Portfolio Update

This week, it's time for my monthly portfolio update and a look at how I have diversified my holdings broadly across a number of asset classes with some commentary.  It wasn't a great month with the overall portfolio declining 3.8%.  Most of that was driven by weakness in Bitcoin and some of the high growth tech stocks I own in my trading portfolio, although both have started to recover the last few days.  The broader stock investments in my 401(k) performed well, posting a 3.7% increase from last month which helped offset losses elsewhere.  

With a buy and hold mindset, particularly for Bitcoin, I don't mind the frequently wild short term fluctuations and actually do like to see the lack of correlation between broader stock holdings and Bitcoin, which helps my overall portfolio diversification strategy.  Last week I reviewed the top 20 cryptocurrencies if you're interested - my top picks continue to be Bitcoin, Etherium and Litecoin.  I continue to favor a heavier portfolio mix of hard assets including real estate, Bitcoin, gold/silver and commodities in the current fiscal and monetary environment.  There are many good arguments on both sides of the inflation / deflation question from many very smart people and I still think it makes sense to prepare for either situation rather than trying to make a directional bet on one or the other.  Indeed, we could see inflation followed by deflation (i.e., both scenarios could unfold in the next few years).  

One thing is for sure:  It's important to review your portfolio and make adjustments where appropriate as things change - not trading, but rather actively managing your asset allocation.  Passively investing in index funds is no longer a guaranteed way to make money given current market dynamics.

Here's the breakdown:

Cash - 11.6% (moved out of TIPS into cash to see what happens with interest rates, especially with Fed meeting next week and recent action in 10 year Treasuries - TIPS were selling off last week as longer dated bonds rallied)US Large Cap - 10.2%US Mid Cap - 3.0%US Small Cap - 3.0%International - 6.2% (split evenly between emerging and developed markets)Commodities - 6.4% (these performed well - up 1.6% over last month)Bonds - 9.1%Real Estate - 24.5% (has been a particularly strong performer recently)Private Equity - 10.8% (added a couple new investments this month on SeedInvest and continuing to build a portfolio of small early stage investments focused on artificial intelligence, genomics and fintech)Bitcoin - 10.9% (includes direct Bitcoin holdings mostly, plus Grayscale Bitcoin Trust and Microstrategy - during the month I sold some stocks and increased direct Bitcoin holdings, buying the most recent dip)Other - 4.1% (includes physical gold and silver and royalties) I try to keep a disciplined approach on my asset targets and trade in and out of positions only as necessary.  I also try to be patient with unrealized losses and don't allow those to dictate my strategy.  

I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2021.  To see all my books on investing and leadership, click here.  
  Stay safe, healthy and positive.