Liquid Net Worth Update Q1 2022. +$85,000

Liquid net worth – January through March

Hey folks. Hope you all had a great quarter. 🙂

My IB portfolio returned 4% net of new deposits. Not too shabby. 🙂

Between my wife and I, our total liquid investments are now worth over $1 million! (green line below)

What I did over the last 3 months

The strategies that worked well for me in this period were buying the stock market dip and selling options. 😀

What didn’t perform so well were my tech stocks, which are almost all lower today than at the start of the year.

As long term readers know I like to be FULLY invested to not miss out on any bull market runs.

However, when the stock market dips I borrow additional money to purchase discounted stocks!
And there were some great deals over the last couple of months, especially growth stocks.

I always have a list of companies I want to buy. And when some of them got cheap enough I executed my strategy and purchased over $50,000 of stocks in Q1 of this year. 🙂

Buy when others are fearful, as Warren Buffett says.
And a lot of people in the market were fearful in late February.

If you follow me on Twitter you’ve probably seen me posting my live trades.
And if you’ve watched my recent YouTube videos you’ll know exactly which stocks I’ve been scooping up. 🙂
It’s mostly GARP stocks, businesses that grow but trade at a reasonable price.

In case you missed it, I explain why I love the GARP investment strategy in this video here.

Overall my portfolio has gained in value by $85,000 net of new borrowing. Yay! 😄

I do not recommend everyone try to time the markets like me. It can be quite risky.
But by sharing my thoughts, I hope others can make more informed decisions with their own money.

Portfolio breakdown

With all the recent ups and downs, here is how my liquid portfolio stands on March 31, 2022.

Liquid Assets:
Cash = $14,000 (-$11,000)
Canadian stocks & bonds = $424,000 (+38,000)
US stocks & bonds = $256,000 (+22,000)
Retirement = $268,000 (+33,000)
P2P lending = $21,000 (-6,000)
Mortgage funds = $46,000 (+1,000)
Total = $1,029,000

Liquid Liabilities:
Margin loan = $92,000 (-11,000)
HELOC = $10,000 (+10,000)
RRSP loan = $5,000 (+5,000)
Total = $107,000

Liquid Net Worth = $922,000 (+$85,000) + 10.2%

All numbers are rounded to the nearest $1,000 and in $CDN at 0.80/USD

Commentary:

I used a lot of the money to buy new stocks so my cash balance dropped. I also withdrew some funds from my Lending Loop account to invest in the stock market.

My margin account was running low on liquidity so I transferred in $10,000 from my HELOC, haha. Now I have a bigger margin cushion and a lower risk of receiving a margin call or forced liquidation.

By the next quarterly update I hope to have a liquid net worth of $1,000,000.

In my experience actively managing a portfolio can add a lot of value than a completely passive, index ETF approach. However, part of the reason this works for me is because I have a relatively large portfolio. For someone who’s just starting out with $10,000 or less in assets, it’s probably not worth the time and effort to spend hours each week studying the markets.

When in doubt always follow your instincts and trust your personal experience over what others tell you. 🙂

There is no way to know with certainty if a decision is the right decision, before you take it.
But for some reason that is what most people spend all their time trying to figure out. 😅

How likely is an upcoming recession?

There’s a chance the economy will head into a recession later this year, maybe 40%. And a greater chance, 70% some time in 2023. But a lot of it will depend on Central Bank policies. But if we see interest rates climb another 1.00% or more by December of this year, then most likely we’ll have a recession in 2023. If that happens, rates will be slashed once again on both sides of the border and we’ll probably see a decent stock market rally, mostly in the high growth companies. 🙂

In any case I do expect another 5% to 10% drop in the stock market before things get better. That doesn’t mean you should sit on the sidelines with cash. Historically speaking, investing when you have the cash produces better results than timing market dips. I’m just saying the market appears to be slightly overbought short term.

My plan for the next 3 months

I plan to by more Ethereum (ETH) as I believe the transition from proof of work to proof of stake that’s expected in June will create upward pressure on the cryptocurrency’s price. I will also continue to trade options and earn between $3,000 to $6,000 per month if the volatility index remains where it is today, around 25. The more option premiums I earn the more risk I take on.

I am being very careful about keeping my notional value below 120% of my net portfolio value in my brokerage account. The notional value is how much money I would pay in total to buy all the stocks that would be assigned to me if all my options were to expire in the money, lol. Very unlikely, but I suppose black swans exist, lol.

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Random Useless Fact:

Reconstructive surgery practices were being carried out in India as early as 2,800 years ago.