Performance Update: Irrational Exuberance? – 1500 Days to Freedom

My main goal* was to build an investment and cash portfolio of $1,120,000* ($1,000,000 to retire on and $120,000 to pay off the house) in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers. For now…

Note: I didn’t publish an October Performance Update. I was all set to, but then things went nutty in November that made the October update seem ridiculous to publish.

Alan Greenspan coined the term “irrational exuberance” in a speech on 12/5/1996. It was a warning that the stock market was overvalued. My own portfolio encountered irrational exuberance in November. And by portfolio, I mean Tesla.

Tesla’s stock immediately shot up post-election because shareholders think that the new administration will ease rules for certification of autonomous cars. Currently, if a company wants to operate an autonomous vehicle, they have to get certified in every state separately. Tesla bulls think that the new administration will come up with federal guidelines that will supersede state rules. Since Musk has bet the future of Tesla on a robotaxi network, the stock went bonkers.

The issue I have with this thinking is that certification frameworks don’t matter unless Tesla solves autonomous driving. Here in Colorado on my Model Y, I have to intervene at least once every 50 miles. I’d want to see a rate of intervention in the 1000s of miles to feel confident that Tesla will pull it off. I just don’t know if Tesla is that close to solving autonomy. It could still be years away.

So, I think that the Tesla stock price (forward PE of 100!) is irrational. I saw this as an opportunity and unloaded about 10% of my shares. I may unload more in early 2025 when my capital gains reset.

Note that selling Tesla stock violated my own rules that I wrote about earlier this year: An Index Fund In Reverse. I fully expect that this will come back to bite me in the ass. Now that I’ve put this in writing, Tesla will solve autonomy next year, the stock will double, and this post will age very poorly. Elon Musk is rarely on time, but he usually does what he says he’s going to do.

October/November Performance Updates

October was a meh-riffic month. Our investments went from $5,230,934 to $5,206,435 for a loss of $24,499.

In November, our investments went from $5,206,435 to $5,738,700 for a gain of $532,265! Add $400,000 in primary home equity and we’re at $6,138,700:

All of this feels surreal. My first job paid me about $37,000 or about $70,000 in today’s dollars. So, I’d have to work almost 8 years at that job to make what we made from portfolio appreciation in November. One month!!!

$532,265/$70,000 = 7.6 years (!!!)

Random Thoughts

• Money working is better than you working. Not all jobs are bad, but I’d rather perform work without income being a consideration. I love work on my own terms.
• Give it enough time and your money can work way harder than you ever could. Our portfolio went up $500,000 in November and we’re up almost $1,120,000 for the year. While there are jobs or businesses one could work at to make that kind of money, I’m not smart or clever enough to do them.
• Compound interest is one of the life’s ultimate hacks. If a clown like me can do it, you can too! Of course, it comes with a very big catch; you have to start young. Thank you financial insecurity! (I was deeply worried about not having money when I was young, so saved hard.)
• This is only the beginning. Most likely, I still have decades left. If our nest egg doubles every 10 years and I live to be 80, there will be a new wing of the library in Longmont named after one of my toy dinosaurs:

• I never want money to boss me around. All of this is wonderful. It’s beyond wonderful. Not having to worry about paying for: shelter, food, medical emergencies, a new roof, or car is great. What a place to be! And now that we’re here, our task is to figure out how to use the money to make our lives easier and happier. It’s really cliche but true in that it’s the little things that really bring happiness. The older I get, the more I just want to have a good conversation with a friend. And the happier I am with everything how it is. Life is good.

More 1500 Days!!!

You can also find me (and the dinosaurs) at:

*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.

**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.

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