My Quarter End: Q2 2013

I seriously cannot believe that 2013 is already half over! I mean seriously, where does the time go? Nonetheless we are here at another quarter end and my total net worth today stands strong at $315,794.83, which equates out to an eleven thousand dollar jump from the end of last quarter. And quite frankly on paper, heading into the summer season at the beginning of the year, I expected Q2 to at the most rake in a jump of under ten thousand dollars.

I anticipated this drop off thanks to the historically proven and annual tradition otherwise known as the summer sell off season. And what a sell off it was! Bernanke opened his big stupid mouth and the market tanked for quite a few days in a row there towards the end of June. But as much as I would like to bash “Big” Ben, a lot of the drop during Q2 had little to do with what the Fed plans to do. Instead the market is reacting to rising interest rates that have been at historic lows pretty much since Obama took office. That’s almost the entire length in between Summer Olympic games that rates have been this low. I mean the Wall Street Journal reported that in December of 2007 a 15 year fixed rate mortgage on average was at around 5.85% and as of today we can get that same mortgage for well under 4%.

What I interpret happening is that lenders are starting to see an uptick in mortgage applications and approvals and with these first signs of a pulse rate from American borrowers, lenders are responding by rising their rates accordingly as they anticipate higher demand coming on the horizon. Coupled with annual profit taking and low summer trading volume and voila! We experienced a bit of a downturn on the big board to close out Q2 of 2013. I anticipate a slightly steeper slip in the market by the start of fall and at best growth will be stagnant as M&A news takes its annual summer breather.

On my personal net worth sheet we saw our real estate and equity holdings sustain a general rise over the last quarter. I made a gutsy move earlier in this very quarter as I moved assets within my 401(k) at work. The mutual fund options at my company pale in comparison to the high quality and proven winners in my ROTH and our taxable brokerage account. I can’t say there was exactly one single thing that made me make the switch from a bond fund to a few mediocre mutual funds, but fundamentally I saw that the mediocre funds were averaging a little over 7% since inception and were old enough to be out of diapers, so I kind of said, “What the hell, why not?” And finally getting out of the bond fund helped spur some of the growth we saw in our equity portfolio during Q2 even despite that brief hiccup of a downturn.

Looking forward I still don’t expect to see housing make a booming comeback. As borrowers and lenders get more confident in purchasing I firmly believe that confidence will also rise with the shadow sellers who will unleash at least 3 years’ worth of shadow inventory into the market as they see some stabilization throughout the country and in their local areas. We are not out of the woods yet but we’re getting close to ripping the Band-Aid off.