Quarterly Net Worth and Investment Review

July 12, 2009 by  
Filed under Investing

Now that our vacation is over and I am again immersed in the harsh realities of our financial lives, it’s time for a brief look back at what happened in the second quarter of 2009.

Net Worth

During the second quarter, our net worth increased 4.7%, which I am satisfied with, given the volatility of the markets. We continue to increase our cash position in anticipation of possibly changing our overall retirement investing strategy. I am reading but have not yet finished Zvi Bodie’s book on Worry Free Investing. I am a long way from pulling the trigger on an ultra-conservative investing strategy of the type that Bodie suggests but it is definitely on the table for consideration. Many of the investing “rules of thumb” have truly become “rules of dumb.” My job is to identify those “rules” that still make sense and those that should be discarded completely.

Investment Performance

Our year to date return on all investments (also known as our internal rate of return) stands at +6.6%. That compares favorably to the year to date performance of the Dow (-7.18%) and S&P 500 (-2.67%). Interestingly, the NASDAQ is up 11.35% YTD.  I suppose that’s what happens when folks are optimistic about certain tech stocks while financials continue to burden the broader indexes.

Another investment category I am following with curiosity is gold. The GLD ETF is up 3.54% for the year but down 4.4% in the last month. Once again, there is little to be learned from these numbers except that emotion appears to drive gold performance as much or maybe even more than stocks. If a nuclear event were to break out, I’m guessing GLD goes sky high. But who wants that?

OVerall, recent market trends are negative. I think it is clear that most of our managers of the economy have misjudged conditions, something Obama and Biden are now openly acknowledging. Investors are reacting accordingly, around the world. The predictions on whether deflation or inflation is in our near future are inconsistent.

All the more reason to take a close look at Bodie’s ideas. More on this later.

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