2020 Portfolio Review: Falling Through the Bottom

2020 was an unprecedented year in every facet of our lives. If you’ve been following my journey, you’ll know I’ve taken big risks — won some, lost plenty. And last year was no exception.

Lesson 1: Have your ‘house’ in order

Around late February 2020, my partner and I were thrust into a precarious living situation that involved potentially offloading our property to purchase a second one (note: townhouse special assessments are not your friend!). Prior to March 9th, this became a reality. Unfortunately for me, I was still fully invested and leveraged in the market. Needless to say, I committed the gravest of sins: panic selling. The choice became either sell now and have money to purchase a property, or hold on tight and ride out what could be a long recovery. By majority accounts in March 2020, things were looking extremely bleak: unprecedented global shutdown, unprecedented stock market collapse, unprecedented health care disaster, and the impetus that would unhinge the bubbly housing market from its bearings.

Nope. That didn’t happen.

I had no choice but to sell. And I sold at a loss — almost 50k overall. In hindsight, when I was eyeing the purchase of every major stock on the TSX on the literal bottom on that fateful Monday in March, my mind said no. I must put family over greed. I will have time to buy back in.

Again, didn’t happen.

Our properties sold in May, and we immediately began looking for “deals” as regulators called for 10-20% drops in the housing market.

We actually did buy a house in August and naturally, with my luck, the deal fell through — the homeowner had open permits on their home, to be fixed by municipal orders, which never happened — and so, a mutual release was signed with days until closing. Pro tip: Google a home address before buying it, and pay your lawyer for a permit search. Trust me.

I can sit here and justify my losses as reasonable given the nightmare scenario that played out in my personal life at the exact same time the world was coming to a stand still. At the end of the day, there were other options. We could have made a decision to rent. However, at the time, consensus was the market would be down for a while and housing would fall. So based on those assumptions, my hand was dealt.

Lesson 2: Stick to your game plan and hold some cash

On March 9, the Monday after Russia and OPEC had their falling out and oil prices went negative, and just as COVID lockdowns were about to shut down the world, I offloaded most of my stock. My portfolio was fairly heavily weighted in energy names, which just two months prior were sitting in my account +30%, only to be sold off -30%+. The stocks I should have kept, and knew I should have kept, I sold. My mindset at that moment was: hold on and potentially sit at a loss for years, having no further capital for real estate (which, again, everyone was calling the bubble to ‘pop’), or, set up my family with a home now that we were thrust from ours. I chose family.

(BTW, stocks I should have held: all banks, Brookfield Renewable, Transalta Renewables, CanWel Building Materials Group. You can see by looking at their charts that March was the time to LOAD.)

As I mentioned above, we did buy a house, and we lost a house.

So there went 2020, with a sizeable portfolio loss while everyone else was making money and not even a home to show for it.
And we all know what happened to global real estate prices! So not only am I down, but the property we would have owned is roughly 100k more expensive now. Whichever of you owns the lucky horseshoe, send it my way.

Lesson 3: Be greedy when others are fearful

Let me preface this by saying: it never hurts to have some cash on hand, because you never know.

What we’ve all learned this year is that the markets can be rattled, but not sank. Buy at max fear. In fact, leverage up at max fear.
Leverage has been my whole philosophy with a long game in mind.
Life sometimes has other plans.

The long game was cut short. I ate another loss.

We continue to rent while searching for a property, but based on experience I can foresee purchasing at peak real estate and the market crashing days after we close the deal. It would be my luck.

At the end of the day, slow and steady wins the race.

… which I will continue to do. But I’m also determined to make the comeback. My November purchase of Enbridge (160k @ $39CAD) is my big bet on energy, and I’m happy to hold it should the economy sour.

Falling through the bottom while everyone else posted record returns hasn’t been an easy pill to swallow.

I hope your adventures have been profitable.

Cheers to your continued prosperity.
And a little bit of luck.

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