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Everyone is a genius in a bull market

Confession time:
I have been greedy and blind-sided, but I have been spared from bigger losses, because frankly I just had more luck than sense.

Short backstory

Over the last eight years or so I have been increasingly blinded by the profit opportunities that the stocks and index ETF can bring. Even though I talk about diversifying our stock exposure, I never took the time to really diversify across asset classes.

I paid for it!

Albeit, I got away with a black eye, it could have been a lot worse!

Due to the coronavirus outbreak that is happening at the time of writing, the stock markets are down worldwide!

3-month performance of worldwide ETF’s

I have two places where I invest our money:

Our 3a pillar account (that is our tax-advantaged retirement account, similar to a 401k in the US) and we have a brokerage account that we are starting to build up, after having to empty it to buy the house we moved into a bit over a year ago.

In the 3a pillar account, which I recently switched from VZ Vermögenszentrum to VIAC, I was extremely fortunate, that by the time the crisis really hit, my money was still all in cash. The transfer from VZ to VIAC took longer than expected (that was a huge blessing) and because of the delay I was able to hold off on investing the full amount in the stock market (like originally planned). I am now waiting until the daily free fall slows down to get back in.

This fortunate event not only shielded me from big losses, but also will allow me to enter back in near the bottom of the market!

How much did it go down?

In my Degiro account I have two ETF’s that I have been buying. A MSCI World Index ETF – iShares Core MSCI World (SWDA) and an S&P 500 Index ETF the S&P 500 Source ETF (SPXS). As you can see I have have bought a few shares since the last portfolio update in Q4. I lost roughly 20-25% on both over the last three months! That hurts.

TickerName # of Units End of Q4 2019 # of Units 16. March 2020 Change
SWDA iShare Core MSCI World USD Acc 5463.09$94 47.14$-25.3%
SPXS S&P 500 Source ETF 2594$3459.9$-22.6%

The good thing – and I have to re-emphasize that this happened without my doing, and was pure luck – is: The VIAC account is completely in cash.

Next steps

Before I invest the back in the market, I need to rethink my 97% stock strategy in the VIAC retirement account (3a / 401k)!

What I’ll need to do is take inventory of all our assets, sort them by asset class and exposure and figure out a diversification strategy to balance our whole portfolio, so I don’t have to rely on “luck” to weather the next bear market.

Fool me once – shame on you; fool me twice shame on me!

To be continued

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