Investment Crisis

I’ve been having a crisis over the past two months in my main investment account. Performance has been lagging for a year and it isn’t one stock. I have exactly one strategy that now appears to not be working. I really didn’t have a backup plan so I have decided to take on some risk.

Part of the portfolio has been dedicated to FAANG and BAT stocks. This consists of Facebook, Amazon, Apple, Netflix, and Google along with Baidu, Alibaba, and Tencent. It has been interesting to watch these stocks rise aggressively (in aggregate) since my purchase. Some are neutral which is heavily offset by the rapid rise in Netflix.

The rest of the portfolio got trimmed down and I started to notice a trend. Some stocks would get hit with a bad news report. I began to look at history and noticed a lack of positive news articles. It seems my technical indicators are finding companies with non-top tier management teams.

It occurs to me that I should be looking for the best management teams in selected sectors. Yet while I can pick the sectors based on macroeconomic situations, I do not have the ability to select management teams. Okay, scrap that idea.

Today, I re-joined the American Association of Individual Investors (AAII) after a several decade absence. They have a model portfolio that looks really good on a ten-year basis but is below average on an eleven-year basis. The portfolio had a 50% loss in 2007. That is a nasty performance to overcome. Recently the portfolio has severely lagged as several stocks have had negative surprises. Technically I called these oval events due to the oval pattern that forms on their Bollinger Bands.

I am going to allocate a modest percentage to selected companies in the portfolio. This will be a test year.

It is interesting trying to figure out how to invest in a market where the Federal Reserve is raising interest rates, reducing its balance sheet, and the Federal Debt is rising at an accelerated rate. Add in an administration that is starting a trade war and the result is a situation that I am unfamiliar with.


Learning Plan

I’ve been told at work to spend some time learning additional topics at home on my own time. My primary focus for this year will be Docker and Kubernetes. From what I have read so far, both will be a challenge. I have become accustomed to configuring and using virtual machines over the past five years. I even have a document to guide me through creating one which takes about one hour.

Docker will eliminate the need for a virtual machine while Kubernetes will eliminate the need for the crontab I have on the VMs.

On the personal side, I have been working through Python and Django. While I am okay at Python, Django will be new to me. I took a class three years ago on PHP and learned enough to create a web page that interacts with a MySQL database. I have been working through the Django class for far too long and new to complete it early this year.

I have also decided to add on two other technologies. The first is Flask. This will be more useful at work than home, but it is not a suggested item at work. I am interested in making some RESTful APIs for some common data collection routines. We’ll see if the class will get me to my objective.

The second class is on D3. D3 (Data Driven Documents) is a JavaScript library for visualizing and interacting with data on the web. I attended a Data Jam session yesterday which was my first encounter with D3. The library is more complicated than I imagined and after a few hours, I decided to utilize the sale at Udemy and purchased a class.

That is quite a bit of learning that needs to be accomplished this year. I have come to a loose grip on the lack of free time I have access to during the week. It’s tough to accept since it puts pressure on the weekends. Dealing with my self-created deadlines will be my personal maturity achievement for the year.

Portfolio Status 2018

As we start 2018, it’s time for me to reset where my portfolio is. This follows from the idea of each part of the portfolio having a job. You will also see a trend of moving away from institutions and towards a people-focused perspective.

At the top of the portfolio are two retirement accounts — one a self-directed IRA and one a 401(k). The IRA is split between trend reversal dividend stocks and FAANG (Facebook, Apple, Amazon, Netflix, and Google) and BAT (Baidu, Alibaba, and Tencent) stocks. The 401(k) is all index funds. My choices there are high-fee, sector funds and low-fee index funds. I’ll choose the low-fee option almost every time.

Both of the equity funds have done exceptionally well this year. Since I am a macro-driven investor, I benchmark against a flat number.

I cannot reach my savings goal in those two funds alone. I save other funds into another equity account. This is guided by an investment writer that I have been following for years. He recently started an ETF guidance newsletter that seems promising.

The bond part of the portfolio has changed into two accounts. I have been allowing my Treasury bonds to mature and moving the proceeds into Lending Club and Fundrise. At Lending Club, I am focusing on well capitalized, short-term, credit card payoff loans, but in the medium risk profile. It has been hard to stay fully invested. At Fundrise, I have been involved in the long-term growth portfolio of real estate.

The cash part of the portfolio has changed from bank CDs to Prosper. Prosper is very similar to Lending Club, but I am not happy with the level of detail I have been receiving. Thus, my investment there is quite small and limited to well-capitalized, short-term, low-risk loans.

There are tax benefits to saving in the 401(k) and the IRA. Those two funds get the majority of my savings and that is causing an imbalance in the overall portfolio with respect to percent allocation by fund. The only way to resolve that is by increasing my saving percentage. I hope to have a quiet year regarding expenses and have plans to reach that savings goal.

The two retirement funds are designed to provide income at two phases of retirement — the 401(k) will be early and the IRA will be late. The other funds are all taxable and will be used as necessary.


I have encountered the word in the title of this post twice in the past week. It isn’t a word used often and the circumstances were so different that i decided to write about it.

The first occurrence was at work where I saw one person succeed with a simple and elegant solution to a problem while another person struggled significantly. From my perspective, they were using a multi-tool for a solution that only needed a hammer. They spent the majority of their time configuring the multi-tool while the person with the simple solution continuously refined their initial solution.

The problem was a categorization problem with a small dataset. Because the categories were known and there were only three, the multi-tool solution quickly showed it wasn’t the right way to tackle the problem because it got bogged down by the simplicity of the problem. It wasn’t applicable to the dataset. It was used because that was the only tool the person knew.

It seems the field of data science is so broad right now and I only know a few of the tools necessary to solve problems. I have encountered a few instances where I have defined what solution is necessary and told the person with the problem which person to talk to.

It is interesting to me that we are starting to reach a point where we have to solve every problem placed in front of us. Similarly, when did we have to have an opinion on every political situation in front of us?

There seems to be so many issues that I am being asked my position when it has no applicability to me.

By the way, when did the question become about my position rather than my opinion?

When I mention it has no applicability to me, I immediately get hit with the pronouncement that I have chosen the opposite side and my apathy will lead to the destruction of all we hold dear. I reject the existentialism that gets thrown at me. I do not think I have the power to exhibit that type of conclusion.

Take a breath. Find your center. See the other side.

February 2017 Participation Rate

Employment data was released today. The administration crowed about the gain and took credit. They are right to celebrate when reports like this go well. The participation rate moved up from 62.5% to 62.7%.

The good news — the participation rate for men 16 and older moved from 68.6% to 68.8% and women 16 and older went from 56.7% to 57.0%.

The bad news — the participation rate for men 65 and older moved from 56.6% to 56.7% and women 65 and older stayed at 16.0%, the highest number ever.

The news in-between — the participation rate for men between 16 and 24 years of age changed from 54.6% to 55.3% and women between 16 and 24 years of age changed from 52.6% to 52.9%.

Overall, the employed level went up 1.067 million jobs while the population increased only 164 thousand. A constant participation rate would have seen 343 thousand jobs created. This is a remarkable report. Celebrate indeed.

January 2017 CPI

The January CPI was recently released and showed quite an acceleration in inflation. The year over year rate is now 2.52%.

Components comprising 78% of the index are up 3.26% year over year. The rest of the components are showing -0.15% inflation. For several months now, inflation is increasing across a broader weight of components.