Jan 022017
 

The Second Longest Bull Market

Happy New Year! 🙂 I hope everyone had a great 2016. It’s somewhat surreal to see an economy that’s still struggling while the stock market has never been stronger. We are currently living in the 2nd longest bull market in American history, recently surpassing the 7 year streak that spanned 1949 to 1956.

2017 could be the year that we finally see a major market correction. But who knows? Maybe stocks will remain resilient and continue to climb for several more years! After all, the longest bull market ever lasted 13 years from 1987 to 2000.

Chart from http://money.cnn.com/

My goal of reaching freedom 35 means I need to be financially independent by 2022. That’s only 5 years from now! Can the markets continue to move higher until then? Well the 13 year bull market run from 1987 to 2000 shows that it’s indeed possible. 🙂 Like many other millennials, I began investing in 2009 by sheer luck, because that was the perfect time to get into the stock market. Maybe I can deleverage at the right time too, Haha. 😀

Future apoplectic haters will probably say, “Well of course he retired early. Any ninny with half a brain could have borrowed $500,000 to buy stocks and other financial assets between 2009 to 2022 and easily become a millionaire.”

And they would be correct. 🙂 But my question is why haven’t I heard of anyone else borrow $500,000 to invest right now? This is currently the best time of our generation to use leverage to potentially double or even triple our investment gains! Surely I can’t be the only one to see the advantage of borrowing money at 2% to buy and hold strong, reliable, blue-chip stocks like utilities and Canadian banks that have been paying 4% or higher dividends for decades, and are also expected to appreciate in value over the next 5 years. Call me crazy, but I want to get rich sooner rather than later, even if it means taking on a bit more risk. 😀

Anyway, December has been another amazing month for the markets. All stock indexes gained, including my new British equities purchased recently. It’s still very early to tell so I’ll continue to hold my U.K. index ETF, and see how it does over the next year or so.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $900
  • Dividends = $700
  • Interest = $400
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,050,000 total (+12,200)
  • Cash = $1,800 (-17,700)
  • Canadian stocks = $135,100 (+5000)
  • U.S. stocks = $83,200 (+3000)
  • U.K. stocks = $18,600 (NEW!)
  • RRSP = $75,100 (-200)
  • Mortgage Funds = $30,200 (+3500)
  • SolarShare Bonds = $10,000
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $479,500 total (-2,600)
  • Mortgage = $185,500 (-500)
  • Farm Loans = $191,800 (-600)
  • Margin Loans = $59,000 (-300)
  • TD Line of Credit = $16,700  (-800)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,000 (-400)

*December Total Net Worth = $570,500 (+$14,800 / +2.7%)
All numbers above are in $CDN. 

Good golly! What a way to end the year. 🙂 Thanks primarily to stock and farmland appreciation, my net worth has increased on average by over $12,000 per month in 2016. That’s totally dope! I can hardly contain my excitement! 😀 It was a gradual and steady process, but I’ve managed to somehow accumulate $350,000 of financial assets over the last 7 years. I wonder what amazing new serendipity awaits for my finances in 2017. 🙂 I guess we shall see. Good luck to everyone in the new year!

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Random Useless Fact:

Stingrays do not use their eyes to hunt for food. Their eyes are above their bodies, but their mouth and nostrils are situated on their underbellies.

Dec 082016
 

Once again North American stocks continue to impress. My liquid net worth (net financial assets) climbed 2.5% over the course of November, nearly $8,000 of gain on its own. Many people including myself thought a Donald Trump win for the presidency would trigger a stock market correction. Although the Dow Jones fell 800 points (about 4%) in pre-market trading the morning after election day, it quickly recovered and went on to hit all time highs in subsequent days in mid November. And just yesterday, the Dow Jones, S&P and transports closed the day at record highs again, climbing more than 1%. What an amazing time to be an investor. 🙂 I feel euphoric! But this is also a time to be diligent because bull markets tend to last 6 to 8 years historically speaking, and we’ve been in this current bull market for 8 years now. Uh oh.

Stock valuations certainly appear to be stretched at this time. The fact that investor’s margin debt is near record highs also concerns me because over-leverage has lead to stock market drops and economic recessions in the past. Investing in the stock market is like toilet paper; sometimes you’re on a roll, but other times you can find yourself in a crappy situation like the crash of 2008. 😄 Nobody can know for sure when the market will peak again, but I decided to take a break from buying stocks in November and paid down some debt. I also contributed $4,000 to my retirement account (RRSP) to buy some Baytex Energy bonds. Overall it was a great month. I hope everyone else enjoyed it as well. 😀

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $800
  • Dividends = $500
  • Interest = $200
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,037,800 total (+8,300)
  • Cash = $19,500 (-4000)
  • Stocks CAD =$130,100 (+4200)
  • Stocks US = $80,200 (+3800)
  • RRSP = $75,300 (+4300)
  • Mortgage Funds = $26,700
  • SolarShare Bonds = $10,000
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $482,100 total (-2,800)
  • Mortgage = $186,000 (-400)
  • Farm Loans = $192,400 (-500)
  • Margin Loans = $59,300 (-700)
  • TD Line of Credit = $17,500  (-1200)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,400

*November Total Net Worth = $555,700 (+$11,100 / +2.04%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.75 USD

I was waiting on a cash refund from a financial institution before investing in any more stocks. The cash was finally returned earlier this week so my plan for December is to purchase 5 figures worth of stocks in Great Britain to take advantage of the low Pound Sterling currency. 🙂 This is exciting because it probably means I’ll be adding another line item to my asset column next month.

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Random Useless Fact:

16-12-bob-marley-money-quote

Nov 072016
 

The Advantage of Asymmetric Risk/Reward

An asymmetric trade is when we have limited downside risk, but a lot more upside return potential. 😀

For example, earlier this year Great Britain held a referendum to decide whether or not it should leave the European Union. There was a 50/50 chance it could go either way. However most investors, traders and political pundits were pretty confident that the UK would vote to remain in the EU. So before the vote on June 23rd, the British financial markets were fully priced for a “stay” result. But when the votes were counted it turned out that they were wrong. So people panicked. Shortly after the vote, the British Pound dropped 15%, and the UK stock market also fell.

The UK referendum represented an asymmetric trading opportunity because if the people had voted to remain in the EU, then nothing much would have happened to the markets. But if they voted to exit, then there would be a large shakeup, which is what actually happened. 🙂

Parallel Opportunity in the United States

The U.S. presidential election on Tuesday this week represents another asymmetric event for the markets. Mainstream news sites and people on Wall St. are signally a 90% or greater chance that Hillary Clinton will win, and Donald Trump will lose. However, based on my own research on alternative news sites it appears to be more 50/50, so I expect the results to be pretty close. 🙂

What this means is the financial markets have already priced in a Hillary win. So there are two outcomes to the election and how it will affect investors over the short term. Below are possible examples of what could happen in each scenario.

  1. Hillary becomes president. No major movement in the stock market. Stocks won’t climb dramatically because almost everyone expected her to win, so it’s already priced in.
  2. Donald becomes president. Many people caught off guard. Sharp negative reaction in the financial markets. Gold goes up US $50/oz. Dow Jones stock index falls by 500 points. $USD loses 5% against $CAD.

To take advantage of this situation, one could short the US dollar or the US stock market, and buy the Canadian dollar or precious metals.

Continue reading »

Oct 032016
 

Not So Special 

Around this time last month I proclaimed that I had a million dollar in assets. At first I was really happy about my situation because I thought I was unique. 🙂 But as it turns out, a million dollars isn’t all that impressive in my neck of the woods.

I live in Metro Vancouver on the west coast of Canada. And according to Environics Analytics, the average net worth of Metro Vancouver households rose 7.1% last year in 2015 to reach $1,036,202. Yowzah! 😲

This means I’m only average. Le sigh. 😞 Lol. Actually, I’m even poorer than average because my household net worth is only about half as much as the average around here. I guess I’m not the special snowflake I thought I was, haha.

16-10-vancouver-lambo-white

Rising real estate values have pushed the average net worth of Metro Vancouver households up over $1 million, making it Canada’s first “city of millionaires,” according to a study. ~ CBC article.

According to the CMHC, single women have greatly contributed to the rising cost of homeownership in Canada. Thanks ladies. 😉 A report released last week by Swiss bank UBS said Vancouver is at greatest risk of a housing bubble in the world. But I don’t think that’s true. Property prices here are high, but still affordable for most people.

September was a pretty good month overall. There were no surprises. The market did fall into the red early on. But around the 3rd week of the month stocks began to rally again as investors grew more confident over the Federal Reserve’s sentiment to keep interest rates lower for longer. In the end, the markets finished the month pretty much flat.

I managed to lower my interest rate expense from $1300 per month, to $1200 per month by switching my margin account from TD to IB.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $800
  • Freelance = $900
  • Dividends = $600
  • Interest = $0
*Discretionary Spending:
  • Fun = $400
  • Debt Interest = $1200

*Net Worth: (MoM)16-08-fiscal-update-liquid

  • Assets: = $1,012,400 total (+6,200)
  • Cash = $14,900 (+2800)
  • Stocks CDN =$122,400 (+1500)
  • Stocks US = $74,600 (+1700)
  • RRSP = $71,600 (+100)
  • Mortgage Funds = $26,300
  • Venture Capital = $6,600 (+100)
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $474,900 total (-1,100)
  • Mortgage = $186,900 (-400)
  • Farm Loans = $193,400 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,700 (+100)
  • TD Line of Credit = $13,700  (-200)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,400 (-100)

*Total Net Worth = $537,500 (+$7,300 / +1.38%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

Looking ahead, October is when I receive my rental income from my tenant which is worth about $4,500. So I’m looking forward to deposit that and maybe buy some new investments with the money. 🙂

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Random Useless Fact:

16-10-things-normal-movies-not-real-life

Sep 052016
 

New Addition to my Asset Column

After blogging about my exciting new investment in a startup company, I’ve decided to categorize this equity holding as a new asset class in my net worth updates. 🙂 High net worth investors are continuing to move their investments into uncorrelated assets such as private companies and I plan to grow my investments using a similar strategy. There is no way to eliminate market volatility entirely, but it’s possible to minimize its effect on my portfolio. 😉

Liquid’s Financial Update

*Side Incomes:

*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1300

*Net Worth: (MoM)16-08-fiscal-update-liquid

  • Assets: = $1,006,200 total (+6,800)
  • Cash = $12,100 (-3000)
  • Stocks CDN =$120,900 (+1400)
  • Stocks US = $72,900 (+1600)
  • RRSP = $71,500 (-2700)
  • Mortgage Funds = $26,300 (+3000)
  • Venture Capital = $6,500 (NEW!)
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $476,000 total (-1,400)
  • Mortgage = $187,300 (-500)
  • Farm Loans = $193,900 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,600 (+200)
  • TD Line of Credit = $13,900  (-600)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,500

*Total Net Worth = $530,200 (+$8,200 / +1.57%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

Say hello to my new asset: Venture Capital. 🙂 I think calling it VC is more accurate than private equity. As mentioned in my post from last week, I now have over $1 million in assets! Let’s break down some of the numbers.

  1. Cash holdings decreased because I used some savings to purchase my startup investment.
  2. Both Canadian and U.S. stock portfolios grew.
  3. I purchased $3K of new mortgage funds in my RRSP. I transferred the $3K value from my “RRSP” category into “Mortgage Funds” instead.
  4. No updates to home and farmland values.

Overall August was a pretty good month. For September I plan to invest in some renewable energy. I found an Ontario based company that suits my investor profile, so I’ll explain what my plans are for that in a future post. 😉

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Random Useless Fact:

Smartphone cameras use LEDs for flash.

16-09--forget-to-turn-off-flash