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

Year 2009 for me personally was an amazing comeback year, and totally beyond my wildest imagination.

I don’t know how many people out there can say this, but my net worth luckily almost recovered to the stock market peak of 2007. Without counting the 35+% loss in my home valuation, I’m just a couple of percentage point down from the peak. Counting the home paper losses, I’m still higher than the end of 2007. Throughout last year, there were numerous financial advisers cold-calling me to promise a retirement make-up plan. Unfortunately, most financial advisers know very little about stock markets. When the stock markets don’t behave like 2008, they are simply stunned without words. And of course, they dare to claim all the credits for the upturn of the year 2009 too.

Throughout 2009, I have positioned myself as short in the general market, and long in natural resource stocks. Most of my shorts were done through naked shorting the option markets at a higher strike prices. I phased in those shorts gradually, and before they turned into a big disaster, I have realized that the markets were not going my way at all. I probably have lost more than $30K in shorts through a notional shorting value of about $400K+, but the loss is not very significant in the grand scheme of everything. Even today, I still hold some short positions. And I plan to increase my short positions again as the year progresses.

What saved my portfolio & net worth throughout 2009 is my steadfast investing in natural resource stocks (more in mining sectors). I increased my original stake somewhat. I still hold almost 40% in cash, waiting for a pullback that never materialize. Year 2010 will be volatile for sure. I should have plenty of opportunities to put my money into work. My portfolio will not be wrecked with this high percentage of cash. Return OF capital is much more important than return ON capital.

Looking forward, I have the plan to get fully vested probably this year. The climatic fall should be behind us (or at least in the sectors that I invest). It’s possible that there is another big leg down, but that will definitely be a buying opportunity in my opinion. The long term pictures on bonds/cash are terrible. There will not be many places to hide.

Best luck to everyone,

Frugal at 1stMillionAt33.com

P.S. Just making sure that everyone gets this: I do NOT (and will NOT) invest in the general stock market, but only specific sectors. Such strategy has a particularly high risk, and it will not correlate with the general indexes. But it is the strategy that I have chosen, and I do NOT want to correlate to the general stock markets.