2025 Update: Portfolio, Job Change, Outlook

In 2025, our net worth rose by 25.92% to $245,127 in USD and 11.56% in EUR to €208,619.

2025 was an enormous year for us. Our wealth has settled above $200,000, and I’ve changed employers after years of feeling economically underappreciated. In this year of contrasts, I earned some of my best money while also taking a substantial pay cut for the hope of a brighter future.

Net Worth Change

2025 generated significant returns in the markets for us, as it did for nearly anyone who held financial assets. We were net savers this year, yes, but it was the markets that did the heavy lifting.

Last year I wrote:

May we call a spade a spade? US large caps are in a bubble. Investors in US large caps are ignoring major risks to valuations. Even ignoring those risks, the overvaluation becomes undeniable when I look objectively at the outrageous outperformance of the S&P 500, the Nasdaq 100, and the hyper-focused growth and technology funds.

Adding to this discomfort is the knowledge that it's impossible to time the bubble's bursting. Any actions taken now will likely languish in relative underperformance while the market valuation churns upwards.

My action plan was:

I've decided to sell Apple and am debating Lowe's.

...within the Wiseguy Portfolio, I've reduced exposure to large-cap growth and raised small-cap value. I may increase exposure to bonds and gold, but I haven't decided yet.

I did all of the things I said I would definitely do and none of the things I thought I might do. How’d that work?

Individual Stocks

Selling Apple was, at least in the short term, the right call. Apple had trouble near the start of 2025 and ultimately underperformed despite having an up year. The largest purchase I made with the proceeds was AVDV (Avantis ex-US Small Cap Value ETF), which went on to have an incredible year. I also purchased a little more SGOL (Aberdeen Physical Gold Shares ETF), which, as part of the broader gold story, also had a great year.

My individual stock holdings did very well in the first quarter of the year (led by Berkshire Hathaway), only to trade range-bound until the end of the year, leading to a 11.82% return. I underestimated the effect of tariffs on companies like Green Brick Partners, Dutch Bros, and Lowe’s, and the announcement of Warren Buffett’s retirement led to trendless price action from Berkshire.

The Wiseguy Portfolio

Indeed, the Wiseguy Portfolio outperformed the S&P 500 24.13% to 17.82% (with dividends reinvested). The reduced growth-stocks version of it I adopted at the beginning of 2025 did even slightly better than that at 24.69%, but I’m not certain the juice was worth the squeeze. However, my actual performance was 23.22%, which is more than acceptable.

A reminder. The Wiseguy Portfolio, as originally conceived, is:

• 25% Large Cap Growth Stocks
• 50% Small Cap Value Stocks (divided equally between US and ex-US)
• 20% Long Term Bonds
• 5% Gold

An updated version, called Wiseguy 2.0, is:

• 25% Large Cap Growth
• 50% Small Cap Value
• 10% REITs (US and ex-US)
• 10% Long Term Bonds
• 5% Gold

The Wiseguy Portfolio outperformed because of gold (SGOL was up 63.99%) and ex-US small-cap value (AVDV’s return was 49.37%). Both assets had an incredible year, and we may have entered a period of alternative asset outperformance for which portfolios like the Wiseguy were built.

U.S. small-cap value remains a lagging factor. I won’t pretend to know why, but I hope that one day, the small value factor will once again shine in the U.S. as it has abroad.

That said, although I’m happy Wiseguy outperformed this year, my expectation is not that it will always outperform. The point of the portfolio is to increase the likelihood that I’m exposed to winning assets/factors in any given year, to reduce risk, and to reduce the possibility of prolonged negative performance or “lost decades” while also, more or less, achieving a market return.

Job Change

In 2019, I wrote “Out of Levers at My Current Job” where I expressed concern that there wasn’t anything else in my job I could do to meaningfully move the needle professionally. I felt frustrated that there was almost no amount of extra effort I could put in to improve our economic situation. I had reached the top at that job, and the only future improvements I could see would come from seniority raises, unionized negotiations, and side gigs, which were limited due to the time constraints of my job.

When the pandemic hit, I began looking in a different direction, and although it took years of effort, it paid off in 2024. I wrote at the end of last year:

I'm deliberately vague here about what I do for a living, but in 2024, I took some steps that have already had meaningful results for my life. Whether or not they translate to extra money is uncertain, but I do feel like I've been overly cautious career-wise for too long, and 2024 was the proof.

At the beginning of 2025, negotiations were still ongoing, but I landed the new job in January. This is one reason I haven’t been writing: my life has been consumed with change this year, and it’s been hard to find the mental space to write. Indeed, as I began to write this review, I was suddenly engaged in some extra work that devoured my attention.

The irony of my new life is this: I’ve taken a pay cut. My life is higher risk right now, but for the time being, it’s not higher reward. It might become so one day, but for now we’re having to buy groceries a little more carefully and be more judicious with our extravagance, which was never that extravagant.

At the very least, I am more satisfied with my work, which gives me a greater sense of purpose.

2026 Anticipations and Fears

Last year, I ended my yearly update with:

I am currently pessimistic about the direction of the world. This shift right-ward both in the US and in Europe threatens stability. Much of what we value about the world exists due to international order and the rule of law. The safety of shipping, the low barriers to trade, and the patchwork of friendly nations working together to solve problems has been imperfect but prosperity making. This new order threatens all of that while offering very little in return.

The events of the last year have reinforced those fears. Throughout 2025, President Trump threatened and bullied other countries with tariffs and trade policy and threat of takeover. He bombed Iran in June and Nigeria on Christmas Day. On January 2, 2026, he attacked Venezuela and kidnapped Nicolás Maduro, which was followed by threats to other countries, including Greenland/Denmark. Moreover, there has been rampant corruption in the White House.

In 2026, I am afraid of war, both an American civil war as well as war between the US and other countries, especially its allies. The ongoing threat to Taiwan from China remains, and the possibility of greater escalation in Ukraine also exists.

Truthfully, I don’t know what a portfolio can do to protect against this. I have no idea how Germany will react if the U.S. truly becomes hostile to Europe or invades Greenland. I don’t know if the U.S. will become even more hostile towards its citizens living abroad. Within the Wiseguy Portfolio, I have been adding foreign large-cap stocks to the large-cap growth allocation, and I’ve added world bonds to the bond allocation.

Let’s get real, though: if the United States truly turns into a rogue state, all bets are off. I called my portfolio the Wiseguy Portfolio because I was trying to control the uncontrollable. I wanted to always have something working within the portfolio, and I wanted it to be ready for nearly all situations. However, a complete breakdown of the world order is beyond any portfolio. Financial assets are merely a series of contracts, and contracts require a functioning legal order. The current president threatens that legal order. Godspeed to the protesters.

All of that hangs over what is otherwise a bright time in my life. It is difficult to know how to feel as I celebrate personal successes, even as there is increasing chaos in the background threatening to force its way to the foreground.

On that depressing note, I nevertheless wish you a healthy and happy 2026. Look for the value of things politics can’t touch.

2024 Year-End Review, Net Worth, Career, Large-Cap Bubble

2024 was complicated for everyone, I think. Although we got richer overall, it's hard not to look at last year's developments and worry about the future. I'm worried about what comes next. First, the good news.

Net Worth

Our net worth grew in 2024 by 14.59% in USD and 21.53% in EUR to $194,321 and €186,667, respectively.

Volatility and Expenses

This annual result masks some volatility. Like most investors, we saw the market jump after the Trump victory, only to watch as most of those gains were lost. In some positions, we lost much more than just the election jump. For example, Greenbrick Partners suffered heavily in the latter half of the year.

We also had some large expenses that ate into our returns. Most substantially, we have lingering tax issues from 2022, which inflated our 2024 estimated tax payments. I hope we'll be refunded much of that money in 2025, but as it stands, it's a loan we've been forced to fork over to the Finanzamt.

Careers

Both my wife and I continued to push our careers forward. I'm deliberately vague here about what I do for a living, but in 2024, I took some steps that have already had meaningful results for my life. Whether or not they translate to extra money is uncertain, but I do feel like I've been overly cautious career-wise for too long, and 2024 was the proof.

My wife's small business continues to grow. She has sharpened her preferred customers, raised prices, and increased her income. Although she doesn't think so, she's very brave and keeps impressing me.

Now let's look at the negatives.

US Stock Bubble

May we call a spade a spade? US large caps are in a bubble. Investors in US large caps are ignoring major risks to valuations. Even ignoring those risks, the overvaluation becomes undeniable when I look objectively at the outrageous outperformance of the S&P 500, the Nasdaq 100, and the hyper-focused growth and technology funds.

Adding to this discomfort is the knowledge that it's impossible to time the bubble's bursting. Any actions taken now will likely languish in relative underperformance while the market valuation churns upwards.

There are some acute risks that the market appears to be wholly discounting:

1. The risk of the US debt ceiling not being raised by the Republican-controlled Congress. The idea that US bonds are the safest asset in the world is at serious risk of being disrupted because the Republican party regularly threatens to not raise the debt ceiling.
2. Donald Trump's proposed tariffs on all imports may trigger inflation while provoking reciprocal trade wars.
3. Cuts to federal spending may reduce growth.
4. Bird flu transmission between humans. The first death from this latest strain was announced on January 6, 2025.
5. Geopolitical risk, especially the invasion of Taiwan by China. So much of the value of US growth is based on products manufactured in a country at major risk of invasion. For an example of geopolitical risk biting a country in the rear look no further than Germany. Allies warned Germany about tying its energy needs so tightly to Russia. As Germany built gas pipelines and shuttered its nuclear power plants, it was clearly ignoring a major source of risk, especially since its economy is so dependent on cheap energy. As we know now, that risk was very real, and Germany is now paying dearly for having hidden its head in the sand.
6. The risks associated with the US no longer being a "rule of law" country. The country elected a felon for president, for God's sake. This felon has promised to pardon the people who tried to overthrow the last presidential election. He is suing newspapers for coverage he finds offensive.

Beyond those acute risks, many stocks with the heaviest weighting in the S&P 500 are dangerously overvalued. Here are some charts from FAST Graphs showing the reasonable valuation line in orange based on earnings growth, their normal valuation line in blue, vs. a chart of weekly closing prices in black:

The SPY ETF:

Apple Inc:

Microsoft:

Nvidia:

Oracle:

Walmart:

Eli Lilly:

Broadcom:

Tesla:

My Portfolio

Several names in my portfolio are overvalued. Lowe's, Apple, Dutch Bros, and Berkshire Hathaway appear overvalued relative to their P/E ratios and growth prospects. I'm exempting Berkshire from this because evaluating book value is a better metric. But what do I do with the others? I intend on holding Dutch Bros because I always intended it to be a never-sell position. It's a tiny position, and I bought it on its first trading day like an idiot. So I'm holding.

Lowe's and Apple are harder. Both are excellent companies. Both are stupidly overvalued. I've decided to sell Apple and am debating Lowe's.

I've struggled with this next decision, but within the Wiseguy Portfolio, I've reduced exposure to large-cap growth and raised small-cap value. I may increase exposure to bonds and gold, but I haven't decided yet. Recessions hit small-cap earnings, too; regardless of their valuation, they will feel pain.

Vanguard Brokerage

After over a decade of using Vanguard as a mutual fund platform, I've finally switched over to their brokerage platform. They emailed me saying that they were forcing the change, which made the decision an easy one.

My foreign address was a hindrance before, but I've changed to an American address to switch. I hope this doesn't bite me in the butt, but I don't know what else to do. Vanguard has tolerated my foreign address for years, and I hope they remain tolerant of me for the foreseeable future.

As for the brokerage itself, it's not nearly as full-featured as Interactive Brokers or Robinhood. It's obviously designed for people who don't want to trade every day, which is fine for me, but I'm still struck by some information being difficult to find. Their app doesn't display the average price paid per share of a given security. That's weird. In the app, trade confirmations don't say how many shares I've purchased if I buy using a dollar amount. It's also annoying that purchasing in dollar amounts is limited to Vanguard securities only. It's a strange bit of self-serving, but it's not the end of the world.

2025 Forecast

I am currently pessimistic about the direction of the world. This shift right-ward both in the US and in Europe threatens stability. Much of what we value about the world exists due to international order and the rule of law. The safety of shipping, the low barriers to trade, and the patchwork of friendly nations working together to solve problems has been imperfect but prosperity making. This new order threatens all of that while offering very little in return.

I don't know what 2025 will bring. In less than a month, Germany will have its own elections, which also threaten to make the lives of immigrants worse. When it impacts us directly is impossible to say.

Until next time, take care of yourselves and your loved ones. Stay healthy. Keep saving.

2023 First Half Update

2023 Second Quarter Update:

The first quarter was full of re-evaluations of financial goals and strategies and was full of fear over impending disaster in my family. Back then, we had to make difficult decisions and have difficult conversations.

The second quarter of 2023 was much milder.

New All-Time High

After a year and a half of being in a net worth drawdown, we emerged at the end of June at a new all-time high. We're just shy of $150,000 at $149,097/€136,162. That's a quarter-over-quarter rise of 10.05%/9.05%.

The 2022 bear market, although not extreme by historical standards, was the worst extended drawdown we've had to live with during our married lives. Despite some losses, there were no disasters in our portfolios, and the stress lead to some necessary reappraisals of how best to allocate savings. I'm grateful for the lesson and happy to allocate most money to an ETF/mutual fund asset mix. While my stock picking has done well this year, I feel safer knowing that all of our eggs aren't in that basket.

The drawdown was exasperated by the drawdown of our incomes. My wife has a lull in her business as she changed strategies, and my extra income opportunities at work dried up. As the market corrected, we were unable to add money in any kind of aggressive way. However, both of those states have started to change: I've found new sources for additional work, and my wife's new business strategy is starting to pay off. It's exciting.

Family Disaster Averted

After much Sturm und Drang back in January and February, it appears that PoorParent will stay put. Staying put means staying in an uncomfortable but stable situation with a family member who has health problems.

It's clear that PoorParent isn't thrilled with this, but they also don't appear to be angry at me and Sib.

Honestly, Sib did most of the heavy lifting. I helped Sib define their own boundaries and see how they weren't respecting their own limits and desires. This lack of self-respect led to Sib not respecting my limits. But once Sib understood this, they had the uncomfortable conversation with PoorParent. Thus far, admittedly, I haven't spoken to PoorParent about my worries. They haven't brought it up, and I won't either.

Portfolio Performance

My individual stock portfolio returned 19.91% in the first half. This was mostly led by Greenbrick Partners and Apple Inc. Greenbrick is now a 1 bagger. It's had astounding performance. But so has Apple! Frankly, if there's any greatest mistake I've made while investing, it's selling even one share of Apple, and unfortunately, I've sold many more than one.

The laggard was Abbvie, which is facing increasing competition from Humira biosimilars. I may add more to the position if its price nears my purchase price.

The Wiseguy Portfolio as I've implemented it is hard to measure. Because it's across three different accounts and uses Vanguard "Admiral" funds in addition to ETFs, it means that getting close to the target weights is currently very tricky. Additionally, the iteration of the portfolio I call Wiseguy 2.0, which includes REITs, didn't take place until a few months ago.

An idealized version of the portfolio returned 12.07% in the first half of 2023. That underperformed the S&P 500, which returned 16.81%.

Second Half Financial Goals

As of yesterday, I have maxed out our 2023 IRA contributions. I put the final $2,000 into the US REITs portion because I refuse to hold a REITs ETF in my taxable accounts. Currently, I'm overweight REITs and US large-cap growth and through the rest of the year, I'll be adding to gold and the small cap value buckets in my taxable account.

We're also rebuilding our emergency fund. If we aim for 6 months of spending, then we need around €16,000, which we're not close to. I'm not planning on pulling a Ramsey and devoting every euro to that goal, however, and I will simply be adding monthly sums to it in addition to other saving. That kind of single-minded focus doesn't make sense when I have plenty of assets, and the risk to my livelihood is so low in comparison to the American "at will" employment reality.

That said, having extra cash would be reassuring.

We've also begun a small down payment fund. We're not devoting large sums to it yet, but it's frustrating not having anything saved for a better living situation.

My wife suggested a dog fund. We both want a dog someday, but we're concerned about the cost, so we've begun saving for it.

Wrap Up

I don't see any disasters on the horizon. The stock markets could always take a dive, which would be both a bummer and an opportunity. No matter what, we'll keep saving as best we can without running afoul of our dual tax situation. Until next time, stay healthy and keep saving. It adds up over time!

December 2022: Update and Full Year Summary

December was a great month. We had family visit us from the US over Christmas for the very first time. We traveled some. We ate some great meals and had a lot of laughs.

However, December was also the first time that our net worth was down in every metric that I track. There are four comparisons at the top of my spreadsheet: USD month over month, EUR month over month, USD year over year, and EUR year over year. For the first time, all of these metrics were negative.

Just like the stock market isn't the economy, your net worth isn't your life. But since this is a money blog, let's focus on the money part of things.

Net Worth Changes

Image: chart of our net worth in USD over time

In December, our net worth fell to $125,071/€116,780, which represents the following changes:

Metric	Percentage
Y/Y USD	-14.23%
Y/Y EUR	-8.79
M/M USD	-2.53%
M/M EUR	-5.71%

Maybe I can assuage my disappointment by creating a new metric: quarter over quarter. How's that look?

Metric	Percentage
Q/Q USD	6.83%
Q/Q EUR	-2.25%

So now one metric shows improvement. I'll take the win where I can I guess.

Our liquid net worth stood at $95,876/€89,521.

So what's up?

Inflation Devours All

The obvious big story is this:

• Due to the war, supply chain, stimulus programs, and energy shocks, inflation rose drastically.
• The Federal Reserve and other major central banks raised their benchmark interest rates to counteract this.
• Since the present value of equities is all future cash flows discounted to the present, both the discount rate and the - assumed - poorer quality of those cash flows put downward pressure on the value of stocks.
• Rising interest rates caused bond prices to fall.

We were not spared from this, and I took some serious hits on the large number of growth companies I had in my portfolio. They weren't the worst growth companies to have owned, but they were hit very hard anyway.

I took some steps to protect myself. In my IRAs, I sold in February due to trend following rules being triggered, which protected us there. I decided to reduce my exposure to individual companies and create the Wiseguy Portfolio, which is a kind of "all seasons" portfolio.

Image: Chart of portfolios in 2022: Green is my IRA, teal is my ETF account containing the Wiseguy Portfolio (started in May), red is S&P 500 benchmark, black is all portfolios together, yellow is individual stocks.

Finally, the effect of rising interest rates has caused a reduction in the estimated value of my pension. Since the pension is discounted at the rate of the 10 year treasury, rising rates reduce the future value. In a sense, this value is both real and imaginary; I'll never be able to pull out all this cash one way or the other, but I do have a guaranteed income stream in addition to government social security. It has value.

Spending

I've created a Sankey diagram that documents the flow of our money. For practical reasons, the numbers are slightly different in some cases compared to our actual budget, but overall this represents money received and spent/allocated well.

Image: A Sankey diagram showing the flow of money from income sources to spending categories.

Excluding tax, social security, and health insurance costs, our largest expenses fall into these categories:

• Rent (warm) (€10956.81)
• Groceries (€5984.66)
• My BLOW money (€4605.97)
• Travel costs (€3532.05)
• Her BLOW money (€3532.05)

A reminder: BLOW is anything we buy that is personal and doesn't require discussing with the other partner.

You can see the mark of inflation on our two largest household expenses. Our rent was raised in August, which was a bummer that upset my equilibrium for a while. Our grocery bill for the year rose from €5,158.22 in 2021 to €5984.66, which is a ~16% jump. Some of that could be carelessness on our part, but some is definitely climbing prices.

Our travel costs included a trip to the US for her, a trip to the US for me, a few weeks of fun in Europe in the summer, and a late year trip with the family who visited us over the holidays. As much as I'd like this number to be lower, there's a reality that an expat who has good relationships with his family will also likely have recurring large travel expenses to contend with.

Image: Chart of the EURUSD price in 2022

Unfortunately, my US trip coincided with a weak period for the euro against the dollar. This made the trip much more painful than it otherwise might have been.

Mindset Changes

There were three major changes in how I view our financial goals in 2022.

Cash

At several points, I felt hemmed in and without options. The most acute phase of this happened when we had our rent raised, but it was a recurring theme in the second half of the year. Yes, we had stock assets, but should we ever actually experience and emergency, our stock wealth would have to be sold off to actually give us flexibility. This increasingly felt intolerable to me, since I was sort of mentally double spending that money: it was both meant as a long term savings but also potentially a bail out, emergency, house, career change fund. It was untenable.

So we are now allocating much more towards cash. Savings accounts both in the US and Germany actually pay something now (though it's still crazy low in Germany). This allows us to pursue opportunities the way a big stock allocation can't.

The Implausibility of FIRE

It is unlikely that we will be able to retire early in any significant way. Perhaps that will change, but it won't change in the next few years, and in acknowledging that reality, I have to ask some questions.

For example, are there other career paths that might be more rewarding? If we have to work anyway, then why not do something that is genuinely enjoyable during that time? Perhaps staying put is the best option, but I should create the space where that's a choice rather than mandatory.

So much of the online financial world is fixated on this idea, that to acknowledge it may never be reality for us feels like a failure. However, my desire is to keep working. It always was, and the FIRE idea was mostly a way to give myself permission to pursue avenues that I find more fulfilling.

Stock Picking

Until this year, I'd exclusively been a stock picker. The US extraterritorial taxation regime has made the purchase of mutual funds tricky, and I'd believed I'd be able to handle individual stocks as the container for all our long term wealth.

It's safe to say that I was wrong.

I've grown as an investor, but I still make silly mistakes that should probably make it clear that stock picking ought not be my primary savings strategy. Yes, I've become less trigger happy, but I'm still too damned trigger happy. Just in the past few months, I sold several securities too early and missed out on rebounds. And my analysis is often rudimentary at best.

I've also discovered that focusing on stocks is not the best use of my time from a "quality of life" point of view. It's stressful and distracting. I have better questions to focus on and better uses of my time than worrying about whether such and such company faces an existential threat or is just going through a rough patch.

My returns thus far - while not catastrophic - align with returns I could more easily achieve by buying ETFs, and so that's what I'm mostly doing now. I just hope that the US/Germany thing doesn't bite me in the ass; if Germany adopts a PFIC type punitive taxation regime again for foreign mutual funds, I'm SOL. But best to save those worries for the future.

2023

The four big questions hanging over me now and likely throughout the year are as follows:

• Do I change jobs and potentially enter a riskier line of work in the hopes of greater life satisfaction and potential long term economic benefits? Or do I remain as I am now: basking in the weird safety of my current position, but potentially plagued by long term doubts around what might have been?
• How do I allocate limited savings for a potential risky life change?
• Do we participate in an expensive vacation that my family has planned out? We participated this year in Europe, but in summer 2023, it's further away and likely much more expensive. This is part of a larger question around family expectations and travel. I should probably write about this, but in general, I feel a lot of pressure to travel to see family, even though the prices are often higher for me, and my income is lower than the other people participating in the trip.
• Does the ticking time bomb of my poor Baby Boomer parent finally explode. There have been indications just in the past month that it might.

One change to the blog is that I will switch to quarterly updates rather than monthly. I find that I repeat myself too often month to month in these updates, and the movements within a month are often noisy.

With that, I leave you for now and wish you a happy and healthy 2023 full of great moments that let you forget about any financial stress you may have.

March 2022: Net Worth, Q1 End Portfolio, Stock-Picking?

This is late.

In March, our net worth rose by 2.83% and 3.38% to $124,495 and €111,555 respectively.

Long story short: the stock market rallied in March, and my positions were brought along for the ride. I also sold off some of the camera stuff that I mentioned in February, which brought in some cash.

Here's my portfolio at the end of March:

A few notes:

• Berkshire Hathaway has grown into the largest position in the portfolio, overtaking my tax advantaged IRAs. Berkshire has done very well this year, and it's helped bolster the portfolio against some of the volatility.
• My tax advantaged accounts are still in a money market fund since the Vanguard Total World Stock Index is still below its 10 week moving average.
• A lot of positions are in significant drawdowns from their previous highs.

Do I Want to Keep Picking Stocks?

With all that, I'm considering whether I want to keep picking stocks. I devote a lot of time to this practice, and the results I get are - thus far at least - fine. Not disastrous. Not brilliant. I've basically performed as well as VT has over the past few years, while also spending a lot more time on the project.

At the same time, I have other activities I'd much rather be doing. I have a side hustle I'd like to build up. I'd like to spend more time developing my "hopes and dreams" career. When I listen to podcasts, they're usually investing podcasts. When I do research, it's often stock research. What if I could get rid of those activities and just focus on the stuff that truly brings me joy?

But then I remember I'm an expat and I'd be signing up for tax and reporting hassles. Doesn't mean I won't change this up at some point, but a decision that I could just choose were I living in the US is much more complicated.

This is the dilemma faced by American expats in Europe. I kind of want to get off this train, but the alternative is misrepresenting my actual address to a US brokerage and putting a lot of my assets in it in order to have access to US ETFs. I'm not comfortable with that, but I'm getting tired of waking up and thinking about or worrying about stocks and stock prices and trying to determine where I should put my money every month. I could just buy a few ETFs and be done with it, but then I'd be creating my own tax data and all that crap.

This is stupid. This is all so stupid, and these governments can't be bothered to actually fix the problem for us.

April Outlook

Well, April is almost over, so I have a good idea what's up.

My stocks have performed badly, but basically in line with the overall market.

We've spent some money on travel. We likely won't save much because of it. There's a family medical emergency in the US my wife is attending to, and that kind of stuff supersedes stock investments.

I've made a little money on the side, but I've also spent a good amount, so it's kind of a wash. On the whole, this camera switch has been expensive.

I also went to France for a weekend on someone else's dime. But it felt dishonorable to rely on their money the whole time, so I paid for some of it myself.

Until next time. Stay healthy, save what you can, and remember that your relationships are wealth.

2021 Wrap Up: Net Worth and Investments

2021 was another strange year. Both of our incomes were depressed, and there was noticeable inflation is many of the staples we buy. In Germany, many of the activities we would have taken part in were curtailed by pandemic rules. My small side incomes sources shriveled to nothing as projects were cancelled or simply not planned.

Despite these challenges, our net worth rose year over year by 43% in USD and 53% in EUR to $124,045 and €109,697 respectively. In December, that represents a respective monthly rise of 6.65% and 6%. Our liquid net worth stood at $104,269/€91,544.

Investments in 2021

The power of compounding assets that work in the background is amazing and shocking. Yes, we made money this year. Yes, we saved money this year. But this relentless background grind of our assets - primarily in stocks, both taxable and tax-advantaged - overwhelmed whatever other forces were working on our lives.

And this was the case, despite the fact that my portfolio only returned around 20% against the S&P 500's 27%. I underperformed overall when compared to that benchmark, and still I'm surprised by how well it works.

In the period between January 7, 2021 (the date the Brexit transition hit my IB account) and December 31, 2021, our investments made a total of $15,752.53 within the taxable account. That includes $504 of dividends, with the rest being a mixture of realized and unrealized gains.

My primary contribution to this result was having some amount of fortitude to withstand all the fears hurled at us investors in 2021. The biggest gains were in positions that I'd bought in prior years and held. That's not to say that I did nothing.

In general, my decisions to sell were, at least in the short term, correct decisions. My decision to sell Square - now Block - was a good call. I sold Cloudflare, which was early but basically correct, and bought back in, which was not correct. I briefly owned a number of foreign growth stocks, but I realized their valuations were beyond comprehension, and I bailed on them. That turned out to have been a good call, though I held Alibaba too long and lost some money on that.

In May, I made big bets on Facebook - now Meta - and Amazon, which have been basically flat since then. I figured those were at least five year bets, so I'm holding without thinking about them too much. I did not expect my Apple position to continue to grow so well, but I can't complain. I also added a lot to Berkshire Hathaway and bought another share of Alphabet, both of which have paid off.

Late in the year, I took out a €30,000 loan with which to buy stocks. My largest single purchase was AbbVie, which was a terrible immediate-term pick since it declined 10% within 15 minutes, but since then has nearly returned enough on its own to pay for the entire interest cost of the loan. Other smaller picks like Intel and Enbridge have been flat but volatile. Greenbrick Partners is volatile but has given a good return so far. Likewise, small positions like Bank of America, D.H. Horton, and Pulte have all done well.

I entered the cryptocurrency space early in 2021, exited after becoming disillusioned, and then I re-entered just as a correction was starting. It's been an uncomfortable few months as my new purchases get swallowed up, but I view the space as promising enough to buy a little bit every month. However, I might be wrong, but I'm strictly using my personal allowance money (BLOW) to pay for these purchases.

On the last trading day of the year, my portfolio looked like this:

The Vanguard All World Stock Index Fund was my largest single holding since that's the entirety of my U.S. tax-advantaged accounts. The largest positions after that are Apple, Amazon, and Berkshire Hathaway, each larger than 10% of the entire investment pool. Some of that is due to deliberate position sizing, while in the case of Apple, that position simply became dominant despite a much lower cost basis.

Final Thoughts: Finding Yourself as an Investor

I have a friend who got an inheritance windfall in 2015. He basically knew nothing about investing, but he knew that he wanted to buy cheap stocks that had promising futures. Like me, he's an American in Europe, so he had to buy individual securities, and he bought around 40.

His performance has been quite good, having bought a mix of growth and value. Some choices turned out to be under performers, and they've have been cut. But he's been admirably steady in his positions even when they grow very large.

It's taken me years to "find myself" as an investor. I bounced from all sorts of styles, but what seems to work best is to be more like him: buy reasonably priced companies that have good odds of doing well in the future. Get convinced ahead of time that the purchase is a good one. It's ok to have some speculative stuff, as long as you're aware it's speculative stuff. And then for the most part let it ride.

Letting it ride is hard, but I'm getting better at it. Over the past month, the market has been rough, but my tendency to want to sell has been quiet. Likewise, I'm trying to get past the need to find the perfect investment or investment style. If I achieved greater than 10% returns annually over time, that would be an achievement.

I plan on writing more about 2021, especially about our income sand saving. Until then, stay healthy. May your 2022 be full of happiness and good fortune.

Update October 2021: Q3 Earnings Season Gyrations

In October our net worth (measured on October 26) rose 1.74% in USD and 2.8% in EUR to $113,899 and €98,189 respectively. Year over year, that's about a 52% rise in USD and 55% rise in EUR.

This small monthly gain was entirely due to the stock market gains. Our savings rate was negative because we had to pay our German tax preparer, which means withdrawing from an account set aside for infrequent but recurring purchases. We also paid off our piano, which had been on a rent to own plan. I characterized the balance remaining on the plan as liability when we agreed to it, although it didn't carry an interest rate, and payments to it counted as saving in my scheme.

But since we were also saving up a large cash balance to make the final payment, it's a wash for our monthly savings rate. You can see that in the chart because both assets (the ~€5000 in cash) and liabilities (the balance) decreased simultaneously.

Stock Market Volatility

On the whole, our portfolio did fine in October, however, it was not without its drama. Of the companies that we own that reported earnings, the market's reaction to the majority of them was swift and terrible. Apple, Amazon, Facebook (now Meta), Intel, Ally, and Charter all fell sharply after earnings were released. Sometimes earnings bled into other names, such as when Snap (not owned) announced their earnings, which caused sell offs in Facebook, Alphabet, and Amazon.

While there was some justification to these downward moves, the intensity of the sell off was surprising. It is no secret that Intel is trying to right its ship after years of product delays and encroaching competition. It is no secret that Amazon is investing heavily in its workforce and logistics operations and that it will likely face some bad year over year comparisons. It is no secret that Facebook is pivoting hard towards the "metaverse" and VR/AR and that this will cost a lot.

Nevertheless, the stocks were punished, and that's one of the aspects of single stock investing that anyone who wants to do this just has to become accustomed to. There's no escaping it.

Some companies did well, to be sure. Alphabet, AbbVie, Bank of America, and Sony had strong post earnings reactions. Absent earnings releases, Greenbrick Partners did very well in October. My two small hyper-growth names Dutch Bros and Cloudflare both grew wildly in October, though their earnings aren't until November. I honestly don't know what to make of their relentless price appreciation.

Regarding Cloudflare, at least for now, I have to conclude that my subconscious was right: selling Cloudflare back in May was a colossal blunder. Had I sat tight, I'd be sitting on my first "ten bagger". Whether that price appreciation continues indefinitely is unknowable, but my current cost basis is a more vulnerable price than my original $19.27/share cost basis.

Somehow, I am reacting to all these gyrations with a decent amount of equanimity. Occasionally I will feel some stab of stress, but I know that:

• Selling too early has been my biggest mistake.
• Companies that I've sold often continue to do well, which means that I'm generally fishing in the right pond¹.
• Despite that, drawdowns are part of reality, and there’s no prudent way to avoid them entirely within my set of priorities.

A healthy reminder has been that, were I to stop adding new money entirely and only reinvest dividends, this portfolio will likely do very well over time. This is in line with Warren Buffett's admonition that "Wall Street makes its money on activity. You make your money on inactivity." That doesn't mean that it will "beat the market" or that every name will be a long term winner, but left alone, I likely end up with decent price appreciation over the long haul.

November Outlook

We expect several large expenses:

• We're planning a few trips. I have some time off around Christmas for once, and we want to take advantage. We also plan to visit a friend in a far corner of Germany, which will demand train tickets and a hotel.
• We still have one tax preparer to pay. Fun times.
• October has a two week school vacation, which many adults choose to also take for themselves. That means that my wife's income this month will be lower due to reduced working hours. She would have gladly worked, but her clients chose otherwise in many cases. Ah, Europe.

We also expect several refunds:

• My wife will receive a refund of part of her health insurance premiums from 2019.
• The estimated taxes we paid in September will be refunded due to a new estimated tax appraisal.
• We expect a tax refund from 2020, but the Finanzamt might take its time delivering that.

And naturally, the market might behave wildly, which is outside of my control. Until next time, stay healthy and happy.

Reminder: I, like all Americans living in Europe, find myself forced into individual securities. The dual taxation/regulations placed on US citizens in Europe via FATCA, the FBAR, PFIC taxes, and MiFID II rules mean that we are excluded from buying financial products such as mutual funds and ETFs unless we misrepresent our actual residence. In many cases, US citizens in Europe are denied simple bank accounts. We are a group that is actively being discriminated against by multiple countries for the crime of being US citizens abroad.

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1. This idea was taken from a recent episode of The Investor's Podcast with Dev Kantesaria ↩︎

September 2021: 3Q 2021, One Terrible Trade, A Loan for Stocks

In September¹ our household net worth inched up .74% in USD and 1% in EUR to $111,947 and €95,518 respectively. For the third quarter 2021 (July-September), it rose 9.46%. Year over year was a net worth 42.15% rise.

Portfolio Performance

If the Portfolio Analyst feature of Interactive Brokers is to be believed, my taxable brokerages and IRA portfolios returned -.65% for the quarter. I was keeping pace with the S&P 500, but my portfolio fell harder during the September drawdown.

There's some uncertainty around that number because of the loan - more on that later - and because I added external accounts to the Portfolio Analyst system, which is kind of wonky. Let's just say the way PA works is kind of opaque. Long story short², I slightly underperformed the S&P500, but by the exact amount is a bit unclear.

I'm not pushing stocks on anyone, so I don't know how much people care about that sort of number. As I've matured as an investor, I've looked at how things will perform given longer future time horizons. I don't know if I'm good at that yet, but I've learned that three month stretches don't really give me much information to work with.

Additionally, I rarely look at any individual position as "full" or "complete". I like adding to positions, and lower prices are helpful for that.

I'm happy, on the one hand, that I didn't crash and burn during these last three months, but given how I close I was to the index, I'm probably more or less closet indexing with a handful of small wildcard positions that have small effects on the portfolio. I'm trying to get away from that by making more educated and larger bets that I can hold for the long term but that will likely perform much differently than the major indexes.

My Worst Timed Trade Yet

I did have my single worst timed stock purchase though. On September first, I bought my first 50 shares of AbbVie. In 15 minutes the stock fell by 10% because of some FDA news. It was pure bad luck because if I'd bought 15 minutes later, I'd likely be sitting on a small gain rather than the loss I currently have. It's not a disaster, and I don't regret the purchase, but there's a real, "You pays your money and you takes your choice," feeling here. Stocks are risky after all.

Speaking of risk...

I Took Out a Loan to Buy Stocks

In September, naturally with my wife's input and consent, I took out a €30,000 loan with an effective interest rate of 2.39% and a repayment over 7 years. You can see the effect in the stacked column chart by looking at both the asset and liabilities side.

It's surprisingly easy to shop for loans in Germany, and the banks are desperate to get euros off their books and some positive cash flow coming in thanks to negative interest rates.

It's taken me years to act on this idea. I discovered the loan shopping sites several years ago, but I didn't act on it, and even in the last several months, it was an idea that I bounced around but left in the drawer. While deliberating, I priced out loans and had bankers calling and emailing me. I had to psyche myself up for it by listening to Rich Dad, Poor Dad a few times³ and listening to a terrific episode of The Investors Podcast about using debt proactively to buy assets.

In my case, I've borrowed to buy stocks rather than borrowing to buy real estate, for example. In fact, the terms of the loan explicitly state that I may not use it to buy real estate. A mortgage would likely have meant a lower interest rate, but RE in Germany is a much different animal than in the US.

I had a few guidelines going in:

• The interest rate needs to be an achievable return. As in, I need to be more or less assured that over the life of the loan, I don't lose any money to interest.
• The monthly payment needs to be lower than the amount I normally save towards my stock purchases. I'm still going to be adding money monthly in addition to the loan amount, and I never want us to feel pinched by the monthly repayment plan.
• The stocks purchased should help diversify away from large cap tech stocks (which are the largest single positions in my portfolio). Doesn't mean I can't buy any tech if a great opportunity arises though.
• The combined dividend yield of the companies I purchase should pay a growing dividend in excess of the loan's interest rate.
• Since I don't want to lose the principal either, the companies purchased should have reasonable-to-great valuations while also not being value traps, melting ice cubes, junk.
• Diversification away from the U.S. would be nice, but is not required.

The stocks I've purchased thus far satisfy those requirements and have been in healthcare, real estate, homebuilding, and banking. I've added here and there to smaller growth positions. I've achieved the dividend/interest rate goal already and still have about $10,000 left. I've probably done more stock research in the past week than I've ever done before in order to decide what to do with this $10,000. It's exhausting, but I've learned a ton, so maybe I'll delay indefinitely and just keep learning until I find more 1 foot hurdles.

October Forecast

We'll have to pay our tax preparers, which will eat some money, but otherwise October should be a pretty standard month for us.

Reminder: I, like all Americans living in Europe, find myself forced into individual securities. The dual taxation/regulations placed on US citizens in Europe via FATCA, the FBAR, PFIC taxes, and MiFID II rules mean that we are excluded from buying financial products such as mutual funds and ETFs unless we misrepresent our actual residence. In many cases, US citizens in Europe are denied simple bank accounts. We are a group that is actively being discriminated against by multiple countries for the crime of being US citizens abroad.

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1. As of September 26. ↩︎

2. Basically, after adding the loan to the PA feature, it made the portfolio look like it had fallen by 25% or so. They don't treat their own margin debt that way, so I'm not sure why it was different for an external loan. Additionally, adding historical data for external accounts is very counterintuitive. ↩︎

3. Don't listen to Robert Kiyosaki's market predictions though. ↩︎

June 2021 Update

On June 26, when I took the monthly measurement, our net worth had risen in the prior month by 1.74% in USD and 3.87% in EUR to $102,269 and €85,653 respectively. Year over year, that's a 50.4% and 41.33% rise in USD and EUR respectively.

We've essentially returned to where we were in May with slight changes to the overall relationships between various accounts. As I wrote in earlier updates, we haven't been able to actually save much in the past few months, so the gyrations of our stock portfolios have been entirely of their own volition.

Stock Shenanigans

Now, I enabled this volatility a bit by selling and buying some things, but there wasn't really much of a period where any of the proceeds of those sales sat in cash.

May provided one of those confounding periods that I wish I were better at predicting. After I sold some stocks, I purchased different shares. When the first stocks fell, I felt vindicated. When the newly purchased shares also fell, I felt like a fool. My instinct to sell had been right, but my rush to buy was not, and much of the frustration I felt in the past two months could have been reduced had I sat on my hands a bit longer and allowed volatility to help me out and make me feel like a genius trader.

That said, in the long run, it won't matter. I can barely remember the various agonies I've experienced since buying my first shares. Eventually this small irritation in May and June will fade like those others I've forgotten in the past. It's all the more reason to avoid making large blunders that make these periods unforgettable.

The one thing that might have been such a blunder was my sale of Cloudflare. This is not a stock tip. Following the sale, I experienced serious regret and a nagging sense that I had made a long-term blunder. I even dreamed about it. After analyzing the company to a greater extent than I did when I first bought the shares in 2019 on a whim, I've decided to average back into it. Make of that what you will. My other sales haven't distressed me, so this will be a good gauge of my instincts as the years play out.

Taxes

We had to move some money out of savings and into the hands of the German federal government by paying our estimated taxes. If we're overpaying, we probably won't see that money again until the end of 2021 with the lag times between receiving the necessary paperwork, the tax preparer's time, and the pace of the German Finanzamt.

In America, I found doing taxes to be kind of fun and easy. I studiously learned the rules as best I could and filed on time every year. When I moved abroad, I knew I needed to file a US return as well, which I've always done.

But taxes have become a drag and a source of dread. Almost none of that feeling has come from paying taxes, but instead it's the vast quantities of paperwork and organization we're required to maintain along with the conflicting rules of two countries that drive me to anxiety and occasional despair.

It appears I've missed something in all my US filings, and now we're going through the IRS' Streamlined Procedure because the risks posed by the outlandish penalties are too high to ignore. Namely, I misunderstood the FBAR (IRS Report of Foreign Bank and Financial Accounts) and how some of my arrangements in Germany might, repeat, might have been reportable. No one can say with certainty whether they are or not, but because the potential penalties are so extreme, and because I'm already in the IRS system, I can't ignore them.

So now we're paying a firm to help us, and in the days before I fly to America to re-establish my relationships with my blood relatives, I'm reassembling three years of data to prove to the IRS country that we don't owe taxes and that we weren't trying to hide money from them. Along the way, I'm learning the other small ways in which U.S. expats are screwed by the US' tax system and it's hard not to feel like our country hates us. Charlie Munger exhorts people to never feel sorry for themselves ("I know self-pity is stupid"), and I try to keep that in mind to keep plunging forward in this task, but that sense of injustice and unfairness grates like sand in my shoes.

June Outlook

We will have to pay the aforementioned tax preparer in June, and I will likely have elevated spending while in the US. Otherwise, I'm hoping for not too many surprises. Because I received my summer bonus, I had some extra money to save, which I've done. Should we receive any of the various stimulus checks from the US or the mythical refund for our overpaid 2019 German taxes, we'll have a boost.

Happy Independence Day to any American readers, and I wish you health and happiness. Until next time.

Update: May 2021

Our net worth dropped 1.36% in USD and 2.23% in EUR to $100,509 and €82,452 respectively. The major factors leading to this monthly drop were reduced income, higher one-time spending events, and volatility in the stock market. Year over year, our net worth increased just under 60% in USD.

The biggest factor affecting 2021 so far are our reduced incomes. My salary has steadily gone up over time, but because of reduced opportunities for doing extra work, I've not had those big one-off boosts to my income. Due to Covid-19, my wife's profession has been severely affected. I've written about this paradigm since the pandemic began, so I feel like I'm repeating myself, but conditions for us have remained very stabile. No one lost their job, but we are nevertheless reduced.

This has meant that we've been unable to take advantage of the market volatility because we're just having trouble saving anything. It's a tricky moment for us on the savings front.

Closed Lots of Stock Positions

During this last month, I closed a lot of positions. I liquidated my small cryptocurrency holdings, and I sold off a lot of stocks while putting that money back into other companies.

I wrote about my feelings on crypto recently, but the stock sales arose from a sense that I couldn't go to war with these names: I knew that I would have difficulty holding them through a serious drawdown, so I bailed on them now. That, and I wanted more Amazon, Facebook, and Berkshire Hathaway shares. I moved out of low conviction names into higher conviction names.

Selling some of those positions will likely have been a mistake when I have the benefit of hindsight. But increasingly, I'm admitting to myself that I am a stock picker, and that means that I need to believe in the position if I'm going to hold it long term. A bunch of small positions that don't mean much to me are just anxiety fuel, and that was especially true because so many of them looked severely overvalued. Some of the positions I sold will likely outperform the positions I bought, but I believe that my behavior will be better in the positions I bought because I have more faith in them.

My desire is to hold a few high conviction names for the long term. That means that I have to understand what's going on and be comfortable holding them through thick and thin. It also means that I will miss out on some other stocks' meteoric rises, but that will have to be ok. I don't have to take part in absolutely everything to have a good result, and, as I saw during the big March 2020 crash, I can hold on to high conviction positions even during trying times.

But to avoid similar culling in the future, I need to be more careful with the stocks that I buy. The sin here wasn't selling, but instead it was that I purchased some names using a half-brained theory, believing that I was a computer who could dispassionately buy and sell companies that I don't have any emotional investment with based on certain factors. This has been a recurring problem for me, and it's time to forego systems that treat me like a computer.

That said, don't be surprised if some of these stocks re-enter the portfolio. I'm not dead-set against them under all circumstances.

As has been the case for the past few months, you can see those positions under the Portfolio tab.

How's June Lookin'?

June will look a lot like May. Our incomes will basically be the same, and we have to pay our estimated taxes, which will hit our savings. Unfortunately, we won't be able to save much, which is a drag.

We're still waiting on our tax refund as well as the U.S. stimulus payments, but those will arrive whenever they arrive.