Monday, December 14, 2015

Talk about a pull-back!

My portfolio hit its high mark in late 2013. If  I had held more U.S. stock, it would have peaked in 2014. Whatever, it seems clear to me that all has been on a slow and steady slide for more than a year.

Each time I feel that stocks cannot fall farther, I buy a little. And then I sit back and watch the losses mount. Ouch.

Oddly enough, as the market has, for me at least, collapsed, my income from dividends has held almost constant. My new purchases have offset any cuts to my dividend stream.

How does such a long, drawn out decrease in market value make me feel? Actually, buoyant. Bad times don't last forever, here I can hear a friend immediately disagreeing and reminding me of the Japanese experience. I say, don't dwell on worst case scenarios if you want to sleep at night.

Come January, I'm going to remove the dividend money I need to live and then I'm going to start looking for some stocks to buy with my remaining cash. Hopefully the market will have a nice pop in the second half of 2016. There are some signs that such a hope is not a total pipe dream.

One thing that keeps me calm is my spread sheet. I have a column showing the total value of my investments at the beginning of my retirement in 2009 entered in the top field. Moving down the column of figures takes one from annual closing balance to annual closing balance. Each new field is a new year. Each field calculates how much my portfolio would have gained during the year if I had made the returns promised by the first financial adviser with whom I consulted.

But the spread sheet does more than this. It also reflects the annual drop in value caused by the withdrawal of funds to live in retirement. The adviser calculated that I would make more each year than I would remove and thus my portfolio would slowly grow over time. It has and it has grown more than that adviser's wildest dreams. Today I am still many bucks above the value envisioned by the adviser. If and when I drop below his forecast, I'll show concern.

Damn. But I hope that doesn't happen. If it does, I'll start thinking "Japan." My friend will understand.