My main goal* was to build an investment and cash portfolio of $1,120,000* ($1,000,000 to retire on and $120,000 to pay off the house) in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.
Meme Stock Shock
Meme Stock: Shares of a company that have gained viral popularity due to heightened social sentiment. This social sentiment is usually heightened due to online and social media platforms.
Definition from Investopedia
I think a lot about meme stocks. The main reason is because my portfolio is dominated by one of them:
How did I end up here? This:
I was a nerd, so I bought what I knew and liked. Google! Yay! Amazon! Yeah! Elon Musk! Yes!
And sometimes you get extremely lucky. This is what happened with Tesla. I bought most of my shares in 2012 for $1.93 and current share price is $208. Some luck and a lot of stubbornness (refusal to sell) can take you a long way.
I continue to hold the stock because I believe that Tesla will be stronger in the future. As the world moves away from fossil fuels, companies like Tesla, CATL (batteries), and BYD (cars and batteries) stand to benefit.
Buffett’s Wise Words
The most important quality for an investor is temperament, not intellect.
-Warren Buffett
So what is temperament?: characteristic or habitual inclination or mode of emotional response (Merriam Webster)
This is how temperament applies to stocks: Sometimes a stock will swing in price wildly even though not much has changed with the underlying business. When this happens:
- Can you keep your emotions in check?
- Will you sell during a draw-down?
- Can you resist the temptation to buy more shares in times of irrational exuberance?
Over the long-term, the price of a stock will accurately reflect the value of the company. Over the short-term though, the price will be affected by wars, interest rates, the weather, robot traders, rogue balloons, and black swan events. In the case of Tesla (perhaps the ultimate meme stock), this effect is amplified by the erratic behavior of its CEO, Elon Musk.
I’m telling you this because in January, my portfolio saw an increase of almost $500,000. While this sounds impressive, this came after a significant decrease mostly caused by the decline of Tesla’s stock price. I have two more thoughts before I shut up about Tesla:
- Tesla was waaaaay overvalued before. While I don’t think Tesla should have the same valuation as a traditional car company, it’s price was nutty.
- Elon Musk. He’s brilliant but yeah, crazy too. I agree with what Tim Urban (Wait Buy Why) has to say:
What are your thoughts on Elon’s controversial side? – Ekin K. (Izmir, Turkey)
It emerges from the same quality that invents new things, challenges conventions, and changes the world: extreme originality, whether people like it or not. So I’m all for it.
Also, Neil deGrass Tyson:
It turns out that I can’t stop talking about Tesla but I put my thoughts at the end of this post. On with the Performance Update!
January ($469,547 gain)!
January was a good month. The ol’ portfolio went from $3,112,821 up to $3,582,368 for a gain of $469,547. Throw in $230,000 in house principal and we arrive at $3,812,368:
2023 (as of 2/1/2023)
- Days elapsed: 28
- Investment gains: $469,547
Since the Start of The Experiment (1/1/2013)
- Days elapsed: 3,683
- Investment gains: $2,996,325
Despite the great month, I’m still a long way from reaching my all-time high of over $5,000,000 at the end of 2021.
I’ll get there again someday.
Beyond Money
This will be a year of big changes for Mindy and me:
- We’ll wrap up our project house in the next week or so. I owe y’all a video! Soon…
- We’ll complete the work on the house we live in this year. We probably should have done this before taking on another project, but I can see the light at the end of the tunnel.
- We are going to Cincinnati in March for EconoMe. (Enter MILEHIGHFI at checkout for a discount). Also, Doug and I will be hanging out at Rhinegeist on Sunday evening. Come say “Hi!” and we’ll hook you up with a Mile High FI t-shirt.
- After EconoMe, we head to NYC for pizza and long walks in Central Park.
- We have friends in Hawaii that we’ll visit in June.
- There is something else, but I’m not ready to talk about it yet. Stay tuned…
Perhaps we’ll see you on one of our adventures?
Tesla, Again
I heard someone say something like this recently:
Tesla is just a car company and should have the same value as Ford.
-random internet person
Let’s break this down.
Tesla is just a car company.
What about:
I acknowledge that these don’t contribute much to the balance sheet. Yet. Let’s back up a second.
Tesla should be thought of as an energy company. Currently, it happens to put most of its energy storage products (batteries) in cars, but that will change. Vehicles are part of the ecosystem that Tesla has built around energy. So are Megapacks.
Building batteries at scale is very difficult, so Tesla’s work take a long time to scale.
Tesla should have the same value as Ford.
This assumes that because two companies do the same thing, they should have the same valuation. Amazon and Target both sell stuff, so should they have always had the same PE ratio?
Of course not. PE ratios are based on growth rates. Now, compare Tesla’s growth to the rest of the industry:
As a growth investor, I care about what the business will look like in 10 years. Critics will argue that Ford will make EVs. That’s true. So will everyone else. But it’s not easy. Ford is ahead of most in the transition to EVs, but also acknowledges that it won’t make a profit from them until 2025 at the earliest.
Finally, there could be many black swans that could take Tesla out:
- Chinese manufacturers (both car and battery) are coming on strong.
- What happens if China invades Taiwan? Tesla’s most profitable factory is in Shanghai. Will the CCP shut it down?
- Tesla’s FSD efforts have been mostly a joke so far. Will Tesla get its pants sued off?
This is why I’m sticking with index funds.
More 1500 Days!!!
You can also find me (and the dinosaurs) at:
Mile High FI podcast:
Also here:
*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.
**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.
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