Financial Update: November 2018

October was a completely dreadful month from an investment standpoint. At one point, US markets were down more than 10%, or in “correction” territory. The last two days of October saw markets rise slightly, easing the pain, but my investment chart tells the story of the month:


There were numerous reasons for the drop that could be pointed at: trade tariffs concerns, international conflict (Saudi Arabia’s murder of a Western journalist), rising interest rates, concerns that earnings have peaked, etc. Those are all possible theories, but the bottom-line that this was a tough month for most investors.

There was no safe haven for investors, either, with bond values dropping with interest rates increasing, and emerging and international markets were similarly weak along with the US.

However, drops like these provide tremendous opportunities for long-term investors. I am sad that I am saving aggressively for a house right now, as I would love to pour in some additional cash for the long-term returns that can be expected at these lower levels. With the drop, the forward price to earnings on the S&P 500 is reaching the historical norm of 15, which bodes well for future returns.

I did increase my 401(k) contributions from 6% to 8% early (I was going to do this starting in 2019) to take advantage of the somewhat lower stock prices, and going forward, saving more per month will get me to my goals quicker.

I am debating increasing my contributions another 2% at the new year, but it might be a bit too aggressive to keep us on track for our summer 2019 new home. It may hinge on any raise that I receive from my job.

For everyone else out there that might have been watching your portfolio values decrease day after day: stay strong. These drops are normal, and you have to remind yourself that this money will not be needed for many years. This is a marathon, not a race, and consistent savings and discipline will be rewarded in the end.

This allows your future contributions to net you more shares. There will be brighter days.

One last bit of housekeeping: I have decided to remove the housing fund savings portion of my post. I do not believe there is a lot of value in reading it, and keeps the post nice and slim.

I will keep you all posted when we do close on our house (including pictures!).

I hope that your non-investment related October was fruitful. We will meet again at the end of November.