Five Years of Tracking My Net Worth

Andy Warhol's Dollar Sign (1981)

Just like that, and we're already halfway through 2019.  

I was listing down my expenses and realized that I've been tracking down my finances for five years now. 2015 was a milestone year for the following reasons: 

1.  I started working two jobs. That means double the salary, which had to go somewhere. 
2.  I finally opened a brokerage account after months of studying. 
3.  I slowly transferred the cash (that's been sitting around in savings--I know!) into equities. 

As you can see, I haven't exactly been the most consistent person. There were gaps in the data, like certain periods where for some reason I did not fill in all the variables for certain data points. 

Story of my (stocks) life. 

But because I wanted to have some sort of accomplishment for the first half of the year, I played around with making charts in Google Sheets. I'm still a newbie on that point so even if I wanted to see how cash migrated to equities plus all the other components of one's net worth, I have to be satisfied with what I came up with so far. 

The blue bars show how my net worth was inching up to seven digits. In 2015, I had most of my holdings in cash and opened my COL account around July. I had a bit of a windfall because I found out that where I worked at the time (CoRK) got my pay rate wrong, and so they owed me money that amounted to 6 digits. They gave it in one go, which meant there was also a huge tax cut. But still, I was determined to invest that money so that I had something to show for it. 

Another bit of a throwback: I remember that period in July-August when the prices of stocks suddenly fell because of fears that Greece would default. I saw that sharp drop down but didn't buy anything because, well, I was a newbie. Still a lot of things of learn. 

My net worth peaked in the First Quarter of 2018--which coincidentally was when my stocks holdings were also at their highest. I remember being so happy that I qualified for the next tier at the brokerage--until I didn't because stock prices dropped. (This was also when my medical expenses started to balloon--probably more connections there I should explore.) My biggest regret is not cashing in enough on those equities, which have since gone down to half its former value. But I'm not really that worried. I have accepted that the price of stocks go up and down. My time horizon is long. Almost 50% of my net worth is in equities. But for the most part, as long as I don't panic and sell everything, I'm hoping that those values will still go up. 

I still feel like I'm an Under Accumulator of Wealth. There are many things I can still do to improve my net worth. I'm going to be more diligent, I should go back to updating the sheets I made specifically for expenses. That way, I can see where my money is going (Grab rides, sadly) and make more cool handy charts. 

How is your 2019 so far? 

Full Time Trading

Rafael Roces, 24, full time stock trader

Entrepreneur has this interesting article about a young full time trader who spoke at Investagram's Inspire PH event. 

While most people envision traders and brokers as mostly middle aged men, Rafael Roces (known by his Investa handle scraffycoco) is 24, started trading while still in college in 2016.

He was studying to become a doctor, taking the NMAT and all, but he thought he could become a better trader rather than a doctor. In his first year of trading, he was down 40% using his father's money. So what he did was to study and establish a system. The eight week trading course at Caylum Institute costs Php100k, but like all sorts of learning, one needs to invest time, money and practice.  He's now also studying to become a licensed broker, and is now affiliated with a securities company. By December of last year, was managing a 7-digit portfolio. 

It's really inspiring to read about a young person learning about money and investments as early as being in college. He's also lucky that he has the opportunity to focus on deep learning. I suppose if one really is interested in being good at something, you put everything you have in it. 

Challenges Millennials Face in the Stock Market

Image by Samantha Gonzales / Business World 

I came across this article by Fehl Dungo of DailyPik encouraging millennials to invest in the stock market. The Philippine population is now dominantly young—with an average age of 22, it puts our country in a sweet spot that allows it to grow in the next 30 years. Which means that young people have a lot of time ahead of them to let their money grow. 

There is also ease of access. Stock trading and investing used to mean having money enough to fund a broker, whom you call to buy and sell stocks for you. But with a number of online platforms, all you need is a minimum of Php25,000 (perhaps even less) to get started. Once online, you can now personally choose which stocks you want to trade, in real time, as long as you have access to good internet. 

Now this is where things get interesting. Yes, I agree with most of the article: a young population, coupled with a long time horizon and ease of access to trading—all of these favor the young. And perhaps the challenge would be combatting the nature of youth as well. 

Hello, FOMO and ADHD. 

Once online, not everyone is educated enough to know which stocks to pick and how long to hold on to it. Look at trade forums and Facebook groups, and you always get that newbie question: “Hi, I have ___ thousand pesos. What stock is good to invest in?” Then other members would jump in with “recos” of their favorite stock. It’s very tempting to jump on the loud, popular, trendy stocks. It’s so easy to fall for “hyped” stocks if you don’t know what you’re getting into. Most of the time, newbies then buy those “hyped” stocks. You see the price going up and then you chase it all the way to the top. Then cry and complain online when the price of the stock they just bought start correcting. It’s succumbing to the fear of missing out, or FOMO. 

When the price falls, you switch to another stock which starts to move fast, hoping to recover your losses. Do it again and again and your capital might just be wiped out by bad, ADHD trades. 

This could be easily avoided by studying the market first, then the stocks and the companies behind them. One also needs to be patient. A stock you buy now might climb high and then correct, so be prepared for that. Don’t panic and dump it all to transfer to another stock. 

In a way, I’ve been one of those ADHD/FOMO traders. Had maybe 5-6 stocks on a less than Php50k portfolio. The gains and the losses basically just cancelling each other out and leaving me with minimal negligible gains. Jumped on a stock that seemed like a good idea and then it started to drop and drop. Cut my losses, only to see that stock climb up again. 

I learned from it and started pruning my portfolio. Sold all the losing positions and placed my money on an undervalued stock. After 4-6 months, it went to its all time high. But I didn’t know how to lock in gains, or place a stop loss. I saw a stock with 70-85% in gains wither down and melt to a negative port. But I held on through those rough, red months. Waited for the stock dividends, saw it climb up, go down, sold some. Yet all told, after holding the stocks for around 16 months, the stock has gained over 115%. 

Of course, there are still a few coulda, woulda, shouldas. Shouldn’t have sold when the price was going down. Should have added on that sharp drop. These are hard lessons to learn, and I’m still learning. 

The Philippines has a population of over 100M, and depends on the data you look at, only less than 1% invest in the stock market. We also have a low financial literacy late, and a large part of the population that’s unbanked.

Another interesting development is that the profile of investors has changed and has “skewed towards the lower income bracket.” Those with less than Php500k income per year are now 40% of online investor accounts. We are expanding, but we still have a long way to go. 

So, yes, we should invest in the stock market—not just millennials. Heck, even the Titos and Titas of Manila need to learn more about how money works and how saving and not spending it all on #travelgoals will help us in the long run. It’s not about #FOMO-ing on the trendy, hot stock. We need to be patient and diligent, in order to be truly #blessed.