Checkin' In

Brain Surgery and Portfolio Review Part One

Well, the recovery continues. My head is still feeling it a bit, but slowly progressing forward. I’ve been writing this off-and-on over the past week and my brain apparently decided to let go off the pain about 3-4 days ago so, that gets a 👍.

So, what exactly is the issue? Well, apparently it was a oligodendroglioma (sure…say that three times really fast). This means that it has been growing for awhile…we’re not sure exactly how long. Maybe it has been there a few months, but more likely it’s been there for somewhere between 1-3 years (or maybe longer). I KNEW that there was a reason I planned to retire early. I just didn’t know that the reason involved brain surgery. Oh, well…on with the plan.

So, we had the brain surgery a couple weeks ago (actually 3.5 weeks ago) and now it is time to continue with the plan. The first step is going to be a bit brutal in that it will involve the loss of hair, likely some nausea, etc. In other words, some radiation/chemotherapy for about the next 7 months — YIKES! On the other hand, the radiation is just for the next 6 weeks and then there will be chemotherapy for awhile. We’ll get through it and on to the other side. What this means is that we will probably be a bit more sporadic as we move on over the next several months. I’ll still check in occasionally, but probably less consistently (don’t expect the 2:00 AM posting every week). That said, if we’re on week four without any updates, be a bit concerned. Even if it is just a short update, we should have one coming your way about every 2-3 weeks.

My hope is that sometime between July and August we are in the “all-clear” zone. This will mean occasional check-ins with MRIs and such, but otherwise I should be good to go. As a side note, this will be a bit of a challenge for me in that my natural position is that doctor’s visits are less than ideal. This does not mean that they aren’t worthwhile, but that they may be a bit on the “reduce the concern” side rather than necessary. Hopefully, I’m being a bit pessimistic about this.

Let’s Get Back To The Ballgame!

Well, let’s get back to firing on all cylinders. Yes, that means targeting a bit of finance with this blog before we call it a week. Let me explore a touch of my portfolio. First, a bit of a disclaimer. This portfolio combines a bit of a barbell-type portfolio in that it is made up of about 50%+ Efficient Markets Hypothesis positions (largely ETFs designed to be held over the long-term), a bit of a barbell position (a little too much cash), and some individual selections (farms, real estate, and individual positions — none of which make up more than 2-3% of the portfolio). The farms technically do as a group (accounting for about 5% of the portfolio), but no one farm accounts for more than 1.5%. Our portfolio (my wife and I) is largely made up cash (probably too much), ETFs, individual positions, and then a variety of other stuff ranging from farms (through AcreTrader) and real estate (through Fundrise and other).

The cash position should probably be closer to 15% of the overall position and instead it probably is around 25%. My plan is to slowly reduce that back towards 15-20% over the next year or two. Some of that will happen naturally as we start living off of the cash going forward. The other 5-10% will need to be moved more gradually towards investment decisions.

AcreTrader

Here I have 6 farms invested across 2 countries. Let’s go through the farms.

East Highline 160 Farm

This was one of the first farms that I purchased which closed on 12-15-2020. The farm cost $24,175 and is expected to yield 8.8% overall with a cash yield of 2.9% over a 5-10 year time frame. The current crop is alfalfa and is expected to be in place for the next approximately 3-4 years.

Wabash River Farm

The Wabash River Farm was priced at $20,850 with a cash yield of 2.4% and an estimated cash yield of 8.3% over the next 5-10 years. The crop is a mix of corn and soybeans.

Valliente Orchard Farm

The Valliente Orchard Farm was priced a bit higher at $40,000 with a cash yield of 0.50% for the first 5-6 years. The reason is that the farm will not be active for a few years as the trees are being purchased and planted. In 2022, a large water cooler (2-million gallons) will be built and then trees will be delivered in March 2023. The first fruit harvest will not occur until 2025. This one is going to take some patience, but the payoff should be down the road after 2026.

Barrett River Farm

The Barrett River Farm was initially issued for $24,660 and a cash yield of 2.3% and total return of 8.2% over the next 5-10 years. The crop is going to be a mix of 52 acres of potatoes, 63 acres of watermelon, 93 acres of full-season soybeans, and 52 acres of late-season soybeans (after the potatoes). There may be some corn, wheat, and/or soybeans also rotated in depending on the weather.

Good Hope Farm

The Good Hope Farm was initially priced at $20,750 and is expected to have a cash yield of 2% and a total return of 7.9% over the next 5-10 years. The crops are designed to be corn and sunflower.

Burnett River Citrus Orchards

This farm is a little bit unique. Specifically, it is outside the US and instead based in Queensland, Australia. The farm focuses on producing mandarins, grapefruits, lemons and oranges. The cash yield will be 14.2% and the overall yield will be 15.2% over a 10-12 year time frame. The yield will be low (1.4%) in 2022, but then increase to 8.7% in 2023 and 10%+ from then on.

Taxes will be a big question mark on these investments. I’ll have to see how the tax code impacts these returns. My guess is that I’ll be in a lower tax rate which should keep the returns relatively high on an after-tax basis. We’ll see.

Fundrise

Fundrise is one of my real estate positions. It ties in with several REITs and the real estate portion of my TIAA-CREF position. I would guess that my total real estate portion of the portfolio is around 15%. Of that, $117,700 is in the Fundrise position and spread across a variety of accounts. The largest position is the Interval Fund (which accounts for 63% of the portfolio). There are two other positions that account for about 13% of the portfolio and then the rest are spread across 6 portfolios. Most of the positions in these funds include residential properties that are a mix of fixed income (13.7%), core plus (57.5%), value add (21.2%), and opportunistic (7.2%). Over the last year, Fundrise had an excellent year (as did most real estate type positions) with a 28.9% average return. Clearly, this is not sustainable. My goal return is probably closer to the 8% range, but I’ll take the higher returns when they present themselves!

Next time around I will provide a bit of an update on how the radiation/chemotherapy is going as well as take a look at some of the individual positions in my portfolio (focusing more on positions rather than ETF-type trades).