Strategy July 2022: Staying Optimistic

 

As I have posted before, my target is to breakeven in 2022 (0% return) which will protect my 19.7% 2021 return. 

Some tech investors have already seen their entire 2021 profit erased, though the silver lining is that if they had 'time in market', their 3 and 5 year CAGR should be positive so they did not lose money. For those that overtraded, there is of course always the risk that they timed their trades wrongly and may well be sitting on "real losses." 

The  current chart for VWRD shows that June-July was a good buying opportunity and I described how I have been accumulating various ETFs including VWRD when it fell below the psychological $100 level. As the circled portion shows, there were "3 bottoms" during that period but the levels held and the price bounced back.

The TA folks will say that it is too early to tell whether there will be a recovery and that is probably the problem with TA - by the time TA analysis says there is recovery, it seems like everyone else knows - and the price has already gone up quite a bit. FWIW, the price has just crossed 50MA.

As for myself, I am optimistic of a recovery because I feel that valuations now are very fair (not cheap, not expensive) and COVID related recovery will have a positive effect. Current supply chain problems are only temporary problems. 

Checking my portfolio, I will only need the market to stage a 5% rally in order for my portfolio to breakeven for 2022. As we are due to have a summer rally, I can totally see 5% happening and I might even hope for 10% from current levels (which would translated to S&P500 about 4350 at the end of the year). 

Of course, one might say breaking even in 2022 is equivalent to a loss because of the value destroyed by inflation. I guess that is true enough, but I want to keep spreadsheets simple so I'll just record down the nominal $ values rather than do inflation adjustments. As for whether inflation affects my Financial Independence, I think I am on track for my passive income to increase more than the inflation rate.