May 2016 Update


Sell in May and go away, they used to say. Well May has been a month of two faces, bad start and great comeback at the end, volatility is lower than the beginning of the year and everyone seems to be awaiting for the 23rd of June when Brexit will be decided and also Yellen might bump up interest rates in the states a little bit more.

It’s hard to say if all is good or bad, but the feeling I get is that markets are certainly more tranquil than they were at the beginning of the year.

To the Long Haul PF May was an important month, for two reasons:

  1. I am moving the stocks to a new broker (Interactive Brokers), this will allow me to save substantially in commissions although I will have overheads in calculating taxes next year. I will also be able to trade options and I gain exposure to many more markets, which is good.
  2. Dividend record set (see here) and change in the way I account for dividends, now they are without the Italian tax which is calculated apart (IB will report dividends like that so I need to adjust)

LH Index Fund

Soon there will be a dedicated page, I promise. I am now playing around with numbers deciding what to show and how. I must admit that I am a bit confused on what could be an interesting statistic, and of course I need to be a bit forward planning in the way I save data so that I can use it also for YoY comparisons… If any of you have some suggestions to give me here please write them up it will really help me!

Going to performance the month of May saw a TR of 1,33% vs. a 0.73% in April.

The Index Fund is at a point where taxes and commissions (let’s call it TER) have now been overtaken by dividends, so from now on every time I get dividends there will be a positive contribution to NAV, while before I was trying to cover expenses.

Composition of the Index Fund is the following:

BOND 34.95%
STOCK 62.19%
CASH 2.86%

DCA/ Increased Positions

LON:PSON –  125 @ 7.9 GBP
LON:RDSB – 60 @ 17.3 GBP

New Positions

BIT:G – 80 @ 13.00 EUR

Generali is the biggest insurance company in Italy with a very interesting array of properties and other assets in Italy. Dividend payments have been pretty…. unstable during the years, meaning that they have gone up and down according to the company results, but they have never been cancelled. Management says that they will keep the actual level, which is a very interesting 5% gross return. Insurance business is a tricky one to analyse as technically it needs a lot of money stashed aside to cover for premiums, it’s quite boring, in a way (and this is good). Low interest rates do not help financial stocks in general (my other european insurer MUV2 is suffering as well), but management said that despite the drop in profits they will still persue a dividend oriented policy. Payout ratio is currently 55%, not that dramatic, and it’s one of the highest in the last years.

BIT:SFER – 55 @ 19.20 EUR

Salvatore Ferragamo! Who doesn’t know this name? Top shot Italian brand for luxury goods, great company and great numbers for a “Cindarella” in the stock market (they were quoted only few years ago). They are a Florentine company, so let’s say that there is a bit of a home pride in this move as the return is below the 2% net mark, but at these values I am looking at a growth in the stock price too. Numbers are really good despite the recent setback in the luxury field, I love their brand equity and the way they have interests in many fields aside from fashion. It’s a well protected brand, so moats are incredibly high, the recent change of CEO is affecting the stock a little, hopefully a new one will come up soon.

Sold Positions

BBEP – 200 @ 0.068 USD

BBEP has been probably one of the hardest lessons learnt since I started investing. Too many bad decisions have been taken here on this stock, and of course here I am paying the price for my actions. A whopping -97% loss, sold all my stake when they declared Chapter 11 two weeks ago. What did I learn?

  1. Invest in something you understand, maybe not completely, but at least understand at 70%.
  2. Get out when dividends are cancelled
  3. What goes down doesn’t necessarily comes back up
  4. Company recent history doesn’t count all that much


Despite this huge failure NAV managed to stay afloat, which means that there is some good underneath the ashes, must concentrate on that from now on, limiting “funky investments” to a small part of the Portfolio…


14 thoughts on “May 2016 Update

  1. I’m interested in learning about your experiences with Interactive Brokers. I’ve heard a lot of great things about them and their rates are fantastic, especially for options. The only reason I’ve not switched to IB is that they don’t offer DRIP investing. Having said that, in the next 12-months I should be pulling in anywhere between $600 and $1,000 a month in dividends. At that range, I’d rather buy shares instead of DRIP.

    Right now I pay $9 with Schwab on Options contracts. This means almost $20 per trade because I usually buy to close my contracts. With Interactive Brokers the cost savings really add up.


    1. Ciao IH,
      Thanks for stopping by! My adventure with IB hasn’t started yet, we are still in the process of transferring the stocks, hopefully it will be over soon… I do not DRIP so I do not have that issue, but I can say that the costs compared to the Italian bank that I was using are much cheaper. We are talking 60% cheaper, if not more. I will post updates soon so let’s see what happens there, but so far in the paper account (the fake account let’s call it) the costs of commissions are really really low…
      ciao ciao


      1. The thing I loved most is the fact that I can see how the platform behaves when an option expires for example… Or how certain products are traded. Paper trading is certainly a great idea.


  2. Hi Stal,

    I’m curious how you’ll report your stats – what numbers do you find interesting to look at?
    Also, is 65:35 stocks:bonds your target allocation? That’s a similar allocation to something like the Vanguard Wellington Fund (VWELX) which you might use as a performance comparison.
    Best wishes,


    1. Ciao DL,
      Right now I am measuring Total Returns via fund stocks average price and actual price, total Performance since inception (keeping 100 euro as the starting point), I am working on a TER statistic (including all taxes, commissions paid and future), a YoC since the start of monitoring, all of the previous are sampled on weekly bases. Maybe I should add other forms of reporting, and cut some other, not sure really… As to the allocation to be honest I wanted to go more 50/50 but there isn’t anything remotely interesting in the bond market right now… Maybe after the FED rises IR at the end of the month there might start to be some opening on USD T-Bills but I doubt that there will be interesting movements before next year….
      Ciao ciao


  3. Looks like some good buys there Stal. I reckon there IS a good chance that Brexit will happen..if it does, see it as an investment opportunity because it sure will be a bumpy ride if it happens 🙂



  4. Ciao Tristan,
    I do not know about Brexit. What makes you think that they will opt out?
    I lived in he UK when they had to vote about the Euro and so on, that was more of a “direct” vote because a currency was involved and it had a stronger impact on people. This time they are voting on things that you need to read a lot to understand, data is all messed up and mixed… If UK goes out of Europe it will be a major change in the economic chessboard, but I do not think it will be for the best of UK in the long run.
    I might be mistaken, but deciding to go back to a closed border country might have worked in the middle ages, I doubt it works now.
    Having said that opportunities surely will arise if UK goes out of Europe!
    ciao ciao

    Liked by 1 person

    1. Ciao Stal,

      Like I said, there was a good chance of it! It does not have to be the end of the world like some were predicting, people just need to remain rational. The UK is part of the EU for at least 2 years, so we’ll see what happens from here.



      1. Yep you were right, alas (If I can add). My friends in the UK are not happy at all, I think that the vote was a mistake to start with, but looking at the results it completely broke the country in two. Even the Leave campaigners were not expecting it (see the face and victory speech of Boris Johnson, who reminded me of George Bush when they told him of 9/11), socially is a disaster, financially and economically is a loose/loose situation that can only get better in 10 years or so (maybe). Oh and now wait for Ireland and Scotland to say goodby too, they want to be in Europe, apparently… As I said before, a step back into Middle ages. 😦
        ciao ciao

        Liked by 1 person

  5. Ciao Stal!

    I can recommend Interactive Brokers. Can only report good things 🙂
    Congratulations to this step 🙂 Its the step to the next level.
    I think if you do it right, you can more than double your income in a few month 🙂

    keep it up!

    Liked by 1 person

    1. Ciao Chris,
      I had a little bit of a problem with transferring my positions but either than that I have no complaints so far… Let’s see what I can get done, starting to break my head around it from yesterday really… 😛
      ciao ciao


  6. Hey Stal,
    My primary measures are Total Return, YoC, Dividends Paid, Current Yield. Taxes and commissions are excluded (In the US, commissions are netted from capital gains, foreign taxes paid are either credited, offset or excluded or ignored – usually based on tax treaties). I tally taxes annually at tax time and commissions when sold. I benchmark against the S&P 500 only because that is the index most aligned with my portfolio. Bonds I’ve been out of for several years. Other tracking considerations: Exchange Rate (for markets invested in), perhaps commodity prices (if interested) and Tristan tracks inflation (at a personal level).

    I update monthly (not weekly) – but most important is having a metric that you’re comfortable with and is reflective of your goals.


    1. Ciao SR,
      Thanks for sharing your system, I guess that so far we have the same reporting, saving for taxes that are treated differently in Italy, but that’s a different story. Absolutely should add something regarding exchange rates as I have GBP and USD in the PF and that strongly affects performance (for example now I am a bit under the water because of adverse exchange rates)… Thanks and ciao!


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