Monday, January 31, 2022

January 2022 update ($772,875 -$33,564 or -%4.2)

↑ Financial independence savings for last month $2,000
Grand total additions: $2,000 USD

↓ Emerging Markets Stock Index Fund is down by $648 or -0.4%
↓ Eurozone Stock Index Fund is down by $5,437 or -3.5%
↓ US 500 Stock Index Fund is down by $10,986 or -5.2%
↓ Global Small Cap Index is down by $12,433 or -7.6%
↓ Growth fund is down by 3,378 or -4.6%
↓ EUR is down USD by $2,683 or -0.9% for my portfolio
Grand total losses: $35,564 USD
January 2022 Journey to Financial Independence
In principle there had been a little bit of sell off, as inflation started to bite. The tone and description changed from “transitory” to the highest in the recent history.  
As in all the prior occasions the media had been deliberately slow in investigating and reporting the inflation. This typically leads that average investor takes no action until it’s too late (expensive to invest).

Average 30-year fixed mortgage in US climbed from 2.65 percent in January 2021 (the record low) to about 4.92 in January 2022.  It means extra $189 a month in interest on every $100,000 borrowed.  With the average home cost of $374,000 people need to pay $636 extra a month (assuming 10% deposit), thanks to the government policies and politics.

Year end in December my S&P500 returned 30%, while Eurozone 23%.  Active managed funds returned on average 27.5% and western european 19.5% .  82% of the actively managed funds underperformed the passive funds in decade 2020.    What is more puzzling from reading the news that those highly paid manages drawing opposite conclusions from the same piece of information. For example, with the inflation raging in the West and interest rates rising, one manager is selling US bonds, the other one is buying more.

Of course the question is this: without active management (stocks picking) how do you weed the poor performers out? If we invest in all (losers and winners) equally the market will not be efficient any more.

However, my mind always goes back to British manager Neil Woodford, known for collapse of Woodford Equity Income, one of the largest British Investment funds.  In 2017 his flagship fund managed more than 10 billion british pounds. Two years later only 3.7 billion was left after majority of the investors ran off. The fund was suspended, the investors still waiting to lay their hands on the rest of their money.  They would be lucky to get 2.7 billion back.
In June 2013, in the 2013 Birthday Honours, Woodford was appointed a Commander of the Order of the British Empire (CBE) for services to the economy. In July 2016, he was awarded an honorary fellowship by the London Business School.  Neil Woodford is a multimillionaire.

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