I think that Mr.Market started some sort of pullback waiting for the US elections to be over and considering aquite probable interest rate hike in December. For what I have been able to see there have been consistent declines in REITS and UTILITIES, no surprises there. Generally speaking it was not a great month, if we compare it with the previous ones, but after 4 months of total idleness under the stock picking point of view it also marked my return on the market with some new stocks that I have decided to add. A lateral October I’d say, saving for yet another steep decline of the pound (that hurts total returns, but might open up opportunities).
First “more serious” update of the LH Fund that I am calculating since the beginning of the year. TR is Total Return (what selling everything, paying taxes and commissions and converting to euro would mean in terms of return), YoC is Yield on Cost (what my investments have returned to me via dividends/options), TER is Total Expense Ratio (commissions + taxes).
Total Return is not something I am particularly concerned about at this stage (plus it’s an estimate as I have calculated potential taxes and commissions in it), it’s highly affected by the way the market behaves especially in a young portfolio such as this one. But it’s a metric that it’s worth keeping an eye on. YoC is on the other hand more interesting to me, as that is what the PF has produced over time, my target is to reach the 2% x year net mark (by net I mean YoC-TER).
TR (vs Previous Month/Record High August 2016): 3.2% (3.74% – 4.17%)
YoC (vs Previous Month): 4.85% (4.52%)
TER (vs Previous Month): 2.14% (2.09%)
Compared to September October saw a decline in TR, while the other two metrics continue to grow fortunately at different speeds (YoC must grow faster than TER or I am doing something wrong…). We are far from the result that the fund hit in August, but no complaints there, since in the middle we have had a massive fall of the pound which accounts for 1/3rd of my holdings. If I had no currency effect I would have a TR of 5.88%. My target this year is trying to get the YoC – TER to 3%, that would mean an average of 1,5% annual return since the Fund started, considering that the first year I was not invested in anything it would mean that I am already above the 2% yearly gain target that I have set almost 2 years ago.
Here some graphs to describe some of the movements of the Fund since I have started working on it.
Dividends and Options
Thanks to options proceeds October was the 4th month that managed to pass the 1000 Euro mark, dividends accounted for 616 EUR and Options trades for 396 EUR. I did not have a lot of chances to be active during October as I have been away for 2 weeks on a business trip and therefore I had less time to trade. Having said that I was also pretty much maxed out on the cash available ( I do not trade on margin), plus I had a series of positions that I had to roll so not all trades were actually “that” positive as it was in other months. Having said that Options trading keeps going on, learning new things every day!
Nothing to Report
New Positions – Sold Positions
Bought 20 KMB @ 114.60 USD
Kimberly Clark is one of those companies that has been on my radar for some time, nice defensive stock, lots of important brands. A steep fall at the end of the month got yield just where I wanted it to be (3.2%) and I moved in, the stock might fall even further and that’s why I did not go with all the amount that I wanted originally to deploy, will add later eventually.
Bought 100 ORI @ 16.75 USD
Since my sale of CNF I wanted to add another insurance in my USA portfolio, ORI was the candidate, but not in the high teens as it was until few days ago. Relatively bad numbers got a steep decline in share price and here the first move to secure some shares and covered call possibilities (despite a bad book, the options are not very liquid). The stock is solid, relies on a boring business and pays dividends since the year 2000 with a very good yield (above 4%) which appears nicely covered.
Nothing to report.