The Second Longest Bull Market
Happy New Year! 🙂 I hope everyone had a great 2016. It’s somewhat surreal to see an economy that’s still struggling while the stock market has never been stronger. We are currently living in the 2nd longest bull market in American history, recently surpassing the 7 year streak that spanned 1949 to 1956.
2017 could be the year that we finally see a major market correction. But who knows? Maybe stocks will remain resilient and continue to climb for several more years! After all, the longest bull market ever lasted 13 years from 1987 to 2000.
Chart from http://money.cnn.com/
My goal of reaching freedom 35 means I need to be financially independent by 2022. That’s only 5 years from now! Can the markets continue to move higher until then? Well the 13 year bull market run from 1987 to 2000 shows that it’s indeed possible. 🙂 Like many other millennials, I began investing in 2009 by sheer luck, because that was the perfect time to get into the stock market. Maybe I can deleverage at the right time too, Haha. 😀
Future apoplectic haters will probably say, “Well of course he retired early. Any ninny with half a brain could have borrowed $500,000 to buy stocks and other financial assets between 2009 to 2022 and easily become a millionaire.”
And they would be correct. 🙂 But my question is why haven’t I heard of anyone else borrow $500,000 to invest right now? This is currently the best time of our generation to use leverage to potentially double or even triple our investment gains! Surely I can’t be the only one to see the advantage of borrowing money at 2% to buy and hold strong, reliable, blue-chip stocks like utilities and Canadian banks that have been paying 4% or higher dividends for decades, and are also expected to appreciate in value over the next 5 years. Call me crazy, but I want to get rich sooner rather than later, even if it means taking on a bit more risk. 😀
Anyway, December has been another amazing month for the markets. All stock indexes gained, including my new British equities purchased recently. It’s still very early to tell so I’ll continue to hold my U.K. index ETF, and see how it does over the next year or so.
Liquid’s Financial Update
*Side Incomes:
- Part-Time = $700
- Freelance = $900
- Dividends = $700
- Interest = $400
- Fun = $300
- Debt Interest = $1200
*Net Worth: (MoM)
- Assets: = $1,050,000 total (+12,200)
- Cash = $1,800 (-17,700)
- Canadian stocks = $135,100 (+5000)
- U.S. stocks = $83,200 (+3000)
- U.K. stocks = $18,600 (NEW!)
- RRSP = $75,100 (-200)
- Mortgage Funds = $30,200 (+3500)
- SolarShare Bonds = $10,000
- Home = $263,000
- Farms = $433,000
- Debts: = $479,500 total (-2,600)
- Mortgage = $185,500 (-500)
- Farm Loans = $191,800 (-600)
- Margin Loans = $59,000 (-300)
- TD Line of Credit = $16,700 (-800)
- CIBC Line of Credit = $9,500
- HELOC = $17,000 (-400)
*December Total Net Worth = $570,500 (+$14,800 / +2.7%)
All numbers above are in $CDN.
Good golly! What a way to end the year. 🙂 Thanks primarily to stock and farmland appreciation, my net worth has increased on average by over $12,000 per month in 2016. That’s totally dope! I can hardly contain my excitement! 😀 It was a gradual and steady process, but I’ve managed to somehow accumulate $350,000 of financial assets over the last 7 years. I wonder what amazing new serendipity awaits for my finances in 2017. 🙂 I guess we shall see. Good luck to everyone in the new year!
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Random Useless Fact:
Stingrays do not use their eyes to hunt for food. Their eyes are above their bodies, but their mouth and nostrils are situated on their underbellies.
Liquid,
A lot of people are totally against going into debt to invest. They consider debt as pure evil. For me, the interest rate of my line of credit is 5.91% as I do not have a house. My brokerage charges 6.2% for margin interest. So right now, I am not currently borrowing money to invest.
I have borrowed money in the past. A good example of leverage is when Derek Foster took out a loan at 8.5% interest to buy units of RioCan REIT which was yielding 11.5% at the time. I think that was 1999. RioCan was raising its distribution during those years, which meant he could outright own the units he purchased for putting down zero of his own money.
many credit cards offer 0 or 1 percent for a year.
I understand what you’re saying. I would also not borrow money to invest if my borrowing cost was above 5%, because then the odds become unfavorable to leverage. I haven’t heard Derek’s name in a long time. I wonder if he eventually caved and gotten himself a cell phone, lol.
We’re optimistic we’ll semi-retire around 2023 but we figure we need $1 M invested (not net worth) to do that. So, hopefully right behind you. Hopefully 2017 will be good to both of us moving in that direction…
“My goal of reaching freedom 35 means I need to be financially independent by 2022.”
Continued success in 2017!
Mark
I have a pretty good feeling about 2017. I see no immediate threat on the horizon that could undermine the financial markets. 🙂 Good luck Mark.
Now that you’ve had some time with your Interactive Brokers account, I am curious to hear how you like it?? I love the margin rates (you seem to as well) but I do not find the platform user friendly compared to the other 3 self-direct account I use. I was wondering how you like it so far??
Hi Shawn. You’re right. Their interface takes some time to get use to. Figuring out where to look for information using their desktop software is like trying to decode the matrix sometimes. Luckily they have a helpful chat feature. I had some questions regarding buying British stocks, like whether I should convert my $CAD to GBP first. I opened up the chat box, waited 10 minutes, and some person adequately answered my questions. As it turns out, you don’t have to convert the money prior to buying international equity.
So far I am liking Interactive Brokers. I give it 4/5. It does everything I want from a discount broker, except it doesn’t offer a DRIP service. Other than that one flaw, I have no complaints. The $1 trading commission is really nice, even though I don’t trade very often. Keep in mind I mostly just use my IB account to buy stocks and check my account balance and margin requirements. So I have no idea how good or bad their research and tools are. I still use TD and other sources for stock research since my RRSP and TFSA are still held at TD Direct Invest.
Hi,
I noticed your “home” in the asset section has been stuck at 263k for some time. With Vancouver real estate prices having gone up significantly in 2016, I’m sure your condo has gone up in value as well. Is there a reason you haven’t adjusted this number?
I update my home price once per year at the end of January. I calculate it using my purchase price of $230,000 plus inflation (CPI) every year. Canada’s 2016 inflation rate was about 1.5%. So in my next monthly update you will see a $4,000 increase to my home value. 🙂 This is why every update for the month of January for the past 7 years my net worth increases by more than usual. There’s probably be a better way to track my apartment’s market value, but at least this way it’s consistent. Like you suggest, the reality is that my home is probably worth a lot more than $263k today because real estate prices have grown faster than inflation since 2009. I’m okay with my estimate being on the conservative side.
Wait… there was a Stingray in the picture??
oh yeah.. Great job. I’m still waiting on final financial statements to see where I ended in 2016. I think I was close to increasing my NW by $100K over the year. Looking forward to a 2017 that I can make at least half as much.
cheers!
$100K increase in one year is impressive. I would also be happy if markets this year perform half as well as 2016. It can give some time for fundamentals and corporate earnings to catch up, lol.
Great year Liquid! We also had a stellar year at my house going from a net worth of 290K to 547K (likely will drop a bit when final income taxes are done). Still at +200K for the year I’m stoked!
Jumpin’ jellybeans! That’s an insane year over year increase. You obviously have the whole making money thing figured out. Maybe you can share some tips on how it’s properly done. 🙂
Stock/Bond/REIT/mortgage distributions are all great but the ROI isn’t killer 3-15% per year. But if you can buy into a specialized business with a sustainable bull market you can really capitalize and get 20%+ returns. In my case I bought into my dental practice and my yearly income went from ~240K to 350K+ and I was only an owner for 6 months of 2016.
Really other than that I’m just doing the same thing you’re doing leveraging funds at 2-3% and investing them in things that have better returns.
Very cool. I will try to find a specialized business too. I know a private B.C. optometry clinic that’s looking for investors. I will find out if that’s a suitable opportunity for me. Thanks for the tips. 🙂
Possibly. My wife is an optometrist, they have pretty good margins (double digits).
Way to go Liquid! A very impressive 2016, which I am sure will continue in 2017.
I hope so. Maybe we’ll see double digit gains again this year. 🙂
[…] and have been for well over a year. Stock investors like myself have benefited greatly from the second longest bull run in history. 🙂 But it’s becoming very difficult to find value in traditional asset classes […]