Ten Bagger

Peter Lynch who was very successful running Fidelity's Magellan fund from 1977 to 1990 popularized the term "ten bagger" (also 10-bagger or tenbagger) for a stock investment whose price goes up tenfold from your purchase price.  Earlier this year one of my stocks hit that milestone.  This was a first for me among stocks I had personally purchased (rather than inherited).  The company was Caterpillar (CAT), not perhaps the type of company people would expect to be a ten bagger investment.

I purchased CAT on August 21, 2013 at $83.4499 per share.  As with most of my stock picks I can't claim a lot of thought went into the selection.  I discussed the pick a little here and here.  The stock didn't do much at first dipping below 60 in January, 2016.  The CAT began a slow irregular rise.  But as late as April 2025 it traded below 300.

But then the AI data center building frenzy arrived.  This helped CAT in two ways.  They make the construction equipment needed to construct data centers and the electrical generators needed to power them.  It made for a good story and CAT stock took off.  It closed at 835.24 on April 23, 2026 putting the stock in ten bagger territory.  After falling back for a few days it continued up closing at 1073.46 on June 30, 2026.  This might have been a good day to sell as the next day it closed at 991.41 and has continued to fall from there.  It closed at 782.71 on July 29, 2026, out of ten bagger territory.  It came back a bit on a strong earnings report but has fallen again the last couple of days closing Friday, August 9, 2026 at 842.19.  So I decided I should post this while I could still claim ten bagger status.

The stock is still very richly priced.  While the data center boom will help CAT for the next few years it is questionable that it will cause the kind of large durable increase in CAT's earning power required to justify the current stock price.  According to wikipedia in 2013 CAT had revenue of  $55.66 billion, in 2025 it had revenue of  $67.59 billion. Revenue projections for 2026 are near $80 billion.  It should be noted CAT has bought back about 28% of their shares since 2013.  Still this doesn't seem like the sort of revenue increase would justify a stock price that is ten times higher than it was in 2013. 

Perhaps I should sell my shares but this would incur a large capital gains tax.  So I probably won't.  

Turbo Tax Erases my 2025 Tax Returns

Well this is kind of annoying to say the least.  I wanted to look up my Adjusted Gross Income (AGI) for last year, 2025.  So I started up my copy of Turbo Tax Deluxe 2025 which I had used to do my taxes.  I hadn't used it for months and when I started it up it requested permission to download some updates which I perhaps unwisely granted.  The download took close to an hour (perhaps a warning sign) and when it was finally installed and the program opened my return information (federal and state of New Jersey) for 2025 was nowhere to be found.  The program acted like a new purchased copy.

I eventually exited the program and looking around on my computer was still unable to locate any return information for 2025 except for a pdf copy of my federal return which Turbo Tax could not read.  I believe there should have been somewhere some *.TAX2025 files in some Turbo Tax format which would have contained all the information I had entered while doing my 2024 taxes. But apparently for some reason while updating Turbo Tax erased these files.

This may be a relatively harmless error in my case.  My returns are filed and I have received my refunds.  Hopefully no problems will arise and I will not need to use the program further.  And I do have paper copies.  But obviously this was an extremely bad thing for Turbo Tax to do which could have had much worse consequences.

2024 Portfolio Review

Overall my main portfolio and the market in general (as usual represented by VOO, Vanguard's S&P 500 ETF) performed similarly in 2024 compared to 2023.  In 2024 VOO was up about 24.89% compared to 26.13% in 2023.  And I was up about 18.20% compared to 15.66%.  So the market did a little bit worse and I did a little bit better but still underperformed by about 6.69%.

Breaking things down a little I was about 46.88% invested in VOO, 26.15% in individual stocks, 18.01% in ETFs other than VOO and 8.97% in cash (that is Vanguard's Federal Money Market Fund,VMFXX).  VOO returned 24.89% of which 1.54% was income.  My individual stocks returned 15.98% of which 3.13% was income.  My other ETFs returned 10.19% of which 2.69% was income.  And all of the cash return, 5.23%, was income.  Adding this up produces a return of 18.15% of which about 2.49% is income.  This doesn't quite match the actual return of 18.20% perhaps because I have made some approximations including basically ignoring interest on the dividends received during the year.

My improved relative performance is primarily due to my individual stocks returning 15.98% compared to 5.44% in 2023.  So still lagging the market but by 8.91% instead of 20.69%.  

In June I transferred some cash into the account.  In October I sold my entire CVS position at about 67.5 taking a tax loss as I had come to believe retail drug stores were a bad business.  This was a good decision in the short run as by the end of the year CVS had fallen to about 44.  But it has since recovered nicely and is currently over 90 up about 38.24% so the long run verdict is still open.  Also in October I made some buys none of which have done especially well.  I replaced CVS with VHT, Vanguard's health industry ETF, which is currently down about 1.42%.  I bought PEP, Pepsi, sort of impulsively and it is down 14.5%.  Perhaps I should have given more consideration to the potential reduction in demand for their products due to  growing adoption of the new class of weight loss drugs.  I also again added to VIG and SCHD two dividend growth ETFs.  They have done okay (up 15.79% and 14.43%) lagging the market but beating cash.  These return figures are all price only and compare to 27.54% for VOO over the same time period.  

Blog List Switch

I have replaced the "Lawyers, Guns and Money" blog with the "Awful Avalanche" blog in my blog list.

I was banned from commenting on "Lawyers, Guns and Money" some time ago and have rather belatedly decided I shouldn't be promoting them.  The replacement "Awful Avalanche" gives a Russian nationalist view of the world.  I find it interesting although I often disagree with it. 

Three of the other blogs on my list, "Mr. Money Mustache", "West Hunter" and "Bronte Capital", have become inactive.  However at the moment I don't have any good replacements.  For some reason I haven't been finding a lot of new blogs to follow.  Perhaps blogs are going out of fashion or perhaps I am just less interested. 

For financial reporting I would recommend Matt Levine's email list. "Money Stuff".   And for politics the free email version of Nate Silver's substack, "Silver Bulletin".

Social Security approved

I applied for Social Security on June 1, 2024 in advance of turning 70 later this year.  If I recall correctly the website said it would take 30 days for a decision.  However I didn't hear anything until yesterday, August 31.  I received an email saying a decision had been made and upon logging into their website found out that my application had been approved.  This was expected as my case was pretty straightforward having worked for two big employers a combined 40 years.  Nevertheless it took them three months to approve the application.  This made no difference to me as I had applied as early as possible (four months in advance) and am not due my first check until November.  And I have no urgent need for the money.  However if you do need the money or your application is at all complicated it would probably be a good idea to apply as early as you can.     

The amount of your Social Security monthly benefit depends in part on when you start taking it.  You receive the smallest benefit if you start taking it as soon as you are eligible which is when you are 62.  Past age 62 each month you delay taking it increases the amount until you reach age 70.  Further delay past age 70 is pointless as your benefit stops increasing.  I have read (but not verified) that taking the benefit early or late makes little difference from an actuarial stand point. Based on this, I decided to take it as late as possible as that would give me the biggest benefit if I lived a long time and might need it.  Also I tend to procrastinate.

My full retirement age is 66.  According to Social Security this means that starting your benefit four years early at age 62 costs you 25% compared to starting it at age 66.  Whereas waiting until age 70 increases your benefit by 8% a year or 32%.  In practice it is more complicated as there are various inflation adjustments made each year.  In my case I had maximum earnings each year.  Social Security has computed a  table  giving the initial and current monthly benefit based on your age and year you retired for maximum earners like me.  If I had started taking the benefit at my full retirement age in 2020 I would now be getting $3623 a month.  But by delaying until this year I will getting $4873 a month.  Which is  34.5% more.

WCBS 880 RIP

Last Sunday night I listened to the last few minutes of WCBS 880.   It was one of two all news format radio stations in New York City.  It shut down forever at midnight to be replaced by WHSQ an ESPN sports format station which began broadcasting on the AM 880 frequency one minute later at 12:01.

I was a bit sorry to see it go as I had been listening to it since I moved to this area in 1983.  First in Ossining NY and then in Princeton NJ.  I preferred it to 1010 WINS the other NYC all news format station.  I thought the connection with CBS improved the national and international news coverage.  Also I listened some to Yankees games during the years they were broadcast on WCBS (in a bit of an exception to the all news format).  Mostly while driving but sometimes at home as well.

In recent years WCBS and WINS were owned by the same company and I expect they concluded  that two all news format radio stations was at least one more than NYC really needed.  I suppose I will get use to 1010 WINS soon enough but still this was an unwelcome reminder that nothing lasts forever.    

2023 Portfolio Review

Compared to 2022 my main portfolio in 2023 did better absolutely but worse relative to the market.  As usual I will use VOO, Vanguard's S&P 500 index tracking ETF, as my market benchmark.  In 2022 my portfolio lost 10.79% but outperformed VOO which lost 18.17% by 7.38%.  In 2023 my portfolio was up 15.66% but trailed VOO which was up 26.13% by 10.47%.  For the two years combined I trailed slightly up 3.18% versus 3.21% for VOO.  

In October 2023 I doubled my positions in SCHD and VIG (two ETFs that buy stocks with growing dividends) and increased my position in VPU (Vanguard's utility sector fund).  In what follows I will account for these purchases as if they were made by borrowing from my cash position and repaying the loans without interest at the end of the year.  This is simple but a little biased.

At the start of 2023 I was 45.55% invested in VOO, 30.01% invested in individual stocks, 13.83% invested in ETFs (other than VOO) and 10.61% invested in cash.  During year my VOO position matched the market.  My stocks returned 5.44% underperforming by 20.69 contributing 6.21% to my overall underperformance.  My ETFs returned 11.20% underperforming by 14.95% contributing 2.06% overall.  My cash position returned 5.28% underperforming by 20.85% which contributed 2.21% overall.  This adds up to 10.48% overall underperformance in good agreement with the actual 10.47%. 

Only two of my stocks (JPM and KD) beat the market.  Seven had negative returns (ED, CVS, XOM, MET, NSC DGX, SOUHY and WDS).  One of my ETFs (VGT) beat the market while two (VDE and VPU) had negative returns.

Over the long term I continue to trail the market but perhaps with less volatility as I tend to outperform in bad markets but underperform in good markets.  This may be safer but leads to underperformance in the long bull market we have seen since the 2009 bottom.  Fortunately my approximately 50% position in VOO has kept me from trailing too badly.

Elon Musk

 I recently read Walter Isaacson's lengthy (670 pages with notes in hardcover) 2023 biography of Elon Musk.  This is a narrative account of Musk's life from his childhood in South Africa to his takeover of Twitter.  In my view while not without some points of interest the book is far too long and neglects the big picture.  I don't recommend it.

Elon Musk is of course an important and controversial figure in contemporary American life.  Among other things he helped create and grow Tesla and SpaceX two very successful businesses.  More recently he purchased Twitter.  But at times he seems his own worst enemy behaving erratically and constantly getting into trouble for little reason.  So far he has avoided disaster but his luck may run out at some point.  The purchase of Twitter seemed particularly ill-advised and could be a sign that he is having trouble keeping his life together.

Musk was born in South Africa in 1971.  At 18 he emigrated to Canada to attend college and soon moved to the US.  He was entrepreneurial cofounding Zip2 in 1995.  The company was purchased in 1999 for $305 million of which Musk's share was $22 million.  Musk then cofounded X.com which became part of Paypal.  Paypal was purchased by Ebay for $1.5 billion in 2002.  Musk next founded SpaceX and in 2004 was an early investor in Tesla which he soon came to dominate.  After some early struggles SpaceX and Tesla have both become very successful.   

What are the factors in Musk's success?  A lot of it was luck of course but on the other hand Musk gave himself chances to be lucky by taking risks.  It is hard to win the lottery if you never buy a ticket and Musk bought some tickets.  He was a tough sometimes abusive boss and that can encourage employees to work harder and accomplish more.  He had an advantage here in that rockets and electric cars are the sort of things many engineers want to work on and are willing to tolerate some workplace abuse for the opportunity.  

Another Musk insight is that products and organizations often contain a lot of fat, unnecessary parts and people that can be eliminated in the interests of efficiency.  If carried too far this can be idiotic as in the episode from the book covered in my previous post but in a lot of cases there are major savings available.  Musk also seems to have had reasonable good judgement about what people will find attractive in a product.  However his record here is more mixed as some features like the gulf wing doors on some Tesla's just aren't worth the trouble.

All of this along with Musk's chaotic romantic life are covered in the book but mostly in anecdotal form.  It is often hard to tell what is important and what isn't.  I would have preferred a shorter book with more analysis.  The book has some value, it does provide some insight into Musk and his good points and bad points.  The book is divided into 95 short chapters so you don't have to read it all at once.  Still in the end I expect most people can find better ways to spend their time.

Coverup

I recently finished reading Walter Isaacson's massive biography of Elon Musk.  I plan to give a longer review but for now will just relate one anecdote from the book.   Musk is trying to cut the cost of installing a solar roof.  So according to the book (p. 370-371) Musk advised his people that "... they should question the requirement that installers must work around every vent and chimney sticking up from a house.  The pipes for dryers and ventilator fans should simply be sheared off and the solar roof tiles placed on top of them, he suggested.  The air would still be able to vent under the tiles .."

This is of course idiotic advice.  The air won't vent efficiently if at all.  And more importantly in the case of a dryer exhaust the lint won't find its way out.  It will get hung up and block what little air flow is left.  Which could cause the dryer to overheat and start a fire.  Since lint is extremely flammable this is not good.  

Also even if this solution wasn't dangerous it isn't code which means Musk's company is likely to be eventually forced to fix any solar roofs installed in this way.  Which will cost them far more than if they had done it right in the first place.

In fairness to Musk it isn't clear that this method was ever actually used.  Sometimes his people were able to ignore his stupider suggestions.  And if it was used I expect the additional costs of being forced to redo installations in a code compliant way would have quickly caused the method to be dropped.  Musk in fact expected some of his cost cutting ideas to prove impractical when tried and have to be reversed.

Still this episode shows why some people find Musk easy to dislike.  And also why many people are reluctant to buy houses with solar installations on the roof.  Who knows what problems are lurking.

Leave a Light On

 I got my monthly gas and electric bill a few days ago and was wondering why my electric use was up 64.6%.  Eventually I thought to check my basement.  It wasn't obvious from the top of the stairs (although it was night) but as I started down it became apparent that there was a light on.  Which I eventually located in a far corner.  I don't go down in my basement much so it could have been burning for months.  This was a little annoying as I have done this before.  I believe I actually checked a few times but only from the top of the stairs.

Assuming a 100 watt bulb this is 2.4 KwH a day.  Which amounts to about $.50 a day which isn't a huge amount amount but does add up.  This by itself doesn't explain the full increase in my bill.  Another factor is the billing period was 33 days this year as opposed to 29 days last year which the utility didn't adjust for.  This still doesn't account for the entire increase so possibly there was some other factor.      

 Anyway if you have an attic or basement or closet that you don't use much and that has lights in it it seems to be a good idea to check every so often that you haven't left a light on. 

Election Night Bet

 I recently reviewed "Going Infinite" Michael Lewis's book about the rise and fall of Samuel Bankman-Fried (SBF) and his cryptocurrency exchange FTX.  The book contains some stories about SBF's time at Jane Street Capital.  One of these stories is about trades Jane Street made on election night 2016.

As related in the book (pages 67-71) Jane Street had noted that the financial markets were moving in response to events seen as changing the odds as to whether Hillary Clinton or Donald Trump would win the 2016 US Presidential election with a Trump victory seen as bearish.  Jane Street decided that if they could figure out on election night who was winning faster than anybody else this would give them a profitable edge as they could trade ahead of (front run) the markets. So with SBF playing a major part Jane Street set up a team to rapidly analyze the returns on election night as they came in, update the odds on who would win, and trade on the new information.    By the book's account this worked well with Jane Street acting on updated information minutes before the rest of the market got the word.  To quote the book "... Around one in the morning, after twenty-four thrilling hours without a break, Sam left the trading desk to get some sleep.  The markets seemed to have fully digested the news of Trump's victory.  Jane Street was sitting on maybe the single most profitable trade it had ever done.  ..".  

But then things go wrong.  Again quoting the book "Three hours later he returned to find that the markets had changed their minds about the likely effect of Donald Trump on the world's stock markets.  .. "What had been a three-hundred-million dollar profit for Jane Street was now a three-hundred-million dollar loss," said Sam ..".

But this account leaves an obvious question unanswered.  Why didn't Jane Street nail down their three-hundred-million paper profit by closing out their positions at one in morning after the markets had "fully digested" the fact that Trump had won?   They no longer had an information edge on the rest of the market so leaving the positions on was taking a risk without any expected gain.

Possibly the markets at one in the morning were not liquid enough to easily close out their positions.    However this would suggest the markets had moved in their direction because of their trades and not because the markets were belatedly realizing that Trump was winning.  But then their three-hundred-million dollar paper profit was at least in part an illusion as closing out their trades would inevitably  move the markets against them and they would not be able to realize the full paper profit.

Or possibly there was another reason.  But as told the story doesn't really make sense.  This is one of the weaknesses of Lewis's book, for whatever reason he seems unduly accepting of SBF's view of the world. 

Going Infinite

 I recently read "Going Infinite" a 2023 book by Michael Lewis.  This book chronicles the rise and spectacular fall of Samuel (Sam) Benjamin Bankman-Fried (henceforth SBF as he was known).  Born in 1992 SBF briefly became a multi-billionaire through his cryptocurrency exchange FTX which he founded in 2019.  However it all came crashing down in late 2022 through the equivalent of a bank run.  FTX's customers lost confidence in the exchange and tried to withdraw their funds.  FTX could not meet these withdrawal demands and declared bankruptcy because there was a $8 billion hole in their books.  SBF was soon arrested in the Bahamas (where FTX was then located) and extradited to the US where he was convicted of multiple charges in November 2023. 

I have read a number of Michael Lewis's books.  I liked some of them a lot, others not so much.  In my view this is one of the lemons.  Apparently the book came about because Lewis was asked by an investor friend to meet with SBF and evaluate him.  Lewis met with SBF and formed a favorable impression.  This led to SBF granting Lewis more access so that Lewis could write a portrayal that they probably both expected to be generally positive.  While the book is not clear about sources much of it appears to be based on stories SBF told to Lewis.  But SBF must be considered an unreliable narrator and some of the stories don't make a lot sense if you think about them too much. 

SBF attended MIT graduating in 2014 with a degree in physics and a minor in mathematics.  He then worked for Jane Street Capital for a while before leaving in 2017 to strike out on his own.  He cofounded Alameda Research and then in 2019 FTX.  He maintained a controlling interest in both.  He initially was very successful as cryptocurrency took off.  But the businesses were not built to endure tough times and collapsed in 2022 when cryptocurrency cooled.  The proximate cause was FTX had in effect loaned Alameda $8 billion (of customer deposits which FTX was obligated to safeguard) which Alameda was unable to promptly repay when FTX needed the money to meet customer withdrawals.  A contributing factor was SBF's refusal for whatever reason to adopt the accounting and risk management controls normal for businesses handling billions of dollars.     

The book largely covers SBF's rise with relatively little about his downfall.  It ends before he is tried and convicted after three top lieutenants, Caroline Ellison, Gary Wang and Nishad Singh, testified against him.         

SBF seems to have been a reasonably smart guy who lacked conventional people skills.  But he did seem to have some strange form of charisma which caused people including Lewis to overlook what might otherwise have been seemingly obvious red flags like his firm's lack of a chief financial officer (CFO).  Perhaps something akin to Steve Job's purported reality distortion field.  However as Philip K. Dick famously said: “Reality is that which, when you stop believing in it, doesn't go away.”.  Perhaps SBF believed (and was able to convince others) that you could run a multibillion dollar crypto enterprise without carefully managing risk and not court disaster.  But reality is that you can't. 

One of SBF's eccentric traits was an addiction to video games which extended to playing them during zoom meetings with important people.  To some extent he seems have treated life as a video game where other people are just characters to be manipulated with no need to concern yourself about their fate.  At the end SBF seems detached from reality unable to accept that he has committed serious crimes.  Lewis also seems unwilling to explicitly say this although it is pretty clear from the facts he presents.  But Lewis takes some shots at John Ray who was in charge of administering the bankruptcy estate and recovering what funds he could for the creditors.  Which even if fair were largely irrelevant to the question of SBF's guilt.       

This book wasn't totally worthless but I found it a bit disappointing and won't recommend it.

Sourland Mountain Preserve

 

As when I lived in Ossining I sometimes take walks in nearby parks on weekends weather permitting.  In general I liked the trails in the Ossining area better than the ones around Princeton.  One problem with New Jersey is that the trails can get muddy.  However I have found some satisfactory places to walk near my new home.  Recently I have been venturing a bit further afield including to the Sourland Mountain Preserve which according to google maps is 23 minutes from my house.  A trail map can be found here.

I have mixed feelings about this park.  The trails have a lot of rocks and exposed roots which can make hiking unpleasant.  In addition while you are walking up a mountain (or what in New Jersey passes for a mountain) with several hundred feet of elevation gain the area is heavily wooded so for the most part the views aren't very good.  There is one exception, a natural gas pipeline cuts through the park and the right of way has been cleared of trees.  This leads to some good views including one on a clear day of the New York City skyline which is about 40 miles away.

Referring to the trail map linked above starting from right-hand-side of the parking lot the skyline view can reached by following the trails through the points labelled 1,2,3,C,4,5.  Then looking downhill on a clear day the NYC skyline can be seen from the right-hand-side of the cleared area where the bench is.  It is on the horizon beyond the nearby white domed building.  It is then an easy albeit a little steep in places walk down the pipeline cut back to the parking lot (through locations labelled C,13,TH). 

I took photo Sunday, May 7, from near the bench.   I used a cheap Canon camera which does however have a telephoto lens.  Photos taken using my phone or my camera without using the telephoto feature didn't show the skyline very well.  The photo is about what you can see with the naked eye.  I also had a pair of binoculars which gave a better view.  The big tall building above the center of the white dome is One World Trade Center (aka the Freedom Tower).  This was a relatively clear day, I have been there on two other days when the skyline was just an indistinct smudge on the horizon although still visible if you knew exactly where to look.

2022 Taxes

Hopefully I am now done with my 2022 state and federal income taxes.  I received a refund check from New Jersey last Wednesday, May 17, and deposited it Friday.  As usual I did my taxes using the TurboTax Deluxe program.   Intuit (publisher of the TurboTax programs) tries to upsell more expensive versions of the program but I have always found the Deluxe version to be sufficient.  I filed the returns a few days early on April 12.  I submitted the federal return electronically shortly after midnight and mailed the NJ return on the way to work.  TurboTax tells you to expect to wait 24-48 hours to receive conformation that your return was accepted but in recent years I have gotten a federal confirmation in just a few minutes.  38 minutes this year.  I always mail my New Jersey return because TurboTax charges a fee to file it electronically.

I owed a considerable amount on the federal return.  This was largely because I had some US savings bonds come due (reach final maturity after 30 years) last year.  Tax on savings bond interest is deferred until the bonds are redeemed which is nice but means a big bill when they finally come due.  And the income is considered ordinary and doesn't receive the favorable tax treatment capital gains and dividends do.  Of course I knew the bonds were going to come due and had increased my estimated tax payments but not as it turned out by enough.  I still got a New Jersey refund because savings bond interest (like all interest paid by the federal government) is exempt from state taxes.

I didn't have any major issues with the program.  The handling of state income refunds is no longer a problem as Trump's changes to the tax laws mean I now take the standard deduction and don't deduct state income tax.  Although I live in a blue state the essential elimination of the deduction for state income tax hasn't hurt me because I had been paying the alternative minimum tax which didn't allow this deduction. 

Rare Event

Earlier this month while reviewing my checking account I noticed an oddity.  The last four withdrawals (bill payments for somewhat random amounts) had added up to exactly $1,000.00.  This is pretty unlikely.  Perhaps roughly a one in 100,000 chance of adding up to an exact multiple of $1,000.00.  Recently I have been averaging about 10 transactions per month for this account.  So over 50 years there would be about 6,000 chances for this to occur.  Of course I might also have noticed if some different small number of consecutive transactions had done this.  Still this seems like a once in a lifetime event or close to it.

Making the event even less likely (although probably more noticeable) the before and after balance in the account was an even dollar amount.

2022 Portfolio Review

Last year was a bad year for stocks.  The market as represented by VOO, Vanguard's S&P 500 index fund ETF, was off 18.17% (consisting of a capital loss of 19.53% partially offset by dividends of 1.36%).  My main brokerage account did quite a bit better being off only 10.79% which is outperformance of 7.38% .

During the year I made a number of moves.  Early in the year I sold my WBK ADR's.  WBK is an Australian bank that had not done well and when it was announced the ADR program would be terminated selling seemed the simplest thing to do.  Near the end of the year I belatedly sold my INTC as after many years of missteps I finally got fed up enough to sell.  At the same time I bought VGT, Vanguard's technology ETF, to keep exposure to the sector.  VGT has close to 40% of its funds in just two stocks, AAPL and MSFT.  I would prefer less concentration but bought it anyway.  I also bought RY and BMO the two of the five big Canadian banks that I didn't already own.  And I bought VIG and SCHD two ETFs that try to buy stocks with growing dividends.  Both have low expense ratios and good records.  However VIG invests more in stocks with low current yields than SCHD.  Currently VIG is yielding 2.00%, SCHD 3.63% (compare to VOO at 1.65%).

The following performance figures aren't super precise.  I calculated yearly returns for the buys, sells and dividends received as if the money was kept in cash without interest for the remainder of the year.  All interest on my cash position was attributed to the remaining cash somewhat overstating the actual yield.  As usual I added Canadian tax withheld back in as this is intended to be a before tax accounting.

At the beginning of  2022 I was 50.48% invested in VOO which of course matched the market (as measured by VOO).  I was 29.78% invested in individual stocks which with a return of -4.03% (-6.88% capital, 2.84% income) outperformed the market by 14.14% or 4.21% overall.  I was 13.26% invested in ETFs (besides VOO) which with a return of -4.38% ( -6.99% capital, 2.61% income) outperformed the market by 13.79% or 1.83% overall.  And my cash position of 6.48% (which excludes the cash used for buys made during the year) returned 2.46% for outperformance of 20.63% or 1.33% overall.

4.21%, 1.83% and 1.33% adds up to 7.37% of outperformance in good agreement with the 7.38% cited above.  My performance relative to the market had previously been pretty bad, these results make the overall comparison more respectable although I am still trailing.  However it is possible this performance in a bad market year shows that my portfolio is safer than the market something I am willing to sacrifice a little in expected total return for.  However in a generally rising market my inability to stay fully invested has been a drag on results.  And there is little justification for it as I have substantial cash reserves outside this account.

Pension Unguaranteed

 I started drawing a pension from IBM late in 2009 in the form of a single life annuity.  That is I will receive a fixed monthly payment for the rest of my life.  Initially less than half the monthly payment was guaranteed by the government through the PBGC.  However as I explained here over time this gradually increased until in 2017 the entire amount became guaranteed.  I had thought this meant I had nothing left to worry about (with respect to a default) however this was not quite correct.

Effective January 1, 2023 IBM paid the two largest insurance companies in the United States, MetLife and Prudential, to assume this pension obligation.  Each will be responsible for half presumably to spread the risk.  In the process the PBGC guarantee disappeared which I had not realized could happen.  There are state insurance guarantee funds which will provide some protection for these annuities but it appears that at least in some cases not for the full amount.  Although the risk of a default appears quite small it is a little disconcerting to be in any danger when I had thought I was totally safe in this regard.

Realistically the biggest risk to the pension value has been and remains inflation.  As of the end 2022 the value of my monthly pension payments as measured by the consumer price index (CPI) has decreased by 27%.  So the value has been slowly eroding.  Or over the last two years not so slowly as the decrease in value at the end of 2020 was only 17%.  Fortunately I have other financial resources.  However someone solely supported by a fixed income in retirement is quite vulnerable to inflation over time. 

Thunderbird

As well as the hardware problems mentioned in my last post I also recently had a software problem.  Starting on Tuesday June 7, 2022 the default Windows 10 email program (Version 16005.14326.20970.0) starting displaying some of my received emails as unreadable markup language gibberish. Strangely my oldest machine using the default Windows Vista email program was still able to display these emails in a human readable format. Some internet research provided no clue as to what was going wrong or how to fix it.  So I decided to try the free email program Thunderbird.

Downloading Thunderbird was easy but getting it to communicate correctly with my Aol email server was a bit aggravating. If you make a mistake you can get into an unfixable state which requires erasing the Thunderbird folder in an obscure Windows directory and starting over. However with the help of considerable internet research and trial and error I eventually got things working.  Once set up correctly Thunderbird seems to work fine. The problematic emails are now readable.

So this problem ultimately wasn't a big deal. However it left me a bit annoyed with Microsoft. It is not to their credit that the Windows Vista email program seems to be superior to the Windows 10 one.  As well displaying emails correctly I prefer the whole user interface.  I much prefer the Windows Vista photo gallery program as well.  It seems like Microsoft figures that it doesn't pay to spend too much money on these sorts of basic functions. 

Lenovo Chromebook 3

Early in 2020 I complained about a cracked screen on my HP notebook computer (model 15-b0015dx) which HP refused to fix under their warranty.  However I continued to use the machine for web browsing.  Besides the cracked screen the computer was prone to overheating and shutting down.  Perhaps this was causing long term damage as recently the disc drive appears to have progressively failed making the machine unusable.  The symptoms were as follows.  First the computer started closing some windows immediately after opening them.  This made some programs like Microsoft Solitaire unusable but others like the web browser continued to work normally.  Various purported remedies found on the internet failed to fix the problem but I didn't suspect a hardware issue at the time.  Then a few weeks later I noticed some of the icons normally on my desktop were missing.  I tried to reboot the computer to fix this but I ended up in the Windows Recovery Environment instead after some messages about automatic repair failing.  The recovery environment provides a MS-DOS window.  MS-DOS commands seemed to be working normally and I was able to save a couple files by copying them from the C: drive to a memory stick.  Then perhaps unwisely I tried running chkdsk.  This ran for over a day reported numerous errors and seems to have damaged my hard drive further.  When it finally finished MS-DOS could no longer find the C: drive making it hard to do much of anything.  Fortunately I had already saved the file I cared about most.       

My older Dell laptop which I had not been using much had failed more abruptly (probably also with a bad disc drive) a few months earlier so I needed a new machine for web browsing.  I ended up ordering a Lenovo Chromebook 3 - Model 82BA001FUS (11.6" HD Laptop - Celeron N4020 - 4GB Memory - 64GB eMMC - Onyx Black)  on sale from Best Buy for $79.  It was delivered a few days ago and I have been trying it out.

Chromebooks use Google's Chrome OS instead of  Microsoft Windows.  Together with a somewhat different keyboard layout this took a little getting used to.  It seems to work okay for web browsing the primary intended use.  However I don't (at least so far) find it as pleasant to use as the HP notebook (even with its problems).  The screen is noticeably smaller and displays less of a typical web page making for more paging up and down.  And I find the keyboard a bit awkward.  Although this is in part lack of familiarity.  It takes a little time to get used to using the alt key to emulate some of the missing keys (so for example delate is alt + backspace, page up is alt + up arrow and so on).  On the plus side the machine seems sturdier than the HP notebook and hopefully will hold up better over time.  The solid state drive is faster and may be more reliable than a mechanical disk drive but it offers considerably less storage and won't last forever as each memory cell can only be written to a limited number of times before becoming unreliable.

Bottom line I was attracted to this machine because of the cheap price and it seems functional.  However it is clearly low end, many people will prefer to pay more for a better machine.

Gas Pains

Last Sunday (June 19) I filled up my gas tank.  This has been becoming more expensive recently and this time the bill was particularly steep, $69.41.  I suspected this might be the most I had ever paid for a fill up and as best I can tell this is correct.  I did pay over $65 four times in a row during the summer of 2008 but the most was $67.38 on July 26.  This was my previous record.  Of course adjusted for inflation the 2008 amounts would still be higher.  Somehow I suspect it won't take 14 years to beat the new record.