and overall it was a brutal year, but not to be unexpected

My worst performers
Upstart -90.86%
Fubo -89.26%
Shopify -74.54%
Tesla -69.20%

Now this list is equally brutal and to make matters worse Shopify and Tesla are on the list and going into this year just those two stocks accounted for 47% of my nestegg. Definitely hurts, but it is the price of admission. Also while it makes sense for me to do this in annual tradition, I do not buy investments with a holding period of 12 months. So while it might be terrifying to some to see every investment you own lose money and your largest investment drop by 69%, I tend to take a longer term view and am not changing anything because of this 12 month period the results were horrible. I held Tesla through many down years and again if we take a step back and zoom out just a tad bit things look pretty darn good.

Even if I only zoom out to 3 years Tesla has returned 329.50% during that time and if we go back 10 years we are looking at 5209.48%. Despite everything you see in the news and from the financial media, investing is a marathon and not a sprint and the ability to ignore the noise is what separates people who make money and who don’t. I look like the worst investor in the world if you only look at 2022, but I think if you come back and see how I’m doing in 2032, 2022 won’t even be a blip on the radar.

Investment Holdings January 2023

Investment Holdings January 2023

In annual tradition I list all of my investment holdings. I do not do much buying or selling, but the percentages have changed quite a bit in the last year due to market fluctuations. Last year TSLA accounted for almost 40% of my nestegg and now it only accounts for 24% and earlier this year it was over 50%!! As a result I have become much more diversified and well poorer 🙂

The other big change I would say in the last year is the amount of cash I have on hand. Now this is not primarily cash from selling – though I did take advantage of some tax loss harvesting at the end of the year, the vast majority of this money is money from a side business I started, some inheritance, and some crypto cash that I have as a start to my cash cushion. It’s very hard not to invest it given that many of my stocks are down 70%, but it is money that can be used for short term security or other short term needs. Historically this is money I would have never counted in my nestegg, but I think at this point in my life is something that I should track as it is something I would potentially leverage should I decide to stop working.

The other item I have not included in this list is in the last year I did invest $90,000 into a commercial real estate purchase with some other investors purely with the intention to learn. Now I hope I make money on the deal, but real estate is so hard to value that I will consider this money a 100% loss until some day when it sells. With leverage I personally view RE as a huge liability as if shit hits the fan you can lose like 5x your original investment where as the worst stock can only lose you 100%, but again I know there are tons of tax advantages and other benefits to real estate and while I’ve flirted it with it my entire career, I’ve always shied away because of the effort involved and the difficulty accessing the equity. I am not sure if this investment is going to change those opinions, but I was in a position in my life where I decided to give it a try.

I lost $2 million dollars

I lost $2 million dollars

Well every goal I set for myself on this blog I not only met, but in many cases vastly over achieved. As you can see from my last post I brought up that I made the comment in my 2018 report that

My goal some day is to lose $1 million dollars in portfolio value.

Well in January of this year I made a post letting everyone know that I had indeed accomplished that goal and now in the same year I’ve now managed to lose a second million dollars in portfolio value!

My portfolio had grown at absolutely insane rates the last couple of years and now it’s going the other direction having lost two million dollars over the last 12 months.

In some ways thats almost mind boggling as it took me 41 years to amass $2M and then just two years later I’ve lost more than $2M. This would be absolutely devastating for me if I hadn’t also hit $3M and $4M shortly after I hit $2M so basically where I sit now I am back to where I was 2 years ago. Easy come / Easy go and also where I was 2 years ago was absolutely incredible and mind boggling.

My absolute stretch goal for my nestegg set when I was just starting out was to hit $1M in nestegg value before I turned 40. Not only did I hit that goal 1.5 years early I was then able to run my portfolio well above $4M in the next 3-4 years. Compounding is powerful big numbers get bigger and the flip side can be said – big numbers drop bigly when the portfolio shrinks. It’s best to think in terms of percentages as dollar amounts can mess with your mind when numbers get big as those dollar amounts are mind boggling. The other thing to remember is the price to pay for those returns is risk & volatility. It cannot be avoided so it’s best not to get too high or too low. This is a long term game and the short term fluctuations don’t mean anything in the grand scheme of things. Draw downs like this will happen all of the time, and while it hurts to be down 50% from some arbitrary all time high, if I zoom out and look at where I have come from I am still incredibly proud of where I am.

I also know that with such a big draw down, the level of risk of further massive drops likely becomes less likely and there will be good days again in the future.

Now one thing I have learned from this draw down was that despite my constant insistence that being 100% invested in stocks all of the time is clearly the only smart play long term as it guarantees the largest long term gains and that volatility does not matter as long as you have a large enough margin of safety. Now I still logically believe this, I do think the idea of having a cushion of stable investments makes a little more sense to me now and I’ll try to explain why.
I have not ever touched any of my investments as I am young and do not rely on them to pay bills or make purchases. I am however constantly moving closer and closer to a day when I will likely start tapping into this huge pile of money for the freedom that it can provide. While I know I will have a large margin of safety built in when I do this, I do realize that the optimizer in me would have a hard time pulling money from the market when things have fallen so much as I know in the next couple of years todays prices will be extremely attractive and I would be dumb to sell. This is why I need to get better at building a large cash reserve when things are going extremely well. Yes I will cost myself somewhat in performance, but I will greatly increase the freedom buying power of that money. Meaning I can basically do whatever I want whenever I want with my money and whether the market is up a lot or down a lot will not affect those plans in any meaningful way.

To to this I’ve arbitrarily decided that I would need about 5 years of spending money with a good margin of safety and that in that case I would almost always be set regardless of what the market is doing or what my needs will be met and I would have cash on the sideline to take advantage of any major discounts. I am not sure if this goal should be a percentage or dollar amount as my spending would be a set dollar amount, but it probably makes sense to have a percentage of my portfolio. I think somewhere around 10-20% makes sense with maybe a cap on the dollar amount. Obviously it doesn’t make sense to raise cash now with the markets down, but as the market recovers and we get back to previous highs or close to it I think it makes senes for me once or twice a year look at my portfolio and raise some cash off of it – kind of like a self imposed dividend. This would give me my 5 years of cash that I would never touch and as the market continued to rise I could pull some additional off up to 20% and then when things fell I would have an additional margin of safety and could reinvest some of that money.

For those that knew TomE from the Motley Fool this is how he ran his portfolio. Like I said I was always invested and always in full growth mode, so I never saw the point and considered it at some level trying to time the market, but I now see the potential benefits for someone like myself. The additional financial gains really arnen’t that life altering at this point, but the loss of freedom of not having enough cash/safety and not wanting to touch depressed stocks to raise it is way worse than having a few less dollars total in the nestegg.