Jun 032019
 

There’s an old saying about sell in May and go away that highlights the historical underperformance of the stock market during the summer months compared to the generally better performance during the other half of the year. If investors use the sell and May and go away strategy, they would sell their stock portfolio in May, and reinvest everything again in the fall. Some people find this strategy more rewarding than staying in the market throughout the entire year.

This old adage does have some historical evidence backing it up. And it’s certainly relevant today if this year is any indication. Most stocks in my portfolio fell in May, as did other people. U.S. stocks were hit the hardest. It was the worst May since 2010. Even my European index fund dropped a few percentage points.

The beginning of a correction?

It’s hard to say if the stock market will continue to slide further going forward. But I don’t believe selling shares is a good strategy right now. Instead I continue to believe that a basket of medium term bonds can help provide stability in a portfolio when the stock market has no clear trend. The BMO bond fund I wrote about last month is one example of this simple approach. It climbed in value during May when most stock funds experienced a loss. If the equity market continues to fall throughout the summer, at least I’ll have some bonds to help counteract that negative impact. 🙂

Another winning asset class last month was cryptocurrency. 🙂 Bitcoin’s value jumped 50% to roughly $8,500 US per coin. I sold all of mine a couple of years ago but this is great news for anyone who still holds BTC or altcoins.

stock investors eyeing bitcoin and cryptocurrency jealous girlfriend meme

Although my investment portfolio took a net loss last month, I received a lot of extra income. I collected $5,300 in rent. I also received about $4,000 from the government. This is because last year I worked 5 different jobs. Each one had deducted too much payroll and income tax from my paycheques because they all assumed I was only working for them, and that I was going to be employed year round. Well I’m no longer working at 3 of those jobs anymore so that’s why I was owed some tax credits. 🙂

Overall my net worth remained pretty much unchanged from the previous month.

Liquid’s Financial Update

*Side Incomes: = $7,900

  • Part time job =$700
  • Freelance = $300
  • Dividends =$800
  • Interest = $800
  • Farm rent = $5300

*Discretionary Spending: = $2,400

  • Food = $400
  • Miscellaneous = $700
  • Interest expense = $1300

*Net Worth: (ΔMoM)

  • Total Assets: = $1,335,200 (-18,000)
  • Cash = $2,600 (-8800)
  • Canadian stocks = $171,100 (-3900)
  • U.S. stocks = $125,400 (-6400)
  • U.K. stocks = $21,800 (-700)
  • Retirement = $131,300 (+1000)
  • Mortgage Funds = $35,900 (+500)
  • P2P Lending = $35,100 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $392,400 (-17,900)
  • Mortgage = $188,000 (-400)
  • Farm Loans = $165,700 (-12500)
  • Margin Loans = $38,700 (-5000)

*Total Net Worth = $942,800 (-$100)
All numbers are in $CDN at 0.74/USD

 

I was able to renew my farm loan in May. But the interest rate went up and the best I could get was 5.04%, which is a bit higher than I expected. So I decided to make a lump sum payment of $12,000 towards the balance. I also paid down some margin debt in anticipation of a potential major stock market correction. Luckily I had enough savings in my bank account to pay down these debts thanks to the abundance of income that I received during the month.

If investments don’t go down once in awhile there wouldn’t be opportunities to buy on the dips. 🙂 But hopefully things will be better in June.

 

__________________________________
Random Useless Fact:

According to HuffPost, men and women generally have different types of dreams.

Men’s dreams tend to consist of:
Strangers, success or failure
Sex with unknown partners
Physical aggression
Cars and roads
Violence
Shorter dreams
Less color
Competition

Women’s dreams tend to consist of:
Family members, relationships
Kissing, flirting with someone, or sex with someone known to the woman
Verbal aggression
Emotional expression
Loss of loved ones
Longer dreams
More color
Conversation

10
Leave a Reply

avatar
5 Comment threads
5 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
6 Comment authors
ToddLiquid IndependenceOPinCalOPinCalAron Musk Recent comment authors
  Subscribe  
Notify of
RICARDO
Guest
RICARDO

Good to see your red line gaining in inclination. Same as compound interest. The less you owe the faster it will diminish when payments are maintained. I was pleasantly surprised to get money back from both Fed and Prov income taxes (QC resident) plus getting a rebate from rev Can as I had paid Fed taxes (out of prov employer) plus getting another rebate (4 payments) from Rev QC because of my low income. Nothing like dividends and capital gains to bring down your income level. This year should see full OAS payment as I have gotten my revenue down below the clawback level. Again, divs and cap gains help that. Close to two years of full retirement – this July. Keeping an eye on my cash burn rate to see if I can afford retirement. So far so good. I am holding fairly close to what I had budgeted for myself prior to retirement. I have been able to continue contributions to my TFSA thereby reducing dividends from my taxable account. Just the TFSA would pay two months of living expenses. Have not touched the RRSP’s nor the TFSA as of yet. Next year will have to convert some… Read more »

Aron Musk
Guest

Yeah it might be the beginning of some kind of correlation, but I think it won’t be too long. It’s only healthy at this point 🙂

We are staying in it for the long term so let’s ejoy the ride!

https://youngandfinanciallyfree.blogspot.com/

OPinCal
Guest
OPinCal

Is the farm rent monthly? Also, what’s the rent on your margin loan?

OPinCal
Guest
OPinCal

Err… rate on your loan

Todd
Guest
Todd

Sure wasn’t a great May, but in all things will come back up.
Love your blog, do appreciate the insight as I learn more about stocks and what not.

On a side note, I am wondering if I might get a copy of your networth tracker, that I can use for myself to track my progress?