2018 investment performance

2018 Investment Performance

2018 Year In Review: Investment Performance

Happy New Year! I hope that 2019 is a great year for you. Before we jump into the new year, let's take a look at our investment performance in 2018.

The year 2018 saw a lot of ups and downs. In this post you'll see how some of my clients did in their accounts.

Watch the video below, or keep reading to see how we performed.

For details and the charts found in the video, keep reading.

A Quick Strategy Primer

If you're new here, the strategies in the video are available to Premium members only. For Basic or Pro members, we have a partner company that manages our automated "Everything" strategy.

In this video and post there are three active stock or ETF portfolios:

  • Dividend - A portfolio made up of 15 dividend paying stocks. Updated and rebalanced quarterly.
  • Growth - A high growth stock portfolio with up to 15 holdings. May also hedge. Reviewed and updated frequently.
  • Momentum - An ETF portfolio that can be aggressive or conservative depending on market conditions. Updated monthly.

The majority of my client accounts are tax-deferred. That would be IRAs, Roths, and SEP IRAs.

The benefit of having these strategies in tax-deferred accounts is there are no capital gains or dividend taxes to be paid at the end of the year.

The drawback is that we can't take any tax losses either. ๐Ÿคทโ€โ™‚๏ธ

The Growth Strategy

The Growth strategy had a great 2018.

This portfolio was up 29.96%, net of fees. That is compared to the S&P 500 total return which was down -4.38%. And the Vanguard Total Bond Market ETF which was down -0.12% for the year.

The Growth strategy is in dark blue with the pink box and pink arrow showing end of year performance.

Not only did the stocks in this strategy generate good returns, the risk management worked well too.

During October and November several stocks hit stop-loss points and were sold. I also hedged part of the portfolio around that same time.

Of course I had no idea that the market would drop as much as it did. But having some simple, actionable rules so you know what to do when changes happen is essential to good investing.

The Dividend Strategy

The Dividend strategy had a rough year. It ended the year down -13.05%.

While this portfolio didn't fall as much as the overall market in Oct.-Dec., it also didn't generate any returns early in the year.

The Dividend strategy is always fully invested. This is to allow the dividends to compound at all times.

Because most of the stocks in this portfolio fell, the overall dividend yield rose to 5.6%. Historically it's been in the 4% to 5% range.

Dividend stocks can be affected by interest rate changes. So it will be interesting to see where interest rates go in 2019.

The Momentum Strategy

The Momentum strategy uses exchange traded funds (ETFs) as opposed to individual stocks.

We take a geographically and asset type diversified group of ETFs and only invest the top 2 or 3 based on momentum. Momentum is simply the total return of the ETF over a set time period.

While I don't have a client chart of Momentum alone, the portfolio was down for the year. Somewhere in the mid single digits loss.

The Momentum portfolio got more conservative in July and stayed that way through the end of the year.

Here is a client chart of all three strategies in roughly one-third each to start the year:

You can see the benefit of having a combo of strategies like this.

You have the possibility of high returns (Growth) and an adaptive strategy that adjusts with the market (Momentum). And all the while the Dividend strategy is chugging away in the background compounding those dividends.

Going Into 2019

Now that you have seen how we did in 2018, let's look at how we're positioned going into 2019.

Here a quick overview:

  • Growth - Remains largely in cash and still hedged. I will be looking for stocks to add when appropriate.
  • Momentum - As of January 2nd, the Momentum portfolio got even more conservative. It now has no stock holding at all.
  • Dividend - The Dividend portfolio will remain fully invested. The interest rate situation will likely have an impact (good or bad) on this strategy in 2019.

What Are Your Thoughts Heading Into 2019?

2018 was the first down year for the overall market in a while. Do you think it's going to continue into 2019?

Leave me a comment or question below. I'll answer every one.

About the Author Tommy Sikes

Tommy is the founder of Wealthific. He's passionate about helping middle class Americans master their money and finances. When not helping people build wealth, Tommy can be found playing soccer, traveling and cheering on the Tar Heels. โšฝ๏ธ๐Ÿงณ๐Ÿ๐Ÿ˜€

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  • Michael Fisher says:

    Thank you for taking the time to put this together and more importantly for watching closely over the markets.

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