Its that time of year again --the close of fiscal years means an overload of annual reports including Letters to Shareholders. Two annual letters that I read each year are those from Berkshire Hathaway (Warren Buffet) and Fairfax Financial (Prem Wasta). Both of these annual letter to shareholders have been posted in the past couple weeks for 2013.
Some highlights from Warren Buffet's Letter to Shareholders:
- Berkshire spent $18 billion on 2 large investments in NV Energy and Heinz and continues to look for more elphapents.
- Charlie and Warren have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing.
- The letter seemed overall upbeat with the primary economic concern being the timebomb associated public pension obligations.
Some highlights from Prem Wasta's Letter to Shareholders:
- Fairfax remains convinced that 2008 was a 1 in 50 or 1 in 100 year event that hasn't fully played out.
- Prem remains very concerned over the potentially devastating effects of a hard landing in China (as am I). He cites several stats including home ownership rates in China estimated to be over 100% versus 65% in the U.S.
- Inflation in the U.S. and Europe, after five years of huge fiscal stimulus, is still in the 1% area – and falling.
- Prem continues a very conservative posture to protect capital. He cites a Ben Graham warning in the letter - "Only 1 in 100 survived the 1929-1932 debacle if one was not bearish in 1925.’’ Prem indicates he continues to be early – and bearish!
Regardless of your economic persuasion, both these highly respected investors should be a must read.
Highlights for February
- We are in the middle of earning $1,000 in credit card signup bonuses for 2 credit card signups w/ spending requirements. Im not spending extra, but focusing our spending on these new cards to earn the bonuses.
- Our properties are listed on our balance sheet based on their cost basis, not current market value. We have done this during the the real estate market highs and lows. I believe real estate is too illiquid to list based on recent sale transactions. For those interested, our February Zillow property estimates are: $214,838; $130,790; $298,749; and $236,374 (total: $880,751).
- Our February net worth growth was better than I expected, largely due to paper gains in the stock market.
- We had additional reimbursements from my employer from our foreign work assignment last year which boosted our cash flow for the month.
- Otherwise February was a very quiet month for us. We have two looming purchases in the next couple months: a new roof for a rental property, and a replacement car for myself we are gearing up for.
January 2014 Investment Report:
- January was a bad way to start out the year, but our portfolio performed slightly better thank our benchmark (-2.94% vs -3.17%).
- We made our regular monthly investments in our Roth IRAs, and some dividends & dividend reinvestments.
- It was an active month as we took a more substantial amount out of our investments by selling portions of our Genworth (GNW) and Bank of America (BAC) holding as they hit new highs.
- I don't see a whole lot that I'm excited about in the short term so I expect I will be holding a bit higher amounts of cash this year until there is something compelling.
- Our recent monthly returns were: Jan 09 -4.98%, Feb -9.94%, Mar +8.45%, Apr +10.88%, May +4.65%, Jun +0.89%, Jul +9.94%, Aug +4.36%, Sept 3.15%, Oct -2.34%, Nov +5.83%, Dec +1.85%, Jan '10 -2.34%, Feb +2.25%, Mar +5.88%, Apr +2.54%, May -8.13%, June -5.64%, July 6.17%. Aug -4.87%, Sept +8.48%, Oct 2.47%, Nov -0.96%, Dec +8.01%, Jan 2011 +2.06%, Feb 2.57%, Mar +0.15%, Apr +3.04%, May -1.56%, June -1.63%, July -2.71%, Aug -5.42%, Sept -7.06%, Oct +9.88%, Nov -0.39%, Dec +2.10%, Jan '12 +4.03%, Feb +4.68%, Mar +2.35%, Apr -1.74%, Sept +3.47%, Oct 0.10%, Nov -0.20%, Dec +3.09%, Jan '13 +6.72%, Feb +0.49%, Mar +4.52%, Apr +1.30%, May +2.87%, June -0.97%, Jul +6.45%, Aug -3.67%, Sept +3.28%, Oct +5.09%, Nov +2.31%, Dec +2.20%, Jan 2014 -2.94%.....
Note this is our monthly personal investment portfolio report. I view our ability to invest with above average rates of return as the most important factor in reaching our financial freedom goals. This investment report covers our taxable portfolio and IRA retirement accounts. My 401k (which is roughly 1/2 our portfolio) is not included as the index funds it includes are not publicly traded and difficult to incorporate in this report.
Here are some updated charts on our net worth growth and investment portfolio with Yr2013 included:
Our financial freedom goal of $2million + our primary residence is getting closer to reality. If only we could have 4 more years in a row like 2013. Ofcourse if we did, inflation would be way higher than I expected.
2013 Investment Portfolio Return:
Note this is the first year I have ever taken out more than I have contributed to our investment portfolio (-$10,369.60). This is part of our re-balancing as I have increased our cash position to take advantage of future opportunities. We are still heavily invested in stocks overall. The VTI benchmark is calculated via the tracking of our own VTI investment in our portfolio to ensure return calculations are consistent.
5 Year Investment Portfolio Return vs VTI Benchmark:
I track our investment portfolio monthly and use those reports to estimate these returns. 2013 was a good year all the way around from a growth and return perspective. I also finally was able to beat my VTI benchmark return for the first time in 3 years. Still over the past 5 years I'm trailing just slightly. It is why I waffle so much on index investing vs my own investment approach. I recognize a key part for me to achieving financially freedom and more importantly maintaining that freedom is enhancing investment returns. However my track record still shows me I have more work to do and right now I'm just keeping up with the averages.
Highlights for January
- We jumped back into utilizing our credit score for $1,000 in credit card signup bonuses this month.
- Our properties are listed on our balance sheet based on their cost basis, not current market value. We have done this during the the real estate market highs and lows. I believe real estate is too illiquid to list based on recent sale transactions. For those interested, our January Zillow property estimates are: $214,401; $129,051; $299,015; and $241,164 (total: $883,631).
- Our January net worth growth was muted this month, largely due to declines in the stock market and offset by my employer's annual 2013 401k match paid out on Jan 1st. We ended up getting about ~$10k in 401k match at the beginning of the year.
- I installed a water heater timer to help continue to reduce our cold weather utility costs. So far so good - we haven't noticed any differences so far.
- We are starting to think about replacing my 1998 Nissan Sentra. The car did not respond well to being left idle for 7 months. I hit 200,000 miles on the car in May 2011 and was hoping I would be able to hit 250,000. Unfortunately we are not going to make it, but it was a great run. I only hope my next vehicle will hold up so well.
- My employer announced a sale of part of my business unit in January! I'm excited about the possibility of taking a new role and what future possibilities may be.
Last 15 Personal Finance Entries
02/02/2014 | Earning $1,000 in Credit Card Promotions
01/25/2014 | 2013 Passive Income: Dividends
01/19/2014 | Water Heater Timer Project
01/10/2014 | Investment Performance December 2013 (+2.20%)
01/05/2014 | December 2013 Net Worth Update (+$24,052)
01/01/2014 | Wrapped China Assignment, Round 2
12/17/2013 | Investment Performance November 2013 (+2.31%)
12/04/2013 | November 2013 Net Worth Update (+$23,958)
11/27/2013 | North Carolina 529 College Savings Plan Contributions No Longer Tax Deductible
11/12/2013 | QE: The Good and the Not So Good
11/05/2013 | Investment Performance October 2013 (+5.09%)
11/04/2013 | October Net Worth Update (+$40,500)
10/14/2013 | Packing Tips for Extended Family Travel
10/09/2013 | Investment Performance September 2013 (+3.28%)
10/07/2013 | September 2013 Net Worth Update (+$30,692)