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Stocks Are Way Down

Interesting week I’m having. Stocks are down day after day and there’s no end in sight. It’s expected with the crazy rally the tech sector had the previous months leading into September. I did the smart thing and sold off everything that was up too fast. Emphasis on too fast.

My winners this year are: Square, Virgin Galactic, Tesla, Apple, and a few pharmaceutical companies I had no interest in other than they were super cheap. If you’re up over 100% on an investment in a recession, sell and get out if you haven’t already done so.

What goes up must go down and hard. Currently, all markets are in a bloodbath and anyone willing to invest should do so cautiously. Don’t get me wrong. I normally say it’s always a good time to invest no matter the current state of the economy. However, if you have nobodys and average Joes on Robinhood buying anything just because of the crash we had in March due to the coronavirus, you need to be realistic.

My portfolio is still in the green and my overall returns this year is +70%. Kind of makes me wish I wasn’t stuck to a normal nine to five job doing IT, but I’m only dreaming. I made off with several thousands in profit and still hold more to keep myself invested. Thanks for the wild ride.

2020: seriously, what the fuck.

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Down 30 Up 50

This year has been crazy for anyone invested in stocks. During the latter part of March, COVID-19 caused my stock portfolio to crash 30%.

First I panicked, but after some thought, I kept reinvesting into two sectors: pharmaceuticals and tech. I waited for the market to recover last month knowing that there would be a fast rebound and cashed out more than half of my holdings. I ending up buying Apple before their earnings report on the chance they would do their rumored 4–1 stock split. They did. Music to my ears.

I’ve avoided Tesla for a couple years now, but after the minor correction to $1300 and announcing their own 5-1 stock split, I dropped $2000 on Tesla for just over one share. This week has been cloud nine. Tesla had another monumental run up until today. Investors are buying like mad and pushed the stock past $2075 a share.

For the past 90 days, I’ve out paced the S&P 500 index by more than 35%, with an overall increase of 50%. In laments terms, for every $100 invested, I made back an additional $50. Fucking incredible.

Only in America where the economy can be in a recession and you can make serious money at the same time. This is insane.

I feel good. I feel blessed. Later world.

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Money Matters 101

In the never ending pursuit to live a comfortable lifestyle, I’ve been asked countless times how I save money. This question seems easy — just don’t spend it. However, there’s more to it and it’s not as simple as it seems.

For starters, there’s a difference from what you need from what you want. I want a new MacBook Pro and I want a new Rolex, but I don’t need it. Needs are possessions and services deemed essential. A few good examples are car insurance, my medication, and a cell phone. These things are absolutely necessary for my life and is a requirement for going about my daily life. I already have a MacBook and a fancy watch I never wear except on the most special of occasions. Buying something newer is just wanting what’s new and fresh.

I feel the urgency to want something and anticipating it is the main problem with out of control spending or being frivolous with my funds. If left uncontrolled, you run the risk of making it a habit to always want what you do not need.

The cost of the MacBook I want is about $4000. This figure is high because my last computer was fully maxed out when I ordered it. Take the cost of that computer or whatever it is you want and see how many hours you have to work in order to buy it. Remember your time is valuable and is a cost associated with trading your working hours with the cost of purchasing items. Do I still want it? No.

Tracking your spending is absolutely required. I’ve used Mint to log every transaction made on my credit card for almost a decade. I have close to ten years of history to show me my spending habits and if my previous months are above or below my average spending. Charts and data are your friend. Without it, the number in your bank account feels less like money and you can’t picture what dollars look like in your hand.

Speaking of banks, your typical bank offers less than 1% interest. Letting it sit idle in the course of a year means your $100 loses $3 at the end of the year. Inflation is the enemy. If you can’t beat it, you’re losing money by not making it work for you.

Go open up an online savings account and skip the one your local Chase, Wells Fargo or Bank of America offers. The fees are higher, the minimums are lengthy, and they absolutely are designed to keep trapped in a cycle of fees and penalties. Ally Bank is one of the most popular online banks, but even your local credit union might have competitive rates and accounts to fit your needs.

If you rather invest, here’s the blunt reality: do it now. The longer you wait to invest, the less you’re going to have when you retire. Every month, I invest a significant portion of my income into various stocks, mutual funds, and investments. You tend to have people tell you this, “I would but I can lose it all. It’s too risky.” While only somewhat true, money invested into an index that tracks the overall stock market is more likely to make you money in the next 30 years than you’ll lose. It’s not a matter of what you buy into but how often you keep investing. Thanks to the market crash this year from the coronavirus, I’m up 12 to 20% depending on which portfolio I look at.

If you don’t have 3-6 months of expenses saved up, do it now. The pandemic should be a harsh lesson for anyone who is unable to make ends meet. Granted there are multiple reasons why some live paycheck to paycheck, but expect other viruses to occur in the future. That is the truth. If you spend every dollar you make and don’t at least make an effort to save, you’re doing yourself a great disservice and these bad habits will boil over when you’re older.

The fact is you have to try. Discipline yourself to keep track of your finances and don’t go over budget. If you’re banking on the government to come save you, you’re delusional and in for a world of hardship when this repeats. Life isn’t all about money, but when the going gets tough or you have some unexpected expense happen, you’ll be thankful you can just take care of it without issue than keeping yourself at night wondering how you’re going to make it.

Later world.