EscapeVelocity's Net Worth for June 2019

Assets	Value	Change ($)	Change (%)
Stocks & Bonds	$10,859,061	$168,536	1.58%
Retirement	$1,013,281	($964)	(0.10%)
Home	$2,137,500	-	-
Other Real Estate	$342,000	-	-
Cars	$570,000	-	-
Personal Property	$0	-	-
Business	$5,274,428	-	-
Total Assets	$20,196,270	$167,572	0.84%

Debts	Value	Change ($)	Change (%)
Home Mortgage(s)	$0	-	-
Other Mortgage(s)	$0	-	-
Student Loans	$0	-	-
Credit Cards	$0	-	-
Car Loans	$0	-	-
Other Debts	$0	-	-
Total Debts	$0	-	-
Net Worth	$20,196,270	$167,572	0.84%
^*All values shown in USD ($)

Notes:
We closed out May with the S&P down almost 7%, mostly due to the ongoing trade war with China (to punish them for alleged cheating in regards to trade) and a surprise expansion of the trade war to Mexico (to punish Mexico for not doing more to stop unlawful immigration). Setting aside personal politics and the effect and/or effectiveness of the policies, this is creating uncertainty in the stock market and concern for future earnings. It is also impacting the bond market, sending rates sharply lower and causing more of a yield inversion. What is causing the drop in rates? I assume it is a "flight to safety." What else? Although many smart people say the trade war(s) will not cause a recession, the bond market seems to disagree. That said, I had previously thought we'd see a recession in late-2018 or early-2019. I was obviously early a/k/a wrong. Now what? The truth is, I don't know. My head tells me we will experience a recession in the next 12 months, especially if we stay on the existing course. My gut tells me the Tweeter-in-Chief will find a way to claim victory in the trade war(s) in time for the election and, somehow, that kicks the can down the road until after 2020. Maybe things will look less murky next month? Anyone else have any thoughts or predictions?

Notes:

We closed out May with the S&P down almost 7%, mostly due to the ongoing trade war with China (to punish them for alleged cheating in regards to trade) and a surprise expansion of the trade war to Mexico (to punish Mexico for not doing more to stop unlawful immigration). Setting aside personal politics and the effect and/or effectiveness of the policies, this is creating uncertainty in the stock market and concern for future earnings. It is also impacting the bond market, sending rates sharply lower and causing more of a yield inversion. What is causing the drop in rates? I assume it is a "flight to safety." What else?

Although many smart people say the trade war(s) will not cause a recession, the bond market seems to disagree. That said, I had previously thought we'd see a recession in late-2018 or early-2019. I was obviously early a/k/a wrong.

Now what? The truth is, I don't know. My head tells me we will experience a recession in the next 12 months, especially if we stay on the existing course. My gut tells me the Tweeter-in-Chief will find a way to claim victory in the trade war(s) in time for the election and, somehow, that kicks the can down the road until after 2020.

Maybe things will look less murky next month? Anyone else have any thoughts or predictions?

Comments

6/10/2019 3:19:45 AM target10mil
Hard to predict what will happen. Usually best to just stay invested as timing the market perfectly is difficult and most people won't do it correctly. That said, looking back a bit through your monthlies, it looks like you are almost all cash. How are you able to keep growing your money like you are with a massive all cash position? Do you have a really high income or alternative income source?
6/10/2019 12:29:59 PM EscapeVelocity
I do have a high income and several alternative income sources as well, all of which puts me in the highest tax bracket. As a result, most of my money is currently in municipal bonds (ignore the "cash" label as that is simply where I put all my taxable/brokerage account money) for the tax benefits. Those bonds throw off a tax-adjusted yield of ~5% which is fine (many experts don't see the stock market yielding more than that in the next decade) and, when the stock market starts to look cheap again, I can move some money into equities. Although I agree that timing the market is difficult, we can, in my opinion, say that the market is cheap/overpriced. And in my opinion, it's overpriced. The problem, however, is that it can stay that way for a long time until the music suddenly stops.
7/12/2019 1:11:16 PM girlnextdoor
I started holding more in cash last year, as I was expecting a baby (she was born in December) and know my husband and I would probably be moving to a new state this year and looking to buy a house (aka, lots of unknown upcoming expenses). We've now decided to pay cash for a house, and last week we pulled about $160k out of the market to add to ~$90k we had in cash so we'll have our house outright next week. We were not in any way trying to time the market, but I'm actually pretty happy with the timing. I'm also expecting a downturn in the market in the next year or two, and am looking forward to having a paid-for house and being able to throw money into the market as it's down without worrying about bills to pay. No predictions about when exactly that market correctly will take place, but now no real worries either, since we've bought outright the only really expensive thing we plan to need in the next 15-20 years.
7/12/2019 2:47:20 PM EscapeVelocity
Doesn't it feel great to own your house outright rather than rent it from the bank? Congratulations on the house and the baby! Now, trust me on this, set up a 529 plan for that child right away. Don't put it off. As a parent with two kids starting college next month, I'm super-glad I don't have to come up with the ~$100K per year to pay for their college (until their senior year, when the plans run dry). As for the timing, I think it's safe to say there's more downside than upside in the near-term, and the blow-off we're seeing now could be the top or it could be the next leg up, but either way, I'll feel perfectly safe and secure not exposing myself to the emotional trauma by hunkering down in less volatile investments for the time being. Too few people have experienced a bear market, let alone a long one, and they forget how that feels.