My 1st Million At 33 – yes, you can do it too

Note: the following is based on the closing prices of 12/31/06. My portfolio which is heavy in energy and gold has gone down by 5.4%, while my total networth went down by 0.73%, due to the recent market actions.
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On this website, I only have records starting from 5/9/06. From April 05 to April 06, I’ve made about 37% using other records that I have in Excel. From my Excel data, I estimate my portfolio since 1/1/2006 has returned 13.8% using final portfolio size on 12/31/06 (not including any cash). I think it’s fair that I’m not including cash as part of these calculation, since I’m using cash to substitute the “bond” portion to lower the volatility of my entire portfolio. Obviously, it would be very hard to get any 10+% return on bonds. My return on my cash is usually just the money market rates offered by the brokerage companies.

This return of 13.8% also does not account for the fact that I’ve grown my investing portfolio by a whopping 70% since 1/1/06 (from the history since 5/9/06, I grew my portfolio by about 35% using the size on 5/9/06). Overall I’m fairly pleased with my investment return. Here is a highlight of one of the most successful of my moves (in fact, I don’t trade that much at all as you can see that from the cash column of my networth history). For those of you who remembered my post about gold reaching bottom back on Jun 13, 2006, and getting 10%+ return in 10 days, guess what? I was extremely lucky to hit the exact bottom of this recent gold correction. It paid off. Now, just for that portion of stocks, they have returned about 38% in 6 months, better than HUI index. In fact, I think the highest that they went was almost 50%. Of course, don’t you wish that you have acted along with me? Well, hindsight is always 20/20. I also wish that I put a lot more cash to usage than just those. But things can always turn out differently.

Besides, all the actions in gold market, this year, I have benefited from the rise of water & uranium stocks, while got hit by natural gas and alternative energy investment. Oil/gas stocks were somewhat split. The non-dividend paying stocks did okay to well, while the dividend paying stocks got hit by the Canadian tax law changes.

Now, the only thing that has been constantly getting onto my nerves is the sheer size of my portfolio. But I still have 16% in cash relative to my overall portfolio size. In the beginning of the year, I actually had 34% in cash relative to my portfolio size. I have been using the high level of cash to reduce the overall volatility in my portfolio, since I don’t invest in any bonds or bond fund. I take a small hit on my cash return for being flexible in going in/out of the market instead of leaving them in bond funds.

I hope it will not happen in the future, but I can literally go down to below one million networth in less than a month. In fact, in about two months between 5/9/06 and 7/21/06, I lost 28.4% of my networth mainly due to my company stock options. It was certainly very hard to stomach such a horrendous loss. In fact, I probably won’t be recovering majority of that loss anytime soon.

I have also adjusted downward the already moderate valuation of my home by another 5%. Coupled with the updated mortgage balance, and misc, it was not such a big hit to my total networth.

Year 2006 was truly a wild ride for me. I hope 2007 would be easier on my stomach.

Here are some details in the same monthly format:
For the month of December from 12/1/06 to 12/31/06,

1. Networth is down by 2.97%.
2. Value of my company holdings (stock options, ESPP, etc.) is down by 3.73%
3. Everything else excluding my home and cash is down by 2.79%.
4. If including cash in #3, it’s down by 2.35%.
5. My savings of the last month were 0.14% of my total networth, and it will take 58.2 years to replace my networth.

For the past 8 months, 05/09/06 to 12/31/06,

1. Networth is down by 9.44%.
2. Value of my company holdings (stock options, ESPP, etc.) is down by 39.25%.
3. Everything else excluding my home and cash is up by 3.42%.
4. If including cash in #3, it’s up by 3.12%.
5. My savings since 05/09/06 were 1.04% of my total networth, or 56.09 years to replace all of my networth.

Special note: returns were calculated by subtracting 3.00% APR return of my cash position.