Questions about my full time status....
Here are the answers:
1. The rate of my stock portfolio turnover has definitely increased significantly. That has happened because of the overhaul that my portfolio required and due to the sector rotation that happened at the middle of last year. I'm not sure how my holding period will be going forward. I think it will be a little longer than it has been in the past 9 months but time will tell. I'm willing to hold a stock for a long time if the outlook remains good. However, recently I haven't found too many stocks that are of the buy and hold for several years variety.
2. Ironically my cash position has gone up over the past 9 months rather than going down which I thought it would do. While I generally aim to be fully invested or nearly fully invested I have had a hard time finding enough stocks to get me there. I'm down to 37 companies from a high of something like 63 during last summer. I made some good progress in the beginning of March or so but have been selling more in the past two weeks. I am fairly rigid in following my rules and generally will not purchase a stock unless I think there is a good possibility of 50-100% gain over roughly the next 12 months with a reasonable risk for downside. That philosophy has served me well but has kept me from reaching 100% invested.
3. I do withdraw money from my portfolio to pay my living expenses. My wife does not work so there isn't another source of income. So, I need to make sure that cash is available so that I don't put myself in a situation where I am forced to sell. So far that hasn't been an issue due to my high cash rate. Ignoring income taxes, my withdrawal rate is probably on the order of 5-6%/year.
4. For health insurance we have a high deductible plan that is HSA qualified. The high deductible keeps the rates down but does expose us to higher out of pocket costs. However, the out of pocket costs are reasonably capped. The HSA account provides us with a nice tax break that makes this solution the most cost effective. So far our selection has worked well as the choice has probably given us the lowest cost.
5. Our spending habits really haven't changed since I quit my corporate job.
6. The 10% return budget is over my entire portfolio (cash, stock, or other financial instrument). Keep in mind that this is just an average. I waited a long time to make the full-time transition so that I was in a position to survive through some down years if that should happen (especially early on).
7. Probably the biggest surprise to me is how much time I spend on my work. I thought it would be a 40 hour/week job but it has turned out to be a 70 hour/week job. Part of it is because I really like what I'm doing. Maybe I'm just slow :)
Mike
AI
