Saturday, October 16, 2021

Monthly Portfolio Update (October 2021)


It's time for my monthly portfolio allocation update.  Here's a quick overview of recent market activity:

All three major indices (Dow Jones, Nasdaq and S&P 500) have broken their upward trend in September and seem to be headed downward, albeit with some very big bounces including the last few days of this week.  Many believe that the market trend has changed and so there will continue to be volatility and bounces but the overall trend will be lower for the rest of the year.  Others believe a new rally into year end is at hand, driven by strong earnings and receding COVID cases, but complicated by inflation, unemployment / job openings mismatch and supply chain issues.

Certain sectors, like energy have been on fire and have gone parabolic (seems like XLE is due for a pullback soon):

Financials also had a strong and fairly consistent upward trend, supported by a steepening yield curve (strong bank earnings this week seem likely to continue to provide a catalyst for more gains in this sector if supported by yield curve):

Of course, commodities have turned in a very strong performance recently thanks to inflation:

Gold is still struggling to break out of its downtrend and return to previous all time highs; could that be around the corner?:

The big story of the week is the Bitcoin rally to break above $60K and getting very close to prior all time highs; SEC approval of new bitcoin futures ETF's expected to start trading next week, as well as continuing interest as an inflation hedge and substitute to gold may be driving some of the rally (institutions vs individuals):

Here's the portfolio breakdown for this month:

  • Cash - 5.3%
  • Stocks - 20.2% 
    • US Large Cap - 6.5% (59% I manage myself in a hedged trading portfolio and remainder is actively managed fund in retirement account)
    • US Mid Cap - 2.6% (100% actively managed fund in retirement account)
    • US Small Cap - 2.5% (100% actively managed fund in retirement account)
    • International - 8.6% (100% actively managed funds in retirement account, including developed and emerging markets) - I transferred half of my bond portfolio into an international index fund because I'm worried about rising bond yields / falling prices due to inflation;  international stocks, particularly some of the larger China stocks, have been beaten down lately and seems to offer good value
  • Commodities - 6.8% (15% actively managed myself and 85% actively managed fund in retirement account)
  • Bonds - 7.6% (48% actively managed fund in retirement account and remainder is Schwab TIPS ETF (SCHP))
  • Real Estate - 21.1% (26% actively managed fund in retirement account and remainder is investment property I manage myself)
  • Private Equity - 12.7% (includes numerous small Seed Invest and Republic investments - try to invest small amounts across a large number of companies following disruptive themes like artificial intelligence, genomics, fintech, blockchain, energy, cybersecurity, eSports, etc.)
  • Bitcoin - 16.8% (mix of direct Bitcoin ownership, some GBTC and MicroStrategy; sold majority of GBTC position - recently added a small Etherium position and continuing to dollar cost average small amounts twice a month into ETH and BTC in my Coinbase account)
  • Gold / Silver / Other Alt - 7.8% (gold/ silver is 50% physical coins and 50% miner ETF's GDX and GDXJ (I like the miners because they pay a dividend and they also are a leveraged way to play gold since they tend to move up faster than the gold price, of course the opposite is true as well) - gold has been beaten down lately but is expected to recover as inflation and money printing continue for the foreseeable future; also hold a small position in VIX (UVXY) as short-term equity portfolio hedge and recently opened a Masterworks account to invest in art - see my review of Masterworks here)
  • Other - 1.9%
This month, I added a little more exposure to small private equity deals and the new Masterworks investment and sold GBTC to fund these investments and raise some cash, which kept my overall Bitcoin allocation about the same after factoring in recent appreciation.  Continue to keep a broad diversification across asset classes and favor hard assets (Bitcoin, gold/silver, real estate), private equity and inflation protected bonds.  Cash is a little higher than last month for new investments.  Overall portfolio grew 6% since last month, mostly driven by Bitcoin and commodities.

I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2021.  To see all my books on investing and leadership, click here.  
Stay safe, healthy and positive.  

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