August Net Worth Update (up 1.87% to $988,082)

It's been a few months since I've done a real monthly update here on the blog, so I thought I'd take the time to provide an update.

First off, I've been busy as all heck on all of my other projects and writing the blog has taken a bit of a second priority, but do expect me to chime in every now and then over the next few months.

On the surface, this month looks like a great month, but let's dig into the details a bit further. First off, this was an absolutely brutal, brutal month in the market with huge swings, hedge fund redemption selling, periods of low volume and economic stories.

All told, I lost nearly 9% of my portfolio value (or $51,000 if you're playing along) from mid-july to the low in mid-August. Paper money? Yes. Was I nervous? Heck yeah.

Thankfully, it wasn't worse because I was holding a fair bit of cash and even though I was starting to buy into the market as it was dropping, I never committed my full amount of sidelined cash. Also, from mid-August to now, the market has rebounded nicely, although it's still off the highs. With ongoing help from the Fed and now Bush on the sub-prime issue, I can see the market ending the year higher over the next four months and ultimately the correction and following consolidation was a good thing for a move higher.

Although it looks like the portfolio has come back almost entirely from the lows, it really has only regained about $26,000 of that $51,000 lost. The other gains that make August look like an "up" month, were due to a) three prior stock awards in the amount of about $15,600 after taxes, b) 401k and c) ESPP contributions.

Three other points about the current month:

1. Although I have bought a few equities during the correction, I continue to hold nearly $65,000 in cash. I'll continue to look for opportunities to put this cash to work and I think the time is pretty ripe right now.
   
2. I continue to pay down the mortgage and am on track with my mortgage goals for the year. As a reminder, the plan is to pay double mortgage payments for the next few years with the result being a fully paid off home. Double payments are being made possible by reducing expenses, not through savings withdrawals. The ending mortgage balance goal for this year is: $144,000 (stretch goal of $135,000), and I'm still on track.
   
3. On the Prosper.com front, I have $3000 principle invested into 22 loans, and this month, I had one loan go into default. The Proper collection agency was able to recover about 15% of the loss making my net loss only $80 after all was said and done. All other loans are current. Although I am still making over 16% on these loans, I stopped funding new loans in June. If sub-prime folks (same folks getting loans on Prosper) can't pay their mortgages and keep their homes, does anyone really believe they'll have enough money to pay back these loans? There's definitely much more risk for Prosper loans now and I'm not jumping out in front of that truck. There's nothing I can do about the current loans, but at least they are being paid back methodically and don't appear to be in trouble (yet).

Anyway, that's the update -- Things are still good and it looks like I'm only $12000 away from my first Mil mark. Hopefully I should be able to meet that milestone by the end of the year.

January Net Worth Update (up 1.84% to $932,372)

Another decent month -- not a blow out, probably because I am holding a significant amount of cash right now (more than 15%). Overall, my stock gains were up 2.44% and retirement accounts up over 4%, likely due to my REIT holdings blowing through the ceiling. Following are more details:

1. Investment gains were great given the overall bull market sentiment. I did take some profits off the table because I believe, as I've said recently that the market is richly valued right now. My cash holdings moved up to over 15% as a result of the selling. I'll be looking to put this cash back to work as the market corrects. Yes, perhaps a bit of market timing here, but as a value investor, I don't see a lot of value right now. Value should peek it's head out in the next month or two and I want to be positioned to take advantage of it. If a correction doesn't materialize in the first quarter, I'll be happy with my 5% money market interest and look for opportunities to deploy the cash as the year wears on.
   
2. I paid down the mortgage more in January and am on track with my mortgage goals for the year. As a reminder, the current plan is to pay double mortgage payments for the next 4.5 years with the result being a fully paid off home. Double payments are being made possible by reducing expenses, not through savings withdrawals. The ending mortgage balance goal for this year is: $135,000, and I'm on track.
   
3. On the Prosper.com front, I have $3000 principle invested into 15 loans, and all loans are current. Over the past three months, this money has returned $10, $16 and $42 per month, respectively, as the loan payments have been paid. Once I reach steady state next month, I expect to see a sustained interest return of about 1.33% per month, or about 16% per year.

As I'm watching my net worth increase, one thing I am starting to realize and get excited about is the possibility that in the next few months, if all goes well, I should find myself above the $1MM mark in net worth. Some might think this is a bit of a stretch, but one thing I haven't been including in my numbers are my stock options. I currently have nearly $40,000 in stock options at the current market value, post-exercise and tax. One reason I haven't been including these is because I'm not sure if I should be including inherent value (ie. Black Scholes) or the value post-exercise and taxes at current market value. I'm sure I will get some feedback on this and should probably update my numbers to reflect them.

December Net Worth Update (up 1.26% to $915,500)

Ok, so I didn't really get this one out in a timely fashion. It's amazing how the first few weeks of the new year can pull you in so many directions. It has been a heck of a busy new year so far!

Anyway, I'm back and here's the update:

Not a bad month at all to end the year. Overall, my stock gains were up 2.16%, but I used some of these proceeds for other purposes so the gain showing at NetworthIQ is shown a bit lower (see below). Also, my retirement gains were up a meager .69%, given that I moved into some cash early in the month. Following are the details:

1. Investment gains were great, but mostly due to end of year dividends. I racked up around $6000 in dividends and long term capital gains (from mutual funds) in the last two weeks of Dec. Also, I sold about $9000 worth of company stock (@ the 15% capital gains tax rate) and purchased another $5100 in company stock through our quarterly discounted employee stock purchase plan. On the one hand, it's great to have this stock, but on the other hand, it's quite a challenge managing how and when to get out of it.
   
2. As expected, I paid down the mortgage to meet my goal of $170k by the end of 2006. Given that I far exceeded my brokerage account goal for the year, I moved $5k from the brokerage account to realize this goal. To summarize, I've paid down $30k of the principle on my $200k mortgage this year (or 15% of it). Without extra payments, I would only have paid off $5400 (or 2.7%). That a huge accomplishment towards having this baby paid off by retirement in 2011.
   
3. On the Prosper.com front, I have $3000 principle invested into 15 loans, returning an average of 15.89%. All of these loans are current and I'm pretty comfortable with the whole thing so far. It's still more of an experiment for me, so don't expect me to all of the sudden dump $50k in there.

That's it, a pretty basic month.

On final comment I'll throw out there: overall, I'm a little nervous with the market right now. I'm in the camp that says we really need a decent correction at the current levels to be able to go higher. Consolidation in my mind always makes the markets stronger. To this end, I'll continue to hold the cash ($62k in my retirement account) that I have, as well as look to take some profits off the table (around $30k in my brokerage account) to position myself to buy the dip as it materializes. In my mind, it's not if, but when.

November Net Worth Update (up 2.27% to $904,687)

Again, another good month with a lot of little things going on. Overall, my stock gains were up 3.71%, but I used some of these funds for other purposes so the gain showing at NetworthIQ is shown a bit lower (see below). Also, my retirement gain was 2.94%, both of which were great despite the huge one-day drop at the end of November. Following are the details:

1. Investment gains were great. I sold my position in HOG after a near 50% run in the stock, and according to my goal of having $501k in stocks/retirement and a remaining mortgage of $170k by the end of 2006, I used some of the cash proceeds to pay down the mortgage ($12k). Also, I paid down an extra $1790 with free income cash for the month (in lieu of investing it). Note, my stocks/retirement total is still hovering around $510k after this move, so I'm quite confident I will hit my goals for the year.
2. In December, I expect to pay down the mortgage more with free cash and hope to make the $170k balance by end of year. For me, hitting this goal is all part of the early retirement plan. At the rate I am paying it down, I should be mortgage free by 2011 (5 years), about the same time I hang up my big corporate hat.
3. I also moved another $2000 into Prosper.com in anticipation of additional positive returns. I have 6 loans returning an average of 14%, all of which are low risk and "Current". I may step up the risk a bit on this next round of funding, but I'm not going overboard. I'll take a reasonably assured 14% return any day.
4. I should point out that on the stock front, there are about $1500 worth of contributions (via employee stock program), so the gain is a little mis-represented.
   

October Net Worth Update (up 3.29% to $884,564)

As many of you probably had, I had a great October! I've updated my NetworthIQ profile with the numbers, but here is the detailed breakdown:

On the stock front, my portfolio generated $15,853 in market returns (a 5.16%!!). I have been saying that these are not normal one-month gains, but I'm starting to wonder... obviously, market conditions were incredible in October. Also, to be fair, however, a few throusand of this gain were due to additional savings.

On the retirement front, the gain was due to 401(k) contributions as well as pure market returns. The gain was a stellar 4.73% return...

I added my Prosper.com funds in the Assets->Other category, so you will be able to see how I do on those over time. I currently have 5 funded loans at an average interest rate of 13%. These are all very conservative loans and I expect to dabble down stream to add more risk and return. This is going to be interesting.

The net effect on the mortgage balance was almost 2% this month. As I mentioned, I made a $4500 payment this month to pay down the principle. I hope to continue paying it down aggressively until the end of the year.

September networth and mid-October update

Optimism is high -- nothing but sky up there.

Ok, I didn't exactly detail out what happened in September, so I'll spend a little time discussing it now and then move to a mid-month update for October.

September was a particularly good month for me, as it was for many others, I suspect. Net-net, my net worth was up 4.9% or +$22496.

Other highlights that helped bump up the net worth included:

1. I accelerated my 401(k) contributions to reach my $15k limit as early as possible
2. I recieved a 10% bonus and a 5% raise (yes, I am lucky to get this -- raises seem low these days). The bonus went directly into my brokerage account and will be deployed over time.
   
3. I had a block of employee stock purchase shares deposited (about $6k worth)
   
4. Overall market appreciation made up the rest.
   

I guess the message for September was: any money coming in got saved.

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October has been quite good to me, as I suspect it has been for others as well. The market has been on fire and I'm lucky to be reaping some of the rewards. Here is a rundown of happenings to date:

1. I finally finished funding my 401(k) up to the $15k limit. From here on out, funds that would have wound up in my 401(k) will be redirected to pay down my mortgage. (I'll give the numbers at the end of the month update)
2. I never try to time the market like this, but I made a short term investment move in my 401(k) in July to buy my significantly undervalued company stock and finally sold it off this week for a near 26% return / $10k profit. I'm holding the proceeds in cash, but suffice it to say that my 401(k) performance to date with this move is hovering around 17%. I'm unbelievably happy with that.
   
3. Overall investment returns have been around 4% (+$17449) at the halfway point, which is great, but with any market pause, I'm sure I will pare those gains.

Looking forward to the end of the month -- Lets hold these gains!