[quote=sdrealtor][quote=Coronita]Yeah, well I was one of the people that actually took some money off to the side to be a little more cautious. But you know when I did that, it wasn’t significant enough to save my accounts when the markets declined…since when the markets declined the rest of my portfolio took a hit…at the same time, when the markets climbed fast, my portfolio didn’t climb as fast…Slow going up fastcoming down still…Story of my life….I should have just left things alone…
50-60% is impressive. I think my 1 year underperformed @ 27%
50-60% would have been nice. no early retirement for me…[/quote]
Im sure you did great. Part of that roughly 60% was leveraged real estate though it wasn’t highly leveraged. Someone highly leveraged on real estate would’ve done amazing also. I’m sure we know at least one or two of those also[/quote]
As an accountant by profession, I almost have this instinct to track net worth/values/change in net worth, but for my personal funds/assets, I take a slightly different approach.
I do mark securities/stocks to market and combine that with liquid funds/change in debt to get a monthly/year to date net change.
For property, I track two values, a core equity value which is probably 30% below current market but more of a “if the world goes to hell value”.
I have a side calculation which I call “unbooked equity” or unrealized gains which is closer to the current market. I do slowly bring up the “go to hell value” over time to book a portion of the market gain. This practice is inspired by the accounting for German insurance companies which for many years held real estate at the acquisition cost which created “hidden reserves”. Of course, Warren Buffet would figure this out long ago. Still it does make me think of that summer back in Munich as an auditor after the wall came down.
If I go off the mark to market value, the 14 month gain since June 2020 is a solid 33% but overall lagging the market as I’ve kept about 10%-30% in cash to buy more property (10% current).
If I factor the “unbooked equity”, things look much better, and I come in at 53%.
I need to keep some perspective here, the amount is over $2M in gains in 14 months which is probably more than I will spend on discretionary items for a few decades. It certainly begs the question if going to work still makes sense.
My normal target return going forward is only about 4% which may well be too conservative. Eventually all the stimulus measures will peter out and the economy and real estate will converge at some natural growth rate which I estimate at about 1.5%. I’m not saying sell or even change the allocation, but I think the past 14-18 months have had greater returns than the next 5-6 years combined. Hope I’m wrong but am making long term consumption and spending plans based on what I think is a sustainable rate.
