Tag: Finances

Categories
Earnings Economics Market Recap Stock Market

Stock Market Recap & Outlook (2/24/23) – Inflation is back! FOMC minutes and PCE shock!

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Market Review

This shortened holiday week ended up being another losing one, held down by the same issues that beat down price action last week. There’s a lingering sense that the market was due for consolidation and a growing idea that the Fed will keep rates higher for longer.

Fed concerns were the focus midweek when the FOMC minutes for the February 1st meeting were released. They weren’t aggressively hawkish or dovish, their default position continues to be a rate-hike position.

Markets are aware that many of the data releases since the last FOMC meeting are not likely to change the Fed’s mindset. A stronger than expected January employment report, the stronger than expected ISM Services PMI, the January CPI and PPI reports, all capped off by this week’s stronger than expected core PCE, which is the Fed’s preferred inflation measurement.

After the hot PCE reading on Friday, St. Louis Fed President Bullard said that “it appears that the Fed may be able to disinflate in an orderly manner and achieve a soft landing”.

Prior to that, there was some movement higher on Thursday, following NVIDIA’s ($NVDA) earnings and positive guidance. However, the market primarily had downside bias this week and took out its 50-day moving average before testing the 200-day average.

The Treasury market was boosted off of the price action in equities this week, creating tough competition for returns from stocks. The 2-year note rose to 4.78% and the 10 year note rose to 3.95%. The dollar index also rose this week by 1.4%.

None of the 11 S&P sectors made gains this week. Energy was close at -0.04% while consumer discretionary and real estate were hit the hardest will losses over -4%.

Below are summaries of daily price action throughout the week:

  • Tuesday
    • The week started lower on increasing geopolitical tensions and continued money being taken off of the table following last month’s rally for a close under 4,000.
    • News reports state that China’s President Xi Jinping may go to Moscow in April or May to meet with Putin and encourage peace talks, a view that seems to run counter to the assumed supportive relationship between Xi and Putin
    • Disappointing guidance came from Home Depot ($HD) and Walmart ($WMT) and helped push consumer discretionaries down to last place.
    • The January Existing Home Sales fell -0.7% to 4 million (consensus 4.12). Key takeaway is that sales are still under pressure of high mortgage rates and economic uncertainty. This keeps homes on the market for longer and may cause a moderation in median prices over time.
  • Wednesday
    • The day started on a positive note, but moves were modest as the market waited for the release of FOMC minutes.
    • The FOMC minutes indicated that “more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path.” A number of members also wanted raise rate by 50 points at the meeting
    • .Immediately when the minutes were released, price action in the market whipsawed before settling into a slow decline
  • Thursday
    • This day was a more upbeat day, breaking a 4 day losing streak on $SPY following the earnings and good guidance from NVIDIA.
    • Prices got pushed down as other disappointing earnings came out ($EBAY, $DG, and $DPZ are some names that come to mind in that regard). The key takeaway was that consumers are slowing their discretionary spending causing slower growth and further cuts to earnings estimates in the sector, all while the Fed looks intent to raise rates higher.
    • Downside pushed the S&P below the 4,000 level and its 50 day SMA. Buyers stepped in and finished the session with decent gains.
    • Initial Jobless Claims declined to 192k (consensus 200k) and continuing claims decreased to 1.654M. The low levels of initial claims contribute to expectations for the Fed keeping rates higher longer.
    • The second Q4 2022 GDP estimate showed a downward revision to 2.7% (consensus 2.9%). The drive down was moved by less personal spending which was partially offset by an increase in non-residential investment. This could be an off-putting mix for the Fed. Growth and inflation is still running hot, one of them must give.
  • Friday
    • The week ended with board-based selling following the hotter than expected PCE reading.
    • The Core-PCE price index rose 4.7% year-over-year versus 4.6% in December. Real disposable income was up 1.4% month-over-month and personal savings rate increased to 4.7%, indicating that consumers can keep spending.
    • The key was that the report showed inflation, not disinflation, and good spending potential which can keep the economy running above potential. That combo causes concerns about inflation being sticky and prompting the Fed to stick to tightening for harder and longer than expected.
    • The S&P closed below its 50 day SMA and tested its 200 day SMA, recovering a bit from the lows of the day before close.

Dividend Dollars’ Outlook & Opinion

That’s it for the recap. Now for my opinion!

This week was another week of consolidation and modest losses that we have been discussing in this outlook section for 3 editions now.

This was a light week in terms of quantity of economic data, however, the few releases we did have were heavy hitters. The Core PCE reading confirmed that the inflation moderation which began in June of last year has mostly leveled off, and at a level that is much higher than the Fed would like. Pair that with the fifth straight week of initial jobless claims under 200k, and you can see that the labor market is strong and able to withstand further tightening.

Earnings continued this week with 55 S&P 500 participants reporting. 44 of them beat EPS expectations. Overall, 98% of the S&P stocks have reported. Below so far are the aggregate beat rates this quarter compared to prior quarters. These figures are tracked using MarketBeat.

Now moving on to technicals. Last week pointed to slightly bearish with high volatility, and that was what we got! Within a month after the SPX broke through the long-term downtrend (red channel), 4,100 level (top green line), and hit a technical golden cross, did it struggle to keep strength. SPX broke through support at the 50 day SMA on Friday, and has the 200 and 100 day SMA not far under it for support and are converging with the downtrend. Who knows if these will hold, but they should at least slow the downtrend.

Other metrics have shifted moderately bullish. VIX put OI grew more than call OI, SPX call OI grew more than puts, and call OI for major ETFS also grew more than puts for the week, a moderately bullish change. However, the Vix volume put to call ratio moved from neutral to moderately bearish this week at 0.34. SPX volume put to call ratio looks neutral.

Overall, technical have deteriorated and inflation is not moderating. With earnings season basically over, three weeks till the next inflation report, four weeks till the next rate hike, the market may move on news headlines and Fed speak more than usual in the near term.

Technicals and inflation look we move down, a number of metrics have improved and look like we move up, and major economic releases are a few weeks out. Short term time frame looks to be volatile and set up for an oversold bounce before chop and downtrend continues. With that said, I’m neutral for next week and could see the market being moderately down or up. This is one of those weird weeks looking forward where all this analysis may not really help!

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Earnings Economics Market Recap Market Update Stock Market

Stock Market Recap & Outlook (2/17/23) – Continued Earnings and Mixed Week

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Market Review

The major indices ended down this week for the second week in a row, first time in 2023. Instability in the market was driven by reactions to economic releases and Fed comments throughout the week.

MoM inflation data in the January Consumer Price Index (CPI) was not pleasing, but the report showed continued deceleration on a YoY basis. Services inflation, the section that the Fed seems to care about the most, was the exception with a jump to 7.2% YoY from 7.0% in December.

Then a stronger than expected January retail sales report, higher-than-expected producer price data for January, and another remarkably low level of weekly initial jobless claims were released in the following days.

The positive economic news paired with accelerating services inflation, fueled concerns about the possibility of the Fed raising rates more and keeping them higher for longer than previously expected.

Fed comments this week seemed to corroborate those concerns. Cleveland Fed President Mester said she advocated for a 50-basis point rate hike at the last meeting,  St. Louis Fed President Bullard shared the same sentiment, and Fed Governor Bowman said that hikes are needed until “a lot more progress” has been made on inflation.

5 of the 11 S&P 500 sectors made gains week led by consumer discretionary (+1.6%) and utilities (+1.1%). The energy sector (-6.3%) was the worst performer by a long shot with falling oil prices.

Below are breakdowns of daily action for the week.

Monday:

  • A quick dip right out of the gate had the S&P 500 slip below the 4,100 level before buyers stepped in and a rally effort took root.
  • Mega caps were driver of index gains. Meta Platforms ($META) and Microsoft ($MSFT) each rose more than 3.0% on Monday with no specific catalysts.
  • The NY Fed’s Survey of Consumer Expectations showed that inflation expectations are stable, but household income growth expectations have dropped.
    • “Median inflation expectations remained unchanged at the one-year-ahead horizon, decreased by 0.2 percentage point at the three-year-ahead horizon, and increased by 0.1 percentage point at the five-year-ahead horizon, to 5.0%, 2.7% and 2.5%, respectively.”Disagreement on these figures decreased slightly YoY
    • The median expected growth in household income dropped to 3.3%. This is the largest one-month drop in the 10-year history of the series and is the first drop since last September.

Tuesday:

  • Tuesday’s trade was mixed as investors digested the January Consumer Price Index (CPI) released in early hours.
  • Total CPI increased 0.5% MoM (in line with consensus) and is shown in the graph below. Core-CPI increased 0.4% MoM (in line with consensus).
  • On a YoY basis, total CPI was up 6.4% (the smallest 12-month increase since October 2021) and core-CPI was up 5.6% (the smallest 12-month increase since December 2021). The YoY levels were not as low as expected AND services inflation hit 7.2% YoY from 7.0% last month.
  • The key CPI takeaway is that there has been a clear deceleration from peak inflation; however, the inflation rates are nowhere near low enough for the Fed to even think about cutting rates this year.
  • The market moved higher shortly after the open. The early gains faded, and the S&P 500 briefly slipped below the 4,100 level. There was a bounce late day and closed the session above intraday lows. 
  • Treasury yields seemed to have a more concrete reaction to the CPI data as yields jumped and closed higher.

Wednesday:

  • Ahead of Wednesday’s open was the retail report, which reflected continued strength in the economy, but left the market concerned that it boosts the likelihood of higher rates. Total sales in January were up 3.0% MoM (consensus 1.7%) and sales, excluding autos, up 2.3% ( consensus 0.8%).
    • The key takeaway from the report is that consumers were spending freely on goods in January despite inflation pressure; in fact, every single sales category showed a MoM increase, led by a 7.2% surge in sales at food services and drinking places.
  • The January Industrial Production came in flat (consensus 0.5%) and Capacity Utilization came in  78.3% (consensus 79.1%).
    • The soft reading for January can be attributed entirely to a drop in utility output. Otherwise, there was some strength in mining and manufacturing output, the latter of which saw advances in durable, nondurable, and other manufacturing activity.
  • Equities started down, but true to 2023 form, investors stepped in to buy the early weakness. The main indices all closed the session at or near their best levels of the day.
  • High-beta stocks, uplifted by the positive earnings news and guidance from the likes of Airbnb ($ABNB), Roblox ($RBLX), and Analog Devices ($ADI), helped Wednesday’s gains.

Thursday:

  • Thursday was down in the start and the finish. The negative bias was brought on by the higher-than-expected Producer Price Index (PPI) number for January and another low level of weekly initial jobless claims, which fueled concerns that the Fed will not pause its rate hikes in the near future.
  • January PPI came in at 0.7% shown below (consensus 0.4%) and Core PPI at 0.5% (consensus 0.3%).
    • The key takeaway from the report for the market is that headline inflation was hotter than expected on a monthly basis and causes concerns about inflation pressures persisting at higher levels for longer than expected.
  • Weekly Initial Claims shown below came in at 194K (consensus 203K) and Continuing Claims at 1.696 million
    • The persistence of initial claims below 200,000 reflects a very tight labor market, and a reluctance to cut workforces, which will continue to drive worries at the Fed about tight labor market conditions feeding into stickier wage-based inflation pressures as reflected in high service readings.
  • The market recovery mid-day coincided with buyers stepping in when the S&P 500 breached the 4,100 level, along with Treasury yields backing down from their post-data release highs.
  • There was a steep reversal in the last hour that had the major indices close the session near their worst levels of the day, which took the S&P 500 below 4,100 again.
  • The late afternoon plunge was precipitated by Fed speak we previously mentioned (except for Mester, who spoke prior to the plunge).

Friday:

  • The stock market opened weak continuing Thursday’s downside momentum.
  • Treasury yields began to settle and stock sentiment shifted slightly higher.
  • Ultimately, the indices closed the session near their best levels of the day even though some mega cap names were not following.

Dividend Dollars’ Outlook & Opinion

That’s it for the recap. Now for my opinion!

This week was another week of consolidation and modest losses and matched perfectly with the “technicals suggest a flat or slightly bearish week ahead” call from last week’s report. This is the second week in a row of this since I called for a slowdown in the market outlook from 2/3/23.

We had two key inflation reports with the CPI and PPI, both came in well above their estimates causing a fair amount of volatility. One flaw from this report last week was that I did not touch on the coming PPI report. Historically, the PPI tends to not move the market as much as the CPI, however the bigger miss on PPI proved otherwise this week.

As you can see in the chart below, while still quite historically high, the YoY PPI (white) and CPI (blue) peaked in June of last year. They continue to trend lower.

Earnings reports this week had 59 reports of the S&P 500 companies, putting us 81% of the way through earnings season. 41 of the 59 this week beat EPS expectations, below so far are the aggregate beat rates this quarter compared to prior quarters. These figures are tracked using MarketBeat.

Now moving on to technicals. Only three weeks after the SPX broke above the long-term downtrend (red channel), broke above resistance at 4,100 (top green line), and hit a golden cross (white arrow) and the SPX has struggled to hold the support line at 4,100. The first half of the week looked decent, but the last two days did not. Ending the week under that level and establishing a new low on 2/17 compared to the last low on 2/10 looks like a technical breakdown. SPX may be trending in the down direction in the near term.

Other metrics have shifted into bearish territory since last week. SPX OI changes grew more this last week on the put side which is moderately bearish. ETF OI changes were slightly more on the put side, but not enough to make it bearish, I consider this to be neutral. The VIX open interest put/call ratio is down almost 10% this week, this movement follows the VIX index and implies that VIX is likely to go higher moderately in the near term. This is slightly bearish. SPXOICPR saw a similar move.

Overall, metrics like the above, failure of near-term technical support, hawkish Fed comments, a concluding earnings season, a five week wait till the next FOMC meeting, and mixed economic data all make the market look fairly mixed or slightly bearish in the near-term. Next week is light on the economic data front except for Core PCE (the Fed’s preferred inflation gauge) out on Friday. With a holiday on Monday and an apparent waiting period till the big Core PCE report on Friday, I’m anticipating a choppy week till end of week with Core PCE determining the final move.

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Earnings Economics Market Recap Market Update Stock Market

Stock Market Recap & Outlook (2/3/23) – Continued Earnings and FOMC Meeting

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Market Review

This week started slowly as the market looked to take some money off the table following a strong January and waiting for the FOMC meeting. On Monday, the Nasdaq and S&P 500 were up 11% and 6% for January.

The slow Monday was kicked off by an article in WSJ by Nick Timiraos (chief economics correspondent for WSJ and Fed’s assumed preferred source for divulging information to) indicating that Fed officials were concerned that inflation could return to higher levels due to tight labor markets. He added that the Fed’s interest rate strategy could depend on how much members believe the economy will slow.

Anticipation of the Q4 Employment Cost Index, the January ISM releases, and the January Employment Situation Report and over 100 S&P 500 companies reporting earnings this week also added to the slow start.

The momentum changed on Tuesday as the market looked to end January with some gumption. A well-received Q4 Employment Cost Index and weaker-than-expected January Chicago PMI and Consumer Confidence data also may have led to the idea that the Fed may look to pause rate hikes.

The latter point was corroborated by another Nick Timiraos article that suggested the Employment Cost Index report could increase the possibility of Fed officials agreeing to pause the rate hikes sooner rather than later.

Wednesday came in strong to kick off the month of February . This followed the FOMC’s unanimous decision to raise the target range for the fed funds rate by 25 basis points to 4.50-4.75%, as expected. In the press conference afterwards, Powell did not go out of his way to rein in the market’s enthusiasm.

Mr. Powell acknowledged that the “Full effects of rapid tightening so far have yet to be felt and we have more work to do.” Core services inflation is still running too high, which creates a basis for ongoing rate hikes. Overall, though, Mr. Powell was generally encouraging about the signs of disinflation.

Also, he did not strictly express disagreement with loosening financial conditions and maintained that he thinks there is a path to getting inflation back down to 2% without a significant economic decline or increase in unemployment.

A huge earnings-driven gain in Meta Platforms ($META) kept rally effort strong at the start of Thursday’s session. The earnings results and reception of the FOMC materials encouraged a sense that earnings growth and monetary policy may be better than feared this year.

Some data releases on Thursday also helped with the market’s move higher. The Q4 Productivity report showed a drop in unit labor costs, an affirmation of falling inflation costs. Separately, weekly initial jobless claims hit their lowest level (183,000) since April 2022, providing additional confirmation of a strong labor market that could absorb the impact of a soft landing.

The rally did hit a speed bump at the 4,200 level for the S&P 500. The market may have reached an overextended area, though it did not last long as the main indices were able to climb back towards session highs ahead of Thursday’s close.

However, Thursday wasn’t all sunshine and rainbows as a sizable loss in Merck ($MRK) after its quarterly results kept the price-weighted Dow Jones Industrial Average in negative territory for most of Thursday.

Friday turned out to be a losing session with disappointing earnings and/or guidance from Alphabet ($GOOG), Amazon.com ($AMZN), Starbucks ($SBUX), and Ford ($F) despite a strong gain in January nonfarm payrolls (+517,000) and a stronger than expected January ISM Services PMI (55.2%) that returns the index to growth levels.

The strong data created some doubts as to whether the Fed will pause its rate hikes soon and cut rates at all before the end of the year, contrary to the case for rates in the early weekdays.

The fed funds futures market is now accounting for the prospect of a third 25 basis point rate hike in May. According to the CME FedWatch Tool, the probability of a rate hike in May, in addition to the one that is fully priced in for March, increased to 48% from 33% last week.

Many stocks pulled back on profit-taking efforts following the earnings and economic news. Apple ($AAPL), was the exception. Apple declined 2% off the open but quickly bounced and finished the day up 2.4%.

Only three S&P 500 sectors registered losses this week — energy (-5.8%), health care (-0.13%), and utilities (-1.42%) — while the communication services (+5.26%), information technology (+3.71%), and consumer discretionary (+2.34%) sectors logged the biggest gains.

Dividend Dollars’ Outlook & Opinion

That’s it for the recap. Now for my opinion!

This week crushed my moderately bullish outlook from the prior week. The market is at nearly a 9% in a little more than a month and have given back very little, even with earnings season being a bit mixed!

Q4 earnings season has reached the halfway point so far. 103 S&P 500 companies reported earnings and 74 of them beat consensus expectations this week. That puts us exactly at 250 of the 500 reporting results. The average EPS and Rev beats both increased this week, to 70% and 52% respectively. From a growth standpoint, these results are still lower compared to YoY results from last Q4. This information is tracked using MarketBeat.

Since the market broke out of the long term resistance, it has been off to the races. As we mentioned last week, the next point of resistance was around the 4,100 area that had rejected three times prior. The market broke through that level on Wednesday with strength. Then, on Thursday, we got a golden cross when the 50-day SMA moved above the 200-day SMA (yellow circle) which is a bullish technical indication.

Now that the market is above the 4,100 area, that resistance has turned into support and will be an area we want to watch if we see a small retracement in the coming days.

Overall, after a tough 2022 with lots a tax-loss harvesting ending the year, traders’ cash piles appear to be getting put to work. Communication, Consumer Discretionary, and Tech sectors priced significantly lower than where they were a year look like the areas that the cash is getting sent to. However, with a gain of almost 9% YTD, almost 3% of that coming from this week, it’s been a little too much too fast.

Vix OI change this week looks to be moderately bearish, SPX OI change is moderately bullish, ETF (SPY, QQQ, DIA, and other key ETFs) OI change is moderately bearish. The OI put call ratios for those items are neutral, moderately bearish, and moderately bearish respectively.

Vix levels in general are in the normal zone as of Friday’s close, with futures trading just slightly higher. Both are neutral indicators.

Economic data for next week is sparse, with the main items being jobless claims and consumer sentiment reports. I’ll be curious to read the wholesale inventories report and the consumer credit report, though these rarely have effects on the market.

With earnings season now past the halfway point, the next fed meeting 6 weeks away, and a number of mixed Vix and option indicators, I wouldn’t be surprised to see a bit of consolidation or small moves for the next few weeks.

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Economics Market Recap Market Update Stock Market

Stock Market Week in Review (12/30/22) – 2022 End Without a Bang

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Review

The last week of 2022 shaped up to be a disappointing one, similar to the whole of the year. With all the major indices finishing the year off quite lower than where they started. The S&P 500 ended down 18.2%, The Nasdaq 100 ended down 33.6%, and the Dow Jones Industrials ended down 8.6% .

The Santa Clause Rally never really seemed to kick off and Q3 earnings season is now over, with the next not starting for about two more weeks.

The major indices remained under pressure from continued weakness in some of the most beaten-up names this year. Specifically, mega cap losses accelerated this week on lingering valuation concerns and presumably tax-loss selling activity by participants who bought into the seemingly invincible stocks last year.

Some of the mega cap names aren’t so “mega” any more given the massive loss in market capitalization they have suffered this year. The Vanguard Mega Cap Growth ETF $MGK fell  0.3% this week and 34.0% for the year.

The Santa Claus rally period, which is the last five trading days of the year and the first two trading sessions of the new year, has gotten off to an uneven start. It is believed to be a good sign for how the new year will start when this period produces a cumulative gain over that stretch. 2022 was a definite exception to that belief. Recall that the 2021 Santa Claus rally produced a net gain of 1.4% for the S&P 500 and yet the S&P 500 declined 5.3% this January and 5.0% in the first quarter.

It looked like Santa Claus might come charging to town following Thursday’s rally. The S&P 500 closed the session just a whisker below the 3,850 level, where it has remained since mid-December, but then backed off again in Friday’s trade.

When this year’s Santa Claus rally period began, the S&P 500 stood at 3,822.39. The S&P 500 closed Friday’s session at 3839.50 after visiting the 3,800 level.

It was also a disappointing week in the Treasury market. The 2-yr note yield rose 10 basis points to 4.42% and the 10-yr note yield rose 13 basis points to 3.88%.

The bump in yields was another headwind for equities, particularly the growth stocks, which was the case all year. The Russell 3000 Growth Index fell 0.3% this week, and 29.6% for the year, versus the Russell 3000 Value Index which rose 0.1% this week and fell 10.1% for the year.

Separately, Southwest Air $LUV was an individual story stock of note after the airline canceled thousands of flights due to the winter storm. Tesla $TSLA was another focal point, trading in roller-coaster fashion. The stock hit 108.76 at its low on Tuesday, leaving it down 69.0% for the year, but managed to rebound and hit a high of 124.48 in Friday’s trade.

Only 3 of the 11 S&P 500 sectors closed with a gain this week in thin trading conditions. The financials sector rose 0.74%, the energy sector rose 0.47%, aided by a bump in oil prices above $80.00/bbl, and the communication sector rose 0.40%. Meanwhile, the materials and consumer staples sectors were the worst performers with losses of 1.07% and 0.84%, respectively.

The economic calendar was light on major releases this week. Featured reports included the November Pending Home Sale Index, which declined 4.0%, and continuing jobless claims for the week ending December 17, which hit their highest level since February (1.710 million). Next week will see many major releases that includes the December ISM Manufacturing Index, the December Employment Situation Report, and the December ISM Non-Manufacturing Index.

Dividend Dollars’ Opinion

That’s it for the recap. Now for my opinion!

Last week I was correct in not expecting any major move in one direction or the other. The SPX ended only 6 points lower this week than where it ended last week!

It appears that the Bear Market level is being confirmed as a key level of resistance. And with all major moving averages above the that level, there is not much happening in form of support below our level.

We have been basing at this level for 8 days, which makes me think the next move in either direction will be a significant one.

With the next earnings season still two weeks away and the next rate hike still about four weeks away, the dip buyers are likely to step in again, now that the tax-loss harvesting season has ended. Most people like to buy things when they are on sale, and right now the SPX is 20% off.

Data releases on the ISM Index and Unemployment next week could be the items that have the largest impact.

January will be the month the watch for next year. Given the end of tax-loss harvesting and the fact that we are a few weeks away from key economic data releases and the next Fed hike, I think bargain buyers could push the market higher for next week, or even the week after that putting the January Effect in full swing.

The January Barometer also shows that January overall will be the month to watch. The barometer is: If the Standard & Poor’s 500 market index ends January higher than it started, the rest of the year will follow suit, and vice versa. the January Barometer has registered only 11 errors between 1950 and 2021, giving the indicator an accuracy ratio of 84.5%.

With all of that in mind, I think we see a short-term bounce before possible drawbacks caused by earnings disappointments, Fed hike, and other key economic data bring the market down to a lower level in January.

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Economics

Stock Market Week in Review – 10/7/22

This weekly market recap is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. Click the link above to get a special offer only for Dividend Dollar readers!

Weekly Review

2022 Q4 is off to strong start! There was a decent rally on Monday and Tuesday as the market assumed the Fed would slow their rate hike approach soon. A pullback in Treasury yields from last Friday’s close helped push upside higher in the beginning of the week.

The 10-year T notes was at 3.79% last Friday and fell to 3.62% by Tuesday’s close. The two-year note fell 0.12%. At the same time the S&P, Dow, and Nasdaq all had gains of over 5.5%.

The assumption that the Fed would slow was helped by the lower-than-expected ISM Manufacturing and Construction spending and the lower than expected 25 basis point rate increase by the Reserve Bank of Australia.

All did not remain sunny unfortunately, the week ended with a sell off. Treasury yields moved up and the September Employment Report was a reality check for the idea that the Fed would be less aggressive sometime soon.

The employment report showed continued strength in the job market, extra fuel for an aggressive Fed. There were also some hawkish Fed talks this week; Atlanta Fed President Bostic said that the inflation fight is still in its early days and the Minneapolis Fed President Kashkari said that he is not comfortable pausing until there is evidence that inflation is cooling.

Global politics also caused some worries that were in play for the week. OPEC+ announced a production cut of 2 million barrels per day starting next month. This sent oil prices surging with WTI crude futures rising 17.3%. The surge in oil prices kept the energy sector’s gains intact this week. It outpaced the other sectors in the S&P by a margin of 13.9%. On the other hand, the real estate sector suffered the most with a 4.2% loss.

The 10-year yield ended the week at 3.88%, the two year rose to 4.3%. Despite heavily losses on Friday, the market was able to hold onto some gains. The S&P was us 1.5%, Dow 2.0%, and Nasdaq 0.7%.

The data release schedule has some events to keep eyes on. Pay attention to the FOMC minutes on Wednesday, the CPI reading on Thursday, and the retail data on Friday.

As I said last week, inflation has not waivered much, the job market is still healthy, and the average consumer is still doing fairly well. The data continues to show this; however, the data is delayed by a few weeks or a month depending on the report. Because of this delay and because the effects of a hike take time to materialize in those areas, it’s becoming more likely that the Fed stays aggressive with their rate hikes and may push the economy off the cliff before they’ve had time to realize that we’ve missed the window to ease. Be ready for much more losses in the long term, in the short term we could see another somewhat flat week next week, or red if the market continues to be discouraged by the data that supports an aggressive Fed.

Though this week wasn’t too down, I took advantage of the discounts with some buys in Activision ($ATVI), Intel ($INTC), and a few others you can read about in the portfolio update here. Use that update to help you put together a shopping list of some solid dividend stocks to pick up for the long term.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Dividends General

Lessons From My First Year of Dividend Investing

One year of dividend investing! Can you believe it? I am happy to have partnered Sharesight for most of this year. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. Click the link above to get a special offer only for Dividend Dollar readers!

One year ago, on 9/24/22, I started this blog and started dividend investing. Back then, some of the stocks I first bought were $SLG, $T, and $GNL. Of those three I only still hold $T. Over the past year, I’ve worked on building my own investing philosophy and putting together a dividend portfolio that will help me reach financial freedom (you can read about that strategy here). My strategy didn’t come to me overnight, instead it was the result of a long process and still continues to change.

What I really like about dividend investing is that you are never done learning. There is always a new situation that could generate new results in your portfolio. There’s always new positions that you can pick up, or let go of. As the economy changes, so do your thoughts on certain holdings and approaches to investing. It is never a one a done. After my first year of dividend investing, here are the most important investment lessons I’ve learned:

#1 I Love Receiving Money in my Account

Every week, I receive at least one dividend and I get to see my account naturally grow bigger. Receiving these payouts is a great feeling. Week after week, these payouts start to compound and have not stopped growing.

In my first year of investing, I raked in almost $285 in dividends. I expect to get close to $700 in my next year. Today, my portfolio is roughly a $10,000 portfolio that has an annual income of $504. This is almost a 5% yield. It is a modest amount so far, but it will greatly increase over the years to come.

#2 It’s Easier to Follow Dividend Stocks

When you buy a dividend stock, you usually buy a sound & healthy company. Therefore, following quarterly results is usually more than enough to make sure one stock doesn’t slip through the cracks and start rotting. From my experience with different types of investing, different strategies usually require much more monitoring.

#3 Don’t Chase High Yield

Everyone always says don’t chase yield. But I believe every dividend investor will make this mistake at least once, even if they are familiar with the saying. I made this mistake myself with $UWMC. It had nearly a 10% yield when I started buying into it and I made a substantial position. I lost more than 40% of that position as I continued to buy into its dips and hold on. I eventually got out, but this sucker still hasn’t turned around.

The lesson to learn from this is that high yield investments always carry limited growth potential and/or higher risk. There is a reason why you get a higher yield and it’s not just for shits n giggles.!

#4 Yield Doesn’t Matter if you Select the right pick

To be honest, I still haven’t fully committed to this lesson, but I know its right! At first, I used to select only companies paying over 2% in yield. It was my way of identifying “good dividend stocks” amongst other factors. I used to ignore lower yielding companies because I wanted to start having larger dividend payouts sooner.

I have since made exceptions with holdings like $MSFT, $EA, and $SPY. There’s lots of gems out there with low yields. Take AAPL for example, low yield but the price has appreciated like crazy.

The dividend yield is not the most important metric when you select a dividend stock. Instead, I look for companies with a solid business and the ability to increase its payout consecutively for many years to come.

#5 Patience is the Most Important Investor’s Asset

In my first year so far, I’ve bought several stocks that didn’t go the right way immediately. Starbucks ($SBUX), 3M ($MMM), Intel ($INTC) are great examples of this. In fact, a majority of my holdings are in the red right now. But some, like Starbucks, stagnated before turning green.

Sometimes you get lucky and your stock keeps going up the minute you buy it. But most of the time, the result of your trade is not instantaneous. On the other hand, patient investors will receive their rewards sooner or later. Especially with starting my portfolio on the cusp of a bear market, most things will not turnaround for some time.

I am excited to finish out this year with my current portfolio, as I believe I have a lot of great holdings. I also know I will have much more to learn in the coming years. It will be interesting to see how my portfolio changes and reacts as this bear market continues. Everyone says that wealth is made in recessions, so I am excited to continue putting my money to work and see what it can grow into.

Tell me, what have you learned from dividend investing in the current bearish market?

Categories
Net Worth Personal Finance

Net Worth – March 2022

Welcome back to Dividend Dollars! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money generates passive income that I can live off of.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

March 2022 Net Worth: $151,609.58

We increased our net worth by 13.3% from last month with a gain of just over $17k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We increased the size of our dividend portfolio by 21% this month with some fun adds to positions. The portfolio is up 2.74% for the month. As the dividend portfolio grows, ages, and compounds that is where we will see more significant net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $472,136.28

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 3.6% this month. Below are all of the individual assets that make up that total.

  • Home: $448,500 – 3.9% Increase since last month
  • Cash: $6,947.66 – 29% Increase since last month
  • Dividend Portfolio: $7,425.73 – 21.6% Increase since last month
  • Acorns Portfolio: $760.58 – 19.5% Increase since last month

This is my favorite way of automating investments into a diversified, low expense portfolio. Acorns also provides options to hold this portfolio in a ROTH IRA. I hold two portfolios, a standard aggressive one and an ESG one held in a ROTH account. If you are interested in using Acorns to automate some of your investments feel free to click the link above for a bonus $5 investment.

Abra is the app I use to hold my crypto currencies in interest bearing accounts. Depending on the coin, they have 2-4% interest rates paid out weekly based on how much you hold. If you are interested in using Abra, click the link above and use my code RCL33PVGS for free $25 in CPRX. https://www.abra.com/ref/?deep_link_sub1=RCL33PVGS

  • Retirement Accounts: $465.12 – 84.8% Decrease since last month
  • Other Assets: $7,763 – 8% Decrease since last month

Liabilities: -$320,526.70

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities decreased by 0.4% this month. Below are all of the individual liabilities that make up that total.

  • Mortgage: -$317,451.62 – 0.21% Decrease since last month
  • Credit Card: -$0 – 100% Decrease since last month
  • Garage Door Loan: $3,075.08 – 8.5% Decrease since last month

The mortgage is clearly my largest liability. I like to practice good budgeting in order to make sure I have enough cash to pay down higher rated, shorter term debts. Therefore, I like to keep my credit card balance low and focus on paying off my garage door loan while making regular mortgage payments.

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $472,136.28 for my assets minus $320,526.70 for my liabilities equals a net worth of $151609.58 for the start of March 2022. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This was a great month considering the market movement. The appreciation of the housing market really keeps my net worth looking good. My goal for this year is that we see more substantial gains and growth in my investments so that they start to have a greater weight on the net worth. It takes a lot of time and we are only getting started!

Categories
Net Worth Personal Finance

Net Worth – January 2022

Welcome back to Dividend Dollars and to the New Year! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money generates passive income that I can live off of.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

December 2021 Net Worth: $128,355.17

Woohoo! We hit the $125k mark! We increased our net worth by 8.18% from last month with a gain of just under $10k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We increased the size of our dividend portfolio by 43.6% this month with some fun adds to positions. However, that capital came straight from my cash balance and is up 2% for the month, so that is not a significant impact to my net worth. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $451,047.67

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 2.03% this month. Below are all of the individual assets that make up that total.

Home: $428,400 – 2.12% Increase on last month

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $428,400 which is where I pulled my value from. That is a 22.4% appreciation on the appraised value in less than a year! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,955.15.

Cash: $5,311.07 – 19.94% decrease on last month

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal. We did not do well with growing cash this month, but due to the holidays and traveling that was to be expected

Dividend Portfolio: $3,637.03 – 43.64% increase on last month

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account up 4.37% since starting Dividend Dollars.

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

My goal is to invest over $100 a week into the account and have been blowing that goal out of the water most weeks. This last week we put in $145 on some good buys! Read about those purchases here.

Acorns Portfolio: $547.73 – 39.44% increase on last month

The second account is my Acorns account. It is currently up 3.09% since starting Dividend Dollars. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses a few years ago in college. I have since reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing. I deposit $25 a week and have purchase round ups invested into their aggressive portfolio.

Abra Crypto Portfolio: $224.23 – 8.56% increase on last month

The third account is my Abra Crypto account. I started this account last month and have grown it by about 8% this month through my deposits and interest.

To be honest, I am a little intimidated by crypto currencies due to a mistake I made with a previous crypto account that cost me about half of a $10k gain. It was such a dumb error on my part! After that I took a step back from crypto but am interested in getting back into it. Abra seemed to be one of the most straight forward crypto apps and I really liked their interest-bearing accounts.

Using their platform, I buy and hold crypto currencies in an interest-bearing account and earn anywhere from 3-9% on interest depending on the currency. This interest is paid out weekly. Due to a recent promotion that I was able to catch, the interest on my account is also temporarily boosted by 5%!

Abra seemed to me like an easy way to take advantage of compounding interest and gains on the crypto market! I am depositing $25 per week into the account and am excited to watch how it performs. If you would like to use the app, feel free to use my referral link and code RCL33PVGS which gives us both $25 in CPRX (loyalty token rewarded for being active with the app) after you fund the account with at least $15 and hold it for 30 days.

Retirement Accounts: $3,291.44 – 3.56% increase on last month

My retirement account is provided by my previous employer. I had contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low-cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions. I recently started a new job and am not eligible for their retirement plan till 60 days on employment, therefore this number will stay stagnant for the next few months except for market movements.

Other Assets: $8,055 – 5.22% decrease on last month

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$322,692.52

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities decreased by 0.22% this month. Below are all of the individual liabilities that make up that total.

Mortgage: -$318,780.23 – 0.21% decrease on last month

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit on my investments greater than my 2.65% mortgage rate, than that money is better off being invested elsewhere.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

Credit Card: -$270.84 – 662% increase on last month

This is my Chase Freedom Flex card which I pay off in its entirety every month! However, because of holiday and travel expenses, some of those charges still show as pending on my card and can’t be paid off just yet. Hate to see it! But $270 is not a bad balance to carry by any means.

Garage Door Loan: $3,641.45 – 7.01% decrease on last month

The last liability I have is a new one from last month. My garage door started malfunctioning last month and its panels were badly cracked. I had the door, opener, tracks, the whole system replaced and upgrade. The garage door company offered me 0% interest financing if it is paid of in a year. Because of the 0% interest, I decided to treat this expense as an upgrade to the house and selected the highest quality door and opener they could offer! I had my first month’s payment and will have this sucker paid off in a year.

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $451,047.67 for my assets minus $322,692.52 for my liabilities equals a net worth of $128,355.17 for the start of January 2022. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This was a great month and year. The net worth went up by over $20k since starting Dividend Dollars back in October. The appreciation of the housing market really keeps my net worth looking good, I hope that this year we see more substantial gains from the dividend portfolio as it begins to age and compound. It takes a lot of time and we are only getting started!

Categories
Net Worth Personal Finance

Net Worth – December 2021

Photo by Brett Jordan on Pexels.com

Welcome back to Dividend Dollars and our third Net Worth update so far! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money is starting to work for me.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

December 2021 Net Worth: $118,649.67

We are creeping up on that $125k mark! That is awesome! We increased our net worth by 6.64% from last month with a gain of a little under $7k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We did more than double the size of our investment accounts this month with some fun adds to positions. However, that capital came straight from my cash balance, so it really didn’t contribute to the new worth gain. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $442,043.57

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 2.47% this month. Below are all of the individual assets that make up that total.

Home: $419,500 – 1.80% Increase on last month

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $419,500 which is where I pulled my value from. That is a 19.86% appreciation on the appraised value in less than 10 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,149.67.

Cash: $6,634.19 – 26.99% increase on last month

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal. This month I received a tax refund from an adjustment I submitted to the IRS months ago. That was a nice surprise to receive!

Dividend Portfolio: $3,637.03 – 157.99% increase on last month

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account is down 0.06% since starting Dividend Dollars. We were up 3.6% last week, but a new Covid strain called Omicron decided it had a different plan for the market!

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

My goal is to invest over $100 a week into the account and have been blowing that goal out of the water most weeks. This last week we put in over $400 on some good buys! Read about those purchases here.

Acorns Portfolio: $392.79 – 56.77% increase on last month

The second account is my Acorns account. It is currently down 1.98% since starting Dividend Dollars. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing. I deposit $25 a week and have purchase round ups invested into their aggressive portfolio.

Abra Crypto Portfolio: $206.54

The third account is my Abra Crypto account. I just started this account this month so I have no gains to report. However, on the next net worth update, we will be able to look back on this article and use it as our starting baseline for measuring our success with crypto.

To be honest, I am a little intimidated by crypto currencies due to a mistake I made with a previous crypto account that cost me about half of a $10k gain. It was such a dumb error on my part! After that I took a step back from crypto but am interested in getting back into it. Abra seemed to be one of the most straight forward crypto apps and I really liked their interest-bearing accounts.

Using their platform, I buy and hold crypto currencies in an interest-bearing account and earn anywhere from 3-9% on interest depending on the currency. This interest is paid out weekly. Due to a recent promotion that I was able to catch, the interest on my account is also temporarily boosted by 5%!

Abra seemed to me like an easy way to take advantage of compounding interest and gains on the crypto market! I am depositing $25 per week into the account and am excited to watch how it performs. If you would like to use the app, feel free to use my referral link and code RCL33PVGS which gives us both $25 in CPRX (loyalty token rewarded for being active with the app) after you fund the account with at least $15 and hold it for 30 days.

Retirement Accounts: $3,178.35 – 6.51% increase on last month

My retirement account is provided by my previous employer. I had contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low-cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions. I recently started a new job and am not eligible for their retirement plan till 60 days on employment, therefore this number will stay stagnant for the next few months except for market movements.

Other Assets: $8,499 – 9.84% decrease on last month

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$323,393.90

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities grew by 1.02% (bad thing!) this month. Below are all of the individual liabilities that make up that total.

Mortgage: -$319,442.36 – 0.21% decrease on last month

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit on my investments greater than my 2.65% mortgage rate, than that money is better off being invested elsewhere.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

Credit Card: -$35.54 – 16.14% increase on last month

This is my Chase Freedom Flex card which I pay off in its entirety every month! I do this to avoid paying interest. I use this card for everything in order to take advantage of it’s cash back rewards.

Garage Door Loan: -$3,916

The last liability I have is a new one as of this month. My garage door started malfunctioning this month and its panels were badly cracked. I had the door, opener, tracks, the whole system replaced and upgraded this month. They offered me 0% interest financing if it is paid of in a year. Because of the 0% interest, I decided to treat this expense as an upgrade to the house and selected the highest quality door and opener they could offer!

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $442,043.57 for my assets minus $323,393.90 for my liabilities equals a net worth of $118,649.67 for the start of December 2021. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This month was great, the house appreciated, and we made some great purchases that will pay us dividends for the long term, all of which will continue to add to my net worth in the long run.

Categories
Net Worth Personal Finance

Net Worth – Nov 2021

Photo by Anna Nekrashevich on Pexels.com

Welcome back to Dividend Dollars and our second Net Worth update so far! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the portfolio”? We do review and evaluate the portfolio regularly on this website, read our most recent portfolio update here. However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money is starting to work for me.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

November 2021 Net Worth: $106,675.50 – $111,260.16

We passed $110k! That is awesome! We increased our net worth by 4.2% from last month, that’s just a little under a $5k increase. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We did double the size of our investment accounts this month with some fun adds to positions. However, that capital came straight from my cash balance so it really didn’t contribute to the new worth gain. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula, it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $431,393.80

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 0.9% this month.

Home: $412,100

The house increased in value by just under 1% this month!

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $412,100 which is where I pulled my value from. That is a 17.7% appreciation on the appraised value in less than 9 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,160.16.

Cash: $5,224.16

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal.

In the last two weeks, however, instead of growing this sum we dipped into these funds a little bit in order to add a bit more aggressively to the dividend portfolio.

Taxable Investment Accounts: $1,658.61

This value is the sum of two different investment accounts. We doubled the size of our investment account this month, this is where the decrease in my cash accounts came from! That’s a great start to this portfolio. As the portfolio grows it won’t be easy to double it every month, but we will continue to regularly invest per the plan!

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account is up 0.58% since starting Dividend Dollars in September of this year.

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

The second account is my Acorns account. It is currently up 2.57% since starting Dividend Dollars back in September of this year. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing.

I deposit $25 a week into each account to use for investing. For the dividend account, as detailed in the portfolio update last week, I deposited a good chunk of cash into the account due to some great buys being available on the market last week. Read more about the purchases using the link above.

Retirement Accounts: $2,984.03 (+21.68%)

My retirement account is provided by my employer. I have contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions.

Other Assets: $9,427

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$320,133.64

My liabilities consist of one large debt, which is my home mortgage.

Mortgage: -$320,133.64 @ 2.65%

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit greater than 2.65% on my investments, then that money is worth more if it is invested rather than putting it towards the house in order to pay less interest on my mortgage.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

It’s Simple Math

Now that we have broken out the assets and liabilities, take their totals and subtract them and that is how you get your net worth. $111k is where we lie for the start of November 2021. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This month was great, the house appreciated and we made some great purchases that will pay us dividends for the long term, all of which will continue to add to my net worth and build passive income in the long run.