Diary of a future rentier (81)

This post is part 80 of 86 in the series Diary of a future rentier.

When I recently watched CNBC, a flashback suddenly took me back to the year 2000. I saw myself, barely dry behind the ears, having only been in the workforce for three years. The Nasdaq was at its peak. Its value had increased sixfold in just five years. It was a big party. Everyone was rushing to buy tech stocks.

I can still picture the scene clearly, as if it were yesterday. CNBC was scrolling through the tech stock lists in the background. Everything was green. JDS Uniphase, flagship title of the time, was gaining between five and ten percent, and it was like that every day. I was next to my ex, a good girl who is unfortunately no longer of this world. My brain was boiling.

I had nearly CHF 50,000 in savings, which was already quite a feat considering how little time I had been working. Especially since the salary I was earning at the time was frankly scandalous: 4,000 francs per month, despite having a university degree in my pocket. At the same time, I only had myself to support, so it was also much easier to put some money aside without depriving myself in any way.

As I said, my brain was overheating. If I put all my savings into a few Nasdaq stocks like JDSU, I could earn around 3,000 bucks a day without doing anything. I already saw myself as a rentier. I was a dreamer and very naive at that time.

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Diary of a future rentier (81)
Evolution of the Nasdaq from 1995 to 2000

Alors je me suis jeté sur mon vieux PC 486. Mon modem 56K se mit à crépiter durant plusieurs secondes. Il y avait quelque chose de magique à se connecter sur la toile à l'époque. Après quelques recherches sur AltaVista, je tombais sur la solution de Credit Suisse : Direct Net, qui allait devenir mon tout premier broker. La suite on la connaît : éclatement de la bulle dotcom quelques semaines plus tard, puis effondrement des deux tours WTC l'année suivante, faillite de Swissair, bref le bordel complet.

Diary of a future rentier (81)
Evolution of the Nasdaq from 2000 to 2003

It's been 21 years since that day in front of CNBC. Now, the 3,000 bucks a day I was expecting back then is commonplace. Sometimes it's less, sometimes I lose, but sometimes it's more. Much more.

The dream finally came true, despite many difficult setbacks before getting there.

I still dream of elsewhere. On the other hand, naivety has given way to a good dose of critical sense. The latter seems more necessary than ever in these times. I know that I will lose again, but I also know that I will be able to get up to become stronger, again and again.

 

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24 thoughts on “Journal d’un futur rentier (81)”

  1. Philip of Habsburg

    Amazing how much the 2000 chart looks similar to the 2021 chart!!

    Besides, it seems that the market has lost its momentum from the beginning of the year. For the future, everything depends on covid and the results of the vaccines as far as I'm concerned.

    My cash is still ready, it has only increased over the last year :) and my stocks are ridiculously high haha!

    AltaVista… you remind me of the behemoth my father bought, it was bliss haha!

    1. Amazing how much the 2000 chart looks similar to the 2021 chart!!

      History is an eternal recommencement…

      AltaVista… you remind me of the behemoth my father bought, it was bliss haha!

      I didn't remember it was listed on the stock exchange!

      1. Philip of Habsburg

        I was talking about the computer my father had bought. I was consulting AltaVista on it. The stock market was far from being a source of interest at that time! I preferred to spend hours conversing with strangers on ICQ or others hahaha

      1. Wow!! That's huge! Do you have a very large capital or a crazy return? Or both? In any case, well done!!!

      2. Thank you. Everything is relative, it depends on what we compare ourselves to. I have a return that I find correct associated with a capital that holds up.
        Ultimately, what matters is not what you can earn per day, but rather over a year, or even several years. It's all well and good to earn several thousand francs per day for several months on Tesla or Bitcoin, if you lose everything or almost everything in the space of a few weeks. That's why it's important to diversify and follow an intelligent allocation of your assets. So yield and capital are only one part of the equation. Volatility is another, as I explain in my book " The determinants of wealth" .

  2. Indeed, when I see the volatility of the Nasdaq in recent days it makes me seasick… Tesla & co are definitely not investments. I would even say that it is no longer speculation either: it is just complete nonsense, even worse than a lottery ticket!

    1. I don't remember where I read it, maybe it was even one of you, but someone said that when the pandemic was over, people would finally stop thinking about corona. They could then open their eyes to the huge gap between the stock market euphoria and the bleak economic outlook. The awakening may be bumpy...

    2. Hoho, Tesla is taking 10% in the teeth. In two months the stock went from 900 to 550 USD, I'm laughing, I'm laughing 🙂

      This is what I call an electric atmosphere… 😉

      1. I would like to be wrong but it wouldn't even surprise me if there was a new rush to take advantage of the stock's drop....

      2. The worst part is that with the rise of bitcoin, Tesla will make "profits" blindly attracting investors... Tesla is no longer really a car manufacturer (was it ever?) but a technology company that sells cars... I look forward to seeing the half-year results!

  3. I especially hope that it will put the quality and/or value style back on the front of the stage to the detriment of the growth mantra. In any case, I am currently taking advantage of this disdain for cushy values to stock up on Nestlé, Galenica & co as well as good old cantonal banks. 🙂

    1. Sooner or later it will come back. And, unlike sex, the longer it lasts, the worse it will be. At least for those who speculate on unlimited growth.

    2. These good old cantonal banks are still doing their job well, with interesting dividends too. I had asked myself the question some time ago of making a portfolio on these banks precisely, but the banks and I do not understand each other well… Maybe Jérôme, Dividinde or someone else would write us an article on this subject? It could be interesting, what do you think?

      1. I have been a shareholder of BCVs for about twenty years. The performance of the stock and its relatively low volatility are incredible:
        cantonal bank of valais
        Not to mention that the current dividend yield is over 3%, which is very rare these days.

        The specialist in cantonal banks is Dividinde. He wrote us articles on this subject:
        https://www.dividendes.ch/2019/03/revue-des-augmentations-de-dividendes-des-banques-cantonales-en-2019/
        https://www.dividendes.ch/2018/12/analyse-de-la-banque-cantonale-de-lucerne-luknswx/

        Maybe he wants to write us a new little article on this subject 🙂 ?

  4. The cantonal banks represent about 10% of my portfolio and they have given me during the Covid crash exactly what I pay them for: great stability as well as safe and juicy dividends.

    After that, we should not expect large capital gains from these shares; their main interest lies in their almost obligatory nature. Dividends are often stable rather than increasing.

    I'm far too preoccupied and depressed at the moment (thanks to my job) to write a whole article on cantonal banks, but I can quickly go over each one:

    Glarus and Lucerne: my two favourites, high operational quality and safety, attractive valuation: buy!

    Valiant: the biggest dividend, the stock is very cheap, but the stock struggles to offer positive performance: hold, or only a small position.

    Geneva: correct but negative trend, sluggish dividend: I prefer not to touch it for the moment.

    Vaudoise: the best of the cantonal banks in terms of its diversification and return on equity; unfortunately the stock is eternally expensive: hold, wait for lower prices to buy.

    Basel-Landschaft and Bern: attractive dividends but lack of momentum, the price is constantly stagnating: stay on the sidelines or only really buy for the dividend.

    Basel City: big dividend but poor quality: don't touch it.

    Valais: good dividend, high quality bank, not cheap but still interesting, the price seems to be buying its consolidation phase: buy.

    Grisons: good quality but title too expensive and dividend rather low: stay aside.

    Zug: top bank but title really too expensive.

    St. Gallen: good dividend, rather good quality, there is some potential (but also risks!) with its adventures in Germany: I recommend buying but it is rather cheeky!

    Thurgau and Jura: to forget.

    That's it in a few words, I hope I haven't forgotten any.

    1. Thanks bro for this quick but effective overview!
      Sorry to hear that you are preoccupied and depressed about your job.
      I guess the Chinese virus doesn't help matters. At least for me, as much as I don't give a damn about it from a health point of view, it has ruined my life at work (well, what's left of it :-)).
      Courage. As some politicians say, there is light at the end of the tunnel.
      Except that for us the tunnel is the Rat Race and the light is financial independence.

  5. Wow, thank you very much @Dividinde for this quick review of the literature 🙂 Indeed, a small share can give stability to a portfolio and in all weathers which lightens the mind a little in times of uncertainty.
    Good luck with your job and I hope that financial independence is coming for you too…

  6. Thank you Jérôme and AGU for your support. At work it's really crap right now. Nothing to do with Covid, but a big restructuring with a lot of uncertainties and not exactly positive changes... I'm going to have to change some of my tasks against my will and lose a few % of salary at the same time (even if of course HR keeps telling us that the goal of this reorganization is not to save money!!!).

    In short, I'm in the middle of a rat race. I'm disgusted but not really completely surprised either, given that it's been a long time since I understood how all this worked.

    Financial independence will be (according to my latest projections) in 11-12 years at the earliest for me, so I still have to arm myself with patience and grit my teeth...

    1. I've been through a lot of restructurings and it's always the same old story. There are always "good" excuses: competition, digitalization, the strong franc... Now we have COVID. The consequences are always the same: increased working hours and/or workload for the same salary, or salary cuts, layoffs, outsourcing, etc. It's the same mess every time, employees suffer. However, I have never once seen a member of a senior management reduce their income. Quite the contrary, salary increases and bonus payments are going well for them while the others are left to pick up the pieces. Pure Rat Race. Yet to hear them tell it, with all the "catastrophes" that the economy has suffered in recent decades, we would live in a world full of uncertainty and very risky. Yet where have the enormous productivity gains from globalization, digitalization, robotization gone... if not into their pockets?

      In short, I don't know if this can apply to your situation, but in the past I have taken advantage of these crises to lower my activity rate. It's a good way for an employer restructuring to save money. The downside is that you risk doing the same work in a much shorter period of time... so watch out for stress!

  7. Reducing my activity rate, I've been thinking about it for some time, well before this restructuring story. In fact, it's mainly a question of taxes, because my income is currently taxed at the maximum: salary at 100% + rental value of my apartment + dividends!

    For reasons specific to my job (I prefer not to give too many details here), I will stay at 100% for another 2 to 2 and a half years. Then I plan to move to 80%, then a few years later to 60 or even 50%.

    You are right that part-time work is often a scam, on the other hand there is not a big difference between being paid 100% but working around 120%, and being paid 80% but having to provide around 100%…

    If I remember correctly what you have written in recent years, you are nevertheless generally much happier (at work and in life) since you have successively reduced your activity rate?

    1. In fact it is mainly a question of taxes, because my income is currently taxed at the maximum: salary at 100% + rental value of my apartment + dividends!

      Exactly. That's what I've been saying here for quite some time now. Aside from being able to quickly enjoy financial independence, in short, enjoy life, taxation is what pushes you the most to reduce your activity rate as soon as passive income goes off the rails. With the progressive tax rate, it goes up at an incredible speed, especially when you exceed 100k of taxable net income.

      on the other hand there is not a big difference between being paid 100% but working at around 120%, and being paid 80% but having to provide around 100%…

      Just once again. I have often considered the 80% in this light, a kind of protective bulwark against endless days/weeks. The 80% is also often a necessary step before going lower.

      If I remember correctly what you have written in recent years, you are nevertheless generally much happier (at work and in life) since you have successively reduced your activity rate?

      Of course! I started to (re)live normally when I returned to a normal 100% (about 40 h/week). It was already a huge plus compared to before in terms of quality of life and ties with my family. The 80% then was a kind of trigger where I started to feel that I was leaving the Rat Race, even if my head was still too much at work for my liking at times (precisely because you still have to often take on the burden of a 100%). The big milestone was reached below 25h/week (60%). There things really change perspective. You work less than half the days of the week. The letting go is total or almost.

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