$50,762.03 | Now What?

Hey guys,

I am writing to you today as my Roth IRA portfolio reaches near its highest value ever. I’ve eclipsed the 50k mark and the market doesn’t seem to want to slow down.

This week, I’ve found myself getting really into the financial and investment banking sector. I’ve watched the movie Margin Call at least four times.

There’s a powerful scene in the movie where all of the senior partners get together in a roundtable and decide to drop the entire position of mortgage-backed securities in a single trading day. They were so levered in the position that if the price of the assets on their books dropped by 25%, then the losses would be greater than the market cap of their entire company.

The movie is fictional, but I imagine similar conversations were had during the ’08 crisis.

Over the last few weeks, we witnessed a similar debacle with family hedge funds and highly levered investments. Morgan Stanley, Goldman Sachs, Deutche banks and others caught Archecos Capital over-levered with equity swaps abbd decided to liquidate billions of dollars in swaps they had with Archegos Capital to get the stocks off of the investment banks’ books. The end result was a massive decline in the share price of the stocks held by the family hedge fund and one investment bank, Credit Suisse, holding the bag on what ended up being a $4.7 billion loss.

What is the lesson here? Market highs are where you need to be the weariest of investing on margin. The more room you can move to the downside means that more room for your borrowed money to lose value.

I’ve found myself thinking about how to best invest in a market like this. But, like any good investor, I am staying in the market. The reason, nobody knows what’s going to happen. Maybe there will be a crash, but maybe the market will go up another ten, twenty or thirty percent before that happens. Also, I am not levered up four or five to one on my investments.

Here’s how my Roth IRA portfolio is performing year-to-date vs. the market:

  • S&P 500 from January 4th – April 14th: +11.56% ((378.23 – 339.03) / 339.03) x 100
  • My portfolio from January 4th – April 14th: +12.08% ((50,762.03 – 6,000 – 331.61) – 39,641.18) / 39,641.18 x 100

Check out my full portfolio here: https://m1.finance/awNd6cXLSiWt

This article is written for entertainment purposes only, and is not meant to be used as investment advice. I do not own the rights to the movie Margin Call, just enjoy watching it.

Thanks for reading!


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