My 1st Quarter 2020 Financial Situation

[Jerry1]

I just did a summary of my statements as I've been doing quarterly for many years. On 3/31/2020, my NW is almost the same as it was on 12/31/2017.

This is interesting (to me) because I retired in January of 2018. Of course financially I didn't retire because I got a severance. None the less, being retired for two years and having my NW be the same as just before retirement feels a lot better than focusing on the losses I've watched in this last month hit my accounts.

On 3/31/2020 I moved most of my investments to cash/mm. I went from 60/40 to 10/90. The equities I have left are in my taxable account and made up of ten individual stocks that I feel are solid companies that have great dividend histories.

I'm going to ride out the next month or so - probably at least the 2nd quarter, as I am, while I think about how to go forward. I've discussed that in other threads but basically, I need to feel that I'm better protecting myself to remain retired and living at the level I planned for when I pulled the trigger. At the very least, I've gained a new appreciation for risk during retirement and what asset allocation really means.

The main reason I posted was to say that I feel a lot better when I see that my NW is no different than the day I retired. If it was good enough two years ago, it will be good as a new starting point (today).

 

[LOL!]

The year 2018 was a down year, so you probably had more NW on 12/31/2017 than you did on 12/31/2018.

Our portfolio is higher today than it was on 12/31/2018.

 

[HI Bill]

Jerry1 - you made me look. I'm basically back to where I was in April of 2019. Recency bias has me mourning a 25% loss from this year's peak value, after a nearly $1M run last year. Great perspective.

 

[pb4uski]

NW at 3/31/2020 back to 12/31/2016.... 6/30/2016 with respect to investments balance.

 

[HarveyS]

I also look quarterly. Today my portfolio is about 2% below 12/31/18, and about 2% above 6/30/17.
It wasn't as bad as I thought it would be when I collected the Q1 2020 data - but it is still plenty bad (down about 20% for the quarter).

 

[Dtail]

NW is ~9% lower than when we retired, so not so great, but still okay.
Less years to live theoretically.

 

[DrRoy]

I have looked at this in a similar way. My 3/31/20 NW was higher than my 3/31/17 when I was first RE. Since then I have withdrawn 3 years of spending, and reduced my equity AA by 3 points as the balance rose.

 

[Golden sunsets]

If I subtract a recent inheritance which was added to our balances on 2/28/20, our portfolio is equal to that which we had in early 2019. We had been 51/47/2 early in Q1 2020. We are now about 40% equities, 22% cash and 38% FI. Waiting for the right time to add a significant portion of the cash to equities as well as FI, to get back to a roughly 50/50 AA. In a perfect world, we'd rebalance right now, but.... this isn't a perfect world any longer.

 

[Toocold]

My net worth is the same as Jan, 2019. This isn't bad considering that I exercised a bunch of stock options that I had to pay taxes. My portfolio right now is 42/15/13/30 (non-reit real estate investments).

 

[pb4uski]

NW is ~9% lower than when we retired, so not so great, but still okay.
Less years to live theoretically.

I have looked at this in a similar way. My 3/31/20 NW was higher than my 3/31/17 when I was first RE. Since then I have withdrawn 3 years of spending, and reduced my equity AA by 3 points as the balance rose.

I like that way of looking at it... our NW today is 123% of what it was when we retired.

 

[Dd852]

I like that way of looking at it... our NW today is 123% of what it was when we retired.

Yup. This is a good way of staying sane. If it seemed like enough then, it is enough now. For us it is 124% of retirement in 2012. Even inflation adjusted it is 110%. I’m taking another nap.

 

[calmloki]

Current NW is about the same as mid December 2019, primarily due to our rentals chugging right along. I don't adjust their value till the property taxes arrive, so any loss in equity isn't shown. Will the rents continue to come in? Thus far about 1/2 have for this month. That is enough to keep the water and sewer flowing, keep the trash PU going, pay the electric bill, insurance and property taxes and do a little maintenance. Probably even keep us fed. If 3/4 or more decide not to pay for several months things get dicier. Providing 37 units of safe clean housing gratis for people month after month will cut into the cash reserves real hard.

 

[Scratchy]

Assets excluding home as of 3/31/20 down to where it was around between 12/31/2018 and 1/31/19. Same level as around 12/31/17

I shifted my AA to 45/55 latter half last month, from around 60/40. (Actually it had dropped some already). Chickened out.

 

[ziggy29]

I have done some moving around and a small amount of selling over the last month. My overall AA is probably around 45/55 now, instead of my historical target of 55/45 -- partly because a handful of sales, and partly because of the market decline. I am roughly at late 2018 levels, around 15% off the peak in February.

I've sold all real estate investments, especially what I had that is mostly commercial. I think commercial RE is going to take a long time to recover. First, in the retail area a lot of their small tenants won't survive this and they will have many months (or even years) of a lot of empty retail space. Secondly, in the office space area, I think some businesses will discover they can function just fine with their employees largely working from home, and some of those may decide they would rather cut their facilities expense and start getting out of some leases, that they don't need those expenses to run their business.

We'll see, though. I'm not doing any wholesale changes overall.

 

[sengsational]

Whenever the bear rears it's head, I look at where my NW is 'now' as compared to retirement date and the last time my NW was at this level. It's hard not to, given I have spreadsheets that automatically plot the data on a graph.

Log scale, the blue is w*rking, the pink is after. Lines are end of 2nd and 4th quarter. So still better than the end of 2018. I'm not certain that will hold, but it's pretty good news on a 2/3 equity allocation.

 

[RetireAge50]

Nicely designed roller coaster since we retired. Down 7.6%, Up 41.5%, Down 16.2%, Blind Corner coming up!

 

[kannon]

Agree - like the half full approach. We always knew that 2019 was an anomaly as far as profits. It was definitely nice and we anticipated some type of pull back, not everything though. But we use that too as a barometer - didn't want to go beyond 12/31/2018 as far as our losses. We moved to the higher safer grounds for now, recognizing that we are still ok and that we need to move forward. Sometime in the future.

 

[Markola]

Similarly, our net worth is at the February 2019 level. That is very gratefully tolerable given the economic carnage out there.

I compared March 2019 vs. March 2020 investment income and what surprised me was how stock fund yields in dollar terms fell 21% from last March. Bond funds interest stayed nearly exactly the same. What did others experience Q1 for portfolio income in dollar terms?

 

[Dtail]

Nicely designed roller coaster since we retired. Down 7.6%, Up 41.5%, Down 16.2%, Blind Corner coming up!

Not bad. Sounds like you are still up ~10% LTD.

 

[copyright1997reloaded]

Dunno about 2018 (as I don't track things month to month or quarter to quarter, only what the current value is). But, I do have tracking from when I retired from mega-corp in May 2009.

I am pretty close to double my May 2009 retirement level. Since then, I payed off my house, I bought a new vehicle, I bought a used RV, I bought 40 acres of land. I raised a child (now 17) and not counted in the above is the 140K or so in his college fund. I payed monthly child support for all of those years. I've taken some vacations (I'm not one to go to Europe or Asia on trips, but still have decent trips). I eaten all of the food I wanted to eat, and bought more than my share of things (computers, a used tractor, a log splitter, wood stove, ...). I am also able to get early social security if needed, and much closer than I was at 51 in terms of getting there.

On the other side of the ledger, I did work part time and now full time, albeit at a salary 1/4 of my mega-corp salary.

And of course I now have 11 years less to live.

But all in all, NOTHING to complain about. When I went out the first time (in 2009), I thought I could make it...so even with the market sell off , I am in a much better position.

 

[jollystomper]

Our cash+investments are about the same as when I retired in June 2018. Which at that time included a "buffer" in case of downturns like this one. So nothing to complain about.

 

[ERD50]

I just did a summary of my statements as I've been doing quarterly for many years. On 3/31/2020, my NW is almost the same as it was on 12/31/2017.

This is interesting (to me) because I retired in January of 2018. Of course financially I didn't retire because I got a severance. None the less, being retired for two years and having my NW be the same as just before retirement feels a lot better than focusing on the losses I've watched in this last month hit my accounts. ...

Yes, investors must look at the long term. This is what I've been telling a few people who are nervous about this drop. Some of them have been talking about how the market has been top-heavy for years now, and ready for a fall.

So instead of looking at the drop from that peak, take a longer view, and be happy that you have more money now, than you did back when you might have been worried about a big drop,

... On 3/31/2020 I moved most of my investments to cash/mm. I went from 60/40 to 10/90. The equities I have left are in my taxable account and made up of ten individual stocks that I feel are solid companies that have great dividend histories.

Hmmmm, what happened to the long term look?

No one knows the future, if we all agree things are going to get worse, then the current market value reflects that. It is entirely possible that we are near the market bottom (or not, no one knows). But if that's the case, that means you sold low, will you buy high? That's exactly the opposite of what long term investors should be doing.

Historically, 10/90 has a very bad success rate. Your plan to get back to something more reasonable like 60/40 seems to depend on,... what?

It might work out for you, who knows. But it really isn't a rational move, based on history.

-ERD50

 

[Jerry1]

Your plan to get back to something more reasonable like 60/40 seems to depend on,... what?

It doesn’t depend on anything really. I’m looking to get back in very soon. The only thing that’s holding me back is a thoughtful re-evaluation of my situation and where I want to go from here.

As you know, I’ve been working with a FA. This quarter is where he either earns my trust and I stay with him long term, or I bail on him and do things myself. As you know (or at least suspected), he had me in a lot of different funds. I didn’t even know what some of them were and more importantly, what the objective was for them being there. As we reload, his job is to bring forth ideas (products) that will meet my needs. My job will be to have a clear understanding of my goals, objectives and risk tolerance. Nothing will go into the mix that I don’t completely understand. Of course, that should have been the case from the beginning. My mistake.

I think the biggest change is that I understand my risk tolerance much better now that this has happened than ever before. As I said in another thread, in 2008, I didn’t have the kind of money I have now and I was earning the best coin in my career. Now I’m retired and have way more to lose and no real ability to earn it back. Again, my mistake for not appreciating that difference fully.

So, while I accept that it looks like market timing, it is a reset. Though I admit, it’s a hybrid because I do think the market has more loss to go and therefore I’m not in any big hurry to get back in. I expect that by the end of the 3rd qtr I will have a proper AA reestablished.

 

[audreyh1]

We are back close to 12/31/18 net worth, so I can't complain too much.

But we are also back to March 2017 levels.

I usually compare to our 2000 net worth inflation adjusted. That was a few months after we retired. Right now we are ahead 19.4% inflation adjusted, but gosh in Jan 2020 we were 49.9% ahead inflation adjusted!

But you know, we have been spending plenty every year since retiring over 2 decades ago, so I'm always very happy to be ahead inflation adjusted. And if it ends up that we dip below like we did in late 2008-early 2012, I just try to be patient. knocking on wood!

 

[ERD50]

It doesn’t depend on anything really. I’m looking to get back in very soon. The only thing that’s holding me back is a thoughtful re-evaluation of my situation and where I want to go from here. ....

I think the biggest change is that I understand my risk tolerance much better now that this has happened than ever before ...

So, while I accept that it looks like market timing, it is a reset. Though I admit, it’s a hybrid because I do think the market has more loss to go and therefore I’m not in any big hurry to get back in. I expect that by the end of the 3rd qtr I will have a proper AA reestablished.

WADR, this sounds like you are trying to kid yourself. The time to adjust your risk tolerance is before a crash, not after or in the middle of one.

You sold low, you want to get back to 60/40. That's market timing.

A reset is when someone says, for example, "I've been 60/40 for a long time, I'm older now, and want to permanently reduce to 40/60 over the next 2 years, independent of how the market moves."

Now I’m retired and have way more to lose and no real ability to earn it back.

Which is why you probably should not try to market time.


-ERD50