Lazy Man and Money

Be Happy With However the Market Moves

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“Any way the wind blows doesn’t really matter to me” – Freddie Mercury

I’ve been writing about investing a lot this year. I don’t usually focus so much on one area of personal finance. The year started with quite a run and now the markets are fluctuating a lot as news of the COVID-19 starts to directly impact the world’s economy.

Beach Dog
Beach Dog doesn’t care about the markets at all.

I was talking with a friend last week and she said something that shocked me. We talk about investing a lot. We talk so much that we probably don’t need to talk about it because we know what the other person’s philosophy is. What I found shocking was something that I knew about her, but I had forgotten.

It was (paraphrased):

I set up my asset allocation so that I don’t care what the markets do.

This may be an easy thing to say. It might be tougher to follow. There are also extreme unlikely cases (for example: Dow 1,000) that she would care about. I’ll get to those in a minute, but first…

… what a goal!

I had never thought about not caring about the markets, because I do care about the markets. We’ve watched our net worth quadruple over the last decade and are arguably financially independent (or FIRE as the cool kids say nowadays).

I couldn’t imagine not caring about the markets until I remembered the time I didn’t. That was the crash of September 2008. My wife and I were on a trip to Thailand and Australia. I was honestly more concerned about the state of Tom Brady’s knee than anything financial.

In trying to analyze why that was, I think it was a few factors:

1. I never get to travel the world, so I wasn’t going to mess up this chance.
2. I couldn’t do anything about it anyway.
3. Tom Brady’s knee (worth mentioning again)
4. We were 32 years old. Old enough to have some nice savings, but young enough to accumulate shares at low prices before we’d need to use the money for retirement.

At 44 years old, my outlook has changed. We have more money in the market now. We have less time in our career.

My friend is older than me. Her investing strategies are more advanced than mine. I used to be a 100% stock person and now I’m a 88%/12% bond person. She’s probably closer to 50% stocks/40% bonds/10% treasuries-cash-gold. (This is a little over-simplified as we both have some REITs and other investments like that.)

She has written an investment policy statement (IPS) that balances her allocations whenever the market goes up or down. For example, with stocks dropping about 12-15% last week, it triggered and event to sell some bonds or treasuries and buy the cheaper stocks. I did the same myself.

It actually felt good to sell bonds and buy stocks at a lower price. It certainly feels than when I was in 100% stocks and having nothing I can do to buy on the dip.

Do I Care What the Markets Do?

That’s the key question you want to ask yourself. It’s okay to care. It’s okay not to care. This is a judgment-free zone. Personally, I like the idea of having diversification to limit losses and give me options if the market moves down. I’ll always root for it to go up, but I’m finding it more important to feel okay when it goes down.

Of course the famous Mike Tyson quote applies here:

Everyone has a plan until they get punched in the mouth

With the market down 12-15%, it has felt a little more like a love tap than a punch to me. I don’t know how I’d feel if the market goes down 40% like in 2008. I know I won’t sell. I probably will not be very fun to be around.

I think that answers the question for myself. I do care what the markets do, but I have much more flexibility so I don’t care as much. I have some work to do before I feel like I can get my friend’s philosophical place.

Should you have a goal to not care what the markets do? Let me know in the comments.

I Share My Asset Allocation (as do 7 other Money Writers)

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The Money Writers is having a group writing project. Each of us have decided to share our asset allocation and performance from the first of the year to last Friday. You might want to put the children to sleep, this could get ugly.

Asset Allocation

I would like to say that I put together a great graph for you, but I didn’t. My only excuse is what you already know… I’m Lazy. Instead I’ve put together my portfolio holdings inside my retirement accounts. You may ask why I don’t have significant money invested outside of retirement accounts. Good question and I’m not sure I have the best answer. I believe in having a healthy emergency fund as well as maxing out my retirement accounts (401Ks and Roth IRAs). I’ve also bought some significant private stock in companies I used to work at. I can’t sell these shares and I can’t communicate them to you (they’d give away my anonymity to a number of people).

Below is my asset allocation. You’ll notice that one Roth 401k doesn’t make the tickers very readily available. I know I could look them up if I went to click through some PDFs, but it’s not really important to me. My goal with each account is to be fairly diversified. I know it’s not perfect diversification, but I plan to roll them over into a Zecco IRA when the economy rebounds. There I can invest in low cost ETF (as you’ll see in my Roth IRA where I have more trading ability). I don’t want to move it while the prices are low in the off chance that we get a recovery while I’m out of the market shifting the money.

lazy-man-portfolio.jpg

I don’t know if anything in particular sticks out with this asset allocation. I suppose the shares of Google stand out, since it’s the only single company that I specifically went out of my way to own. I like to think of it as a hedge. Many websites, including this one, rely to some degree on Google sending traffic which leads directly to advertising dollars. If Google continues to monopolize Internet search, I want to stand to gain in the off-chance that they update their algorithm to hurt my sites. That said, you can tell I still don’t have a lot of money in Google.

The other thing that I find interesting is that I have just 20% of my money in international stocks. This is the first time that I’ve looked at it in totality and I’m disappointed in that allocation. I want to have much more money overseas. I don’t mean that to be anti-American.  I think it’s simply arrogant to keep 80% of my money in one country. It’s not just any one country, but the one country that I depend on for my income. It feels like working at a company and investing in the company stock… one bad turn of events and you could be wiped out.

You are probably wondering two things at this point. The first: What’s the return on portfolio like this? I’m 7.22% in the hole YTD. I would like to say that I found a way to stay positive, but the market has just not been good. Long term, I still think diversified equities is a solid investment.

The other question you might be wondering at this point: How are the other Money Writers doing this year? I’m afraid to look, I’m sure they are doing better than me. Just so you have good laugh at my misery check out their asset allocations:

Finovate Demos – Part 4

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In case you missed parts one, two, and three, I’m sharing my notes after seeing 40 start-up financial companies present their companies. Today, I’m rounding up the last of the four companies.

BlingNation – You’d think this name would have something to do about pushing luxury branding, but that’s not the case. It’s yet another mobile payment. It looked like they weren’t a consumer product, but instead plan to sell their product for private branding.

Zopa – Won the Best of Show, which I think shocked many. This is not a P2P company in the US like the UK version (and they went out of their way to stress that). Zopa evaluates each country’s culture and regulations to determine the business opportunity present. The most interesting about this demo is that you can actually take a loan and pay back negative interest – if you have help from others buying a CD. Expect to read more of this from me in the next week or two.

TrustedID – I went to the restroom during this presentation, but for completeness talked to them after their demo. They prevent identity theft so they’d be in the same space as Lifelock. Looking over the benefits of their $100/year plan, I imagine one could approximate the value by getting free annual credit reports, free services like CreditKarma, and freezing your credit report when you don’t need it (free in some states, $15 in others).

BusinessLogic – MoneyPools – Incredible graphs, they just need Tom Cruise waving his hands to control them and you’d have Minority Report. Overall the product helps you view your asset allocation in extensive detail. Once your data is loaded in, you can do things like look at your retirement accounts in aggregate and then “zoom in” on sector and style analysis.

Aradiom – Another that I’d have to put in the “best demos” category, but completely irrelevant for consumers. They create a platform that makes it easy for banks to build mobile banking applications. Sounds dry, but they built an application there in the five minute demo. You don’t need to be a programmer, so it reminded me a lot of Visual Basic. You add pre-defined high-level components like a login screen and you are up and running.

CheckingFinder – This was a standout of the show and when they launch in a month, I’ll likely be in great support of them. In short, it’s a search engine for high-interest yielding checking accounts. They showed some banks that were willing to pay you 5% or more on your checking account if you meet a few requirements (such as make 12 debit transactions a month). I don’t know about you, but that’s getting into Scarlett Johansson attractive territory.

Sparkroom – I didn’t fully understand their product. It seemed to help people analyze how their lead generation campaign is performing. This is something that’s apparently useful for those in the mortgage business.

TradeKing – They seem a lot like Zecco except that you pay commissions. They focus on the community aspect as well and have been around longer. In the end, it’s about stock trading and telling others about it.

ClairMail – Another mobile banking company. At this point in the day, I was pretty much asleep. I didn’t really see anything exciting for consumers here.

Vestopia – Allows you to view the transactions of a real industry professional in real time. I think it’s an excellent contrast to the crowd-sourcing that other companies are doing with their community. To be honest, I didn’t have high expectations of this company, but the presentation was decent and I got to speak with the CEO for a few minutes which really galvanized the idea for me.