I frequently visit my Vanguard account dashboard on the Vanguard website and study the progress of my portfolio. The dashboard includes a tool that specifically tracks the portfolio’s performance. On it, a table gives monthly stats on “Market Gain/Loss,” “Purchases & Withdrawals,” “Income Returns” and more. To the left of each number is an arrow. If the number is positive, the arrow is a green arrow pointed up. If the number is negative, the arrow is a red arrow pointed down.
This color-coding of up and down arrows is standard fare in finance. As a human being, my interpretation of green and red arrows, especially when it comes to the market gain/loss, is predictable: green is gain and is therefore good, and red is loss and is therefore bad!
Fortunately, I can see beyond the trap of seeking short-term pleasure and avoiding short-term pain. And there’s a silver lining, which we will come back to. First, let’s take a look at how my accounts have done. After eye-balling the column, I see the following results on the “Market Gain/Loss” column since starting my Vanguard account in July 2017:*
- For 2017, there are 6 green (gain) and 0 red (loss) arrows.
- For 2018, 7 green, 5 red.
- For 2019, 10 green, 2 red.
- For 2020, 7 green, 5 red.
- For 2021, 10 green, 2 red.
- For 2022, 4 green, 8 red.
- So far in 2023, (through April) 3 green, 1 red.
All in all, in 70 total months (just under six years), there are 47 green arrows (or months with a market gain) and 23 red arrows (or months with a loss). That is a positive return 67% of the time. Not bad. Yet 8 months with a loss in 2022? No wonder it felt like a slog! In the previous four years (2018-2021), there had been 14 such months. This averages out to only 3.5 negative months per year, far less than 8. Also, the two negative months in 2021 were in the final four months of the year. That means from September 2021 through December 2022, there were 10 negative months out of 16.
Yikes. That’s a lot of red!
Of course, I’m not complaining. As I have written before, I am prepared to ride it out. Also, the down months create buying opportunities. For instance, my favorite fund, VTSAX (Vanguard U.S. Total Stock Market), is still hovering around $100, a number it first reached in April of 2021. Here are recent prices I have bought it at over the last six months (this is a combination of automated contributions and manual contributions, hence the variety of dates):
The range of prices is $92.70-101.70, which is exactly a $9 range. Yet notice the frequency of purchases in the range of $99-102. There are eight purchases in this range, out of thirteen. In other words, over 60% of the purchases were in a three dollar price range. Incidentally, this is the same average range I mentioned last December, where I noted that my average purchase price for VTSAX had been $101.52 in 2022, and $100.94 in 2021.
What am I getting at? That from a share ownership perspective, the continued market volatility has kept the purchase price of US Total Stock Market within a fairly consistent range over the past 2 1/3 years (from the beginning of 2021 through April of this year). This range also happens to be a lot cheaper than the fund’s all-time high of $118 reached at the beginning of 2022. Those darn red arrows have meant that share prices have been kept in check!
Bottom line: the recent market period may have been a slog, but I appreciate the benefits.
*Before Vanguard, I spent a bit over two years investing with Betterment.
**For some reason, though these are the same dates, the purchase prices are somewhat different. One was in my Roth IRA, the other was in my Solo 401k.