State of the FIRE – Mar 2020


Investing, Strategy / Friday, May 1st, 2020

I have been avoiding taking account of the portfolio performance for March 2020. I’ve done my best to put it off. But even April has come to an end now and I know I can’t escape the inevitable anymore. I thought I had prepared myself for the bloodbath, having followed the roller-coaster ride, mostly a free fall, the stock markets have been on. And despite the knowledge and the preparation, I’m still shaken!

March Madness

This month, the crimson tide swept over the global economy as a whole and what came out at the other end was an unrecognizable mess. The otherwise quick-spinning world came to a complete halt while the stock markets moved more wildly and unpredictably than ever before.

The March madness began with the central banks of most countries including the Reserve Bank of Australia (RBA) and the Fed announcing a reduction in the base rates by as much as 50 basis points. Instead of giving confidence to the markets, it spooked them further and triggered another selling frenzy.

The next shock came with the Russia-Saudi Arabia price war. One of the biggest victims of the Coronavirus pandemic has been the travel industry. This, combined with the lack of any substantial economic output has put a lot of pressure on the oil & gas industry. And all this pressure brought out the fissures in the industry. When Russia refused to come to an agreement with OPEC to reduce oil production, Saudi Arabia took the war to them and increased their own production while reducing oil prices. And that news beckoned in the Black Monday of the 2020 crash.

Then arrived Black Thursday, when the markets suffered the largest single day fall since the share market crash of 1987. Attributed mostly to the escalating situation of the Coronavirus pandemic globally but mostly its increase in the United States and the travel ban imposed by Donald Trump on all flights to Europe.

The stock markets dipped to their lowest on 23rd March, but since then have been boyed up majorly on account of the fiscal policy measures that the global governments have been throwing at throwing to douse the pandemic.

All-in-all, March was the most volatile month on record with an average move of 4.8% on a daily basis. March also saw the global stock markets fall by 15% – 20%.

Combined Net-worth  

Our combined net-worth in March went the way of the stock markets, which is to say, down. Even though we invested around $4,000 in shares in the month, our overall portfolio fell by ~$5,000. Which means that if we hadn’t invested, we would probably have lost around $9,000 in terms of net-worth. That’s our combined savings of about 2 months. But the saving grace has been that we came to stand just below our Jan 2020 net-worth. 

Combined Net-worth – $131,779

Debt Outstanding – $0 

The proportion of stocks has gone down quite a bit this month from nearly contributing 42% of the portfolio in Feb 20 to now contributing around 40%. Even though the absolute value for Cash, Bonds & Super have reduced too, their contribution has gone up, because of the HUGE reduction on the value for Stocks. Gold, ofcourse, is having its heyday, coming dangerously close to the all-time high that it achieved in 1979-80 (on an inflation adjusted basis).

(Wo)Man vs Machine

We’ve only been doing this a few months and I’m already quite tired of losing from the Machine. With March having been the most unkind month in a decade, I’m not very hopeful from it either. Without further ado here’s how both the machine & I fared this month.

As Always, First Up the Machine

Performance Report of Roboadvisor from 1 Mar 2020 to 31 Mar 2020

Machine Portfolio Mix

Even though the Roboadvisor invested $1,000 into Aussie shares this month, their proportion still remains the same as that of last month. That would signify that the reduction in value of Aussie shares has been much more than that of Global & Emerging Market stocks. And because the contribution of Global stocks has actually gone up, they’ve done much better than Emerging Markets stocks too.

Machine Returns

While the ASX fell nearly 20% in the month of March, the Machine’s overall returns were down only 8.6%. VAS was the biggest loser at 17.4%, but the overall portfolio was saved by Gold, which grew at 3.7%.

And Next, the Woman  

Performance Report of Self-directed Investments from 1 Mar 2020 to 31 Mar 2020

(Wo)Man Portfolio Mix

You will see that the proportion of my investment in Shares has gone up slightly from last month. That’s because I’m making all of my investments in either Stocks or REITS. Gold & Bonds are just too expensive at the moment! And inspite of that, the % of my investments in defensive assets have gone up from 19.8%  to 21.0% over the last month. That’s because the value of Shares & REITs have gone down so substantially. Guess, my portfolio is balancing itself without needing much intervention from me.

(Wo)Man Returns

And now for the moment of truth. My overall portfolio returns fell by 9.95%. They would have been worse had it not been for  the wee bit of dividend that came through from STW . 

But yet again, I fared worse than the Machine. REITs were the worst performer in my portfolio falling 20.8% and for good reason. A large proportion of DJRE sits in commercial properties and is heavily reliant on rental income from them. With lock-down rules implemented all over, the prognosis for property value, particularly receipt of rental income has been quite poor. And as per my usual lament, I don’t have enough Gold in my portfolio to stay my heavy falls.

To sum it all, March was a bad bad month, for just about everyone, except for the Gold miners, I guess.

As Shakespeare had suggested, beware the Ides of March.

Ms. FieryIce

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