Liquid net worth – April through June
Hey folks. Hope you all had a great financial quarter, unlike me. 😅
My household liquid net worth dropped $138,000. Oh man. That’s a bummer.
But it’s important to put things into perspective.
I’ve had 6 consecutive quarters of growth before this most recent downturn.
So I see these last 3 months as more of the exception than the rule.
Overall my net worth is still going in the right direction. 🙂
What I did over the last 3 months
Buy more stocks
I don’t think it’s a surprise to anyone that I’ve been a net buyer of stocks lately. The market just keeps getting cheaper. Here are my new positions, all purchased due to my options being exercised, lol.
- TFI International (TSE:TFII) x 100 @ $105.
- Etsy (ETSY) x 100 @ $130.
- Ford (F) x 300 @18.
- Ginkgo Bioworks (DNA) x 200 @ $4.
- Meta Platforms (META) x 100 @160.
- PayPal (PYPL) x 100 @145.
- Sea Limited (SE) x 100 $180.
In the short term I may have overpaid for some of these companies. But let’s see how things play out over the next 1 to 3 years. 🙂
I’ve also rebalanced a bit. I sold $20,000 of my mortgage fund (fixed income investment) and used the money to buy 100 Meta shares at US $160 per share, which comes out to be roughly $20,000 CAD.
The mortgage fund I sold was Antrim MIC, which I’ve held for 8 years now. Each year it distributes 6% to 7% interest to unit holders. The reason I decided to sell a portion of my holdings is because I believe there are better opportunities to make money elsewhere. For example, I expect $META will be worth at least US $200/share one year from now. That’s a 25% ROI compared to single digit for a mortgage investment corporation.
I made $8,456 in net premiums from trading options in Q2. This is actually lower than the previous quarter because I had to take some losses in May. Overall I expect to earn around $10,000 per quarter trading options moving forward. Making $3k to $4K a month selling covered calls and naked puts appears to be a sustainable level of income. I’ve tried making $8K a month before with options, but that was a perilous endeavor and I just ended up losing money the next month. It’s important to find the right balance between risk and reward.
Almost got a margin call
Lastly, I transferred another $40,000 from my HELOC to my IB margin account over the course of the last 3 months. I got a warning in May that my margin requirements was running low. Had I not deposited extra money into my brokerage account, IB would start to automatically liquidate my holdings if my portfolio fell another 10%, which could definietely happen in today’s high volatility environment. 🙂
Email I received from IBKR:
Here is how my liquid portfolio stands on June 30, 2022.
Cash = $12,000 (-$2,000)
Canadian stocks & bonds = $386,000 (-38,000)
US stocks & bonds = $266,000 (+10,000)
Retirement = $259,000 (-9,000)
P2P lending = $20,000 (-1,000)
Mortgage funds = $24,000 (-22,000)
Total = $967,000
Margin loan = $123,000 (+31,000)
HELOC = $60,000 (+50,000)
RRSP loan = $0 (-5,000)
Total = $183,000
Liquid Net Worth = $784,000 (-$138,000) -15%
All numbers are rounded to the nearest $1,000 and in $CDN at 0.80/USD
To put $138,000 into context it’s about 15% of my liquid net worth. It’s also about 7% of my overall net worth which includes the equity of my real estate holdings. This is certainly going to leave a dent in my overall finances. But I’m curious to see how things play out next quarter.
First it was meme stocks that fell. Then the fast growing technology sector was hit. After that it was the broad S&P 500. And finally now, even energy and commodity stocks have began to fall in the last month. This bear market has been relentless.
And no wonder.
The reason asset prices across the board are falling is because the cost of money is more expensive. For example, mortgage interest rates doubled literally in months.
My plan for the next 3 months
If you’ve been watching my YouTube videos recently you probably saw that I shorted the Nasdaq 100 by selling 100 units of QQQ. This is a temporary hedge that I’ve put in place to protect myself in case the stock market continues to fall. I plan to remove this hedge when the QQQ rises back up above its 10 week moving average.
Other than that I plan to keep an eye out for signs of the market bottom. The first half of this year was pretty bad for stocks. However, with the worst part behind us, I believe the second half will be much better so I want to be prepared with cash on hand and not miss the opportunity. Fortunes are made in bear markets because that’s where you can find the best value for your money. 🙂
Random Useless Fact:
The Tesla Model S is often considered one of the best cars ever made.