March 2025 update ($1,007,418 -$29,854 or -2.9%)

↑ EUR is up to USD by 3.8% or $12,370 for my portfolio
↑ GBP is up to USD by 3.2% or $2,530 for my portfolio
↑ Additional investment savings $2,500
Total gains: $17,400

↓ Emerging Markets Stock Index Fund is down by $4,735 or -3.2%
↓ Eurozone Stock Index Fund is down by $5,713 or -3.1%
↓ US 500 Stock Index Fund is down by $25,374 or -5.7%
↓ Global Small Cap is down by $6,331 or -3.8%
↓ Growth fund is down by $5,100 or -6.0%
Total losses: $47,254

Observations:

 

 I feel lucky to have a job and be able to advance my personal financial independence dream. I was pondering on the strategies I should take when the S&P500 is down almost 10% from its all-time high:

-          Should I use this opportunity and to buy in more S&P  + global small cap (over 60% is in the USA)? Most likely I need to work for 20 years before I can afford retirement. This means I can tolerate some market fluctuation in the coming years.

-          I feel that I am fairly diversified by having emerging market, eurozone and global small cap. Should I be going more towards bonds and precious metals (gold is all time at $3,085 per troy ounce (~31.1 gram))?

-          Should I be keeping cash for now, like Berkshire Hathaway and many others?

 I think that people have been accustomed to a steady ascent in U.S. Stocks. Buy low always seemed to pay off, often almost immediately. Typically, the government would step in and rescue businesses at expenses of the taxpayers.

 There is different game now, as the government is sobering up to $36 trillion national debt with bonds.  Even $154 billion saved by the Department of Government Efficiency (so far) barely dents $6.8 trillion is spending. The government is now paying $881 billion in interest and around $807 billion on wars and military (aka Defense budget). Rising interest rates making the repayment sums higher.

 I own stock not for the stability of the US – China /Rest of the world trade relationship.  I want to participate in the long-term growth of world economy.  I am not near retirement so I can wait until dust settles. For US to restart there domestic manufacturing and being energy independent is good thing for the rest of the world due to increased competition.  As I will be getting closer to retirement I need to invest more into the bonds, treasuries and precious metals to provide long term stability.

I am also re-framing the question: instead of thinking of not selling at absolute peak price, to measure how much I paid to begin with. Over past 8 years:

-    Emerging stock market – 4% a year
-    Global Small Cap - 6% a year
-     Eurozone – 6.5% a year
-      S&p500 – 12.5% a year

 I am sitting at a profit, not a loss. We live in a time where the stock’s market total return (changes in prices + re-invested dividends) is possible at relatively low cost. It wasn’t always the case and trading costs and fund expenses were vastly higher in the past.

Brokerage costs used to be exorbitant on small investments. In 1967, Murray Simpson of William Jennings & Co., a brokerage firm, stated in testimony to the U.S. Senate that an investor who put $100 apiece into 10 stocks would pay 6% in initial commissions and another 6% to reinvest any dividends.

 It worth to remember that the Dow didn’t surpass its 1929 high until Nov. 23, 1954, a quarter-century later. That doesn’t include reinvested dividends, but most investors surely took their dividends as cash in those days (with dividends reinvested you would get back by 1949, i.e. 20 years later).