March 2017 Update


IMG_20130721_133940General Comment

Another pretty good month for the markets in March, although the honeymoon between Trump and financial markets is probably looking at a close, we have seen some good numbers and generally an upbeat situation. Brexit is now a reality and finally there was no overreaction from the markets, it has to be said that inflation in the UK rose strongly (it was to be expected), but we could say that “so far, so good”. Negotiation with the EU will be long, we’ll see what happens there. Europe has been quite well, it recorded a good win in Holland from a pro-EU party, and we are about to enter French and German election territory. Some turbulence is bound to come, maybe it will open up some opportunities in a high market.

LH FUND

TR stands for Total Return (selling everything, paying taxes and commissions and converting to euro), 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).
Month TR TER YoC
12.2015 -3.33% 1.27% 1.13%
12.2016 7.06% 2.01% 4.75%
1.2017 4.76% 2.04% 4.93%
2.2017 7.26% 2.20% 5.30%
3.2017 8.15% 2.24% 5.82%

Another record in March 2017 in terms of TR, February is beaten by almost 1% point, a huge result in just one month. Markets have been buoyant and started some correction (mild one I have to say) only now in April. Shares of the LH fund are now worth 108,15 euro per share.

Options Yield goes at 6,23% vs. a Dividend Yield of 5.16%, my expectation is to see Option Yield growing at a much faster pace in the future, target is to hover around 10% with the option returns.

Dividends and Options

March was another positive month with an aggregate result of 1692 Euro. 1093.38 came from Options and the rest (598.33) from Dividends.

Dividends “YoY” mark an increase of almost 75,3%, result that makes me incredibly happy. There are some explanations here, mostly due to the trading style that I am moving into. By trading “options plays” I effectively earn extra dividends, without holding the stocks for long (when successful). Without these plays numbers will be a bit different I guess, but always on the rise anyhow.

Options gave a major boost this month thanks to some positions that I managed to close that I was carrying on for a long time. Rolling means locking profit for longer expiry and when you get out of a losing trade all the profit comes back in. On top of that I had a good month with options. April will be a very low one as I have many positions that will require me to roll options to further strikes.

Anyhow second month in a row above 1000 euro, so I cannot complain at all.

DCA/Increased Positions

None to report

New Positions – Sold Positions

Sold 1000 LON:OML @ 205 GBP – This was actually an option that was executed before expiry (1 month before expiration!!), I really did not want to sell these stocks but it’s part of the game of trading options. As a result I lost part of the dividend, but made a profit with the sale. Will look into buying into the stock again soon.

Options Plays
Options plays are strategies that I put in play with some stocks where I want to “trap” a dividend and sell the stock immediately after. It doesn’t always work, so sometimes you get to keep the stock for a longer time.
These results are already factored inside TR, Options and Dividend gains and are expressed “net”, including all taxes and commissions.
QCOM Play – Started 22/02/2017 – Ended 03/03/2017 – 67.20 USD Gain – AROI (48,24%)
VFC      Play – Started 06/03/2017 – Ended 17/03/2017 – 83.41 USD Gain – AROI (52,51%)
Conclusions
It’s a very good market in these first months of 2017, things seem like going the right way despite international tensions and so on. There is a lot of “buzz” about possible pullbacks and market falls, but I am not concerned all that much. I was talking to a professional investor about hedging my portfolio against a probable market crash, he said that it’s simply useless in my case as lower prices open up opportunities to average down stock prices in companies that pay dividends. After all the share price is not that important to me, sometimes is not easy to remember these points.
Options are proving to be an interesting tool, I am refining their management strategies and could help boosting returns this year way past last year remarkable level of 11222 Euro between options and dividends.
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16 thoughts on “March 2017 Update

    1. Initially it was dividend only, I am planning to keep the mix this way, at least for now. In the future maybe I can increase the Options part, but I need to have more time to work on things if that happens, and right now I don’t have it..

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  1. That’s some really nice cash flowing in between your dividends and options. Nice to see those record months come in. You seem to have a good grasp on the options side of trading. The world is a crazy place as you already know with what’s happening in Asia, Europe, U.S., Middle East, etc. and the markets still seem very resilient. The beauty of earning a passive income stream is that our cash flows no matter what’s going on in the world. Just imagine WWII, etc. The world was “coming to an end” it semmed yet companies continued to do what they always do and pay out shareholders. Keep investing!!

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    1. Thanks DH! Crisis will come in the future, but hopefully the financial markets as we know them will outlive them. After all some companies did pay dividends during the war. Right now the options are two, at least in Europe: 1. put the money in gold and buy a good safe. 2. invest in companies.
      Bonds and cash deposits are not the best option right now…
      Thanks for stopping by!
      Stal

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    1. Ciao Mart,
      Thanks for stopping by! Yes, last year I did not have the boost of the options trading, so the comparison is not exactly “right”, but it’s nice to see those numbers 🙂
      ciaociao
      Stal

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    1. Thanks for stopping by Dan! April is going to be difficult, options are going to weight down returns, but it’s part of the game so I am still looking ahead positively! 🙂

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  2. CIao WDYT,
    Thanks for stopping by! March was good, but that’s just the beginning of the year, so we need to keep the guard up for possible changes in market sentiment. Especially with all the elections that we will see from now till June with the UK… But as I wrote up here no complaints so far!

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    1. Ciao MSM,
      Thanks for stopping by! Actually April has been a bit in a lower key so far, mostly because of many options that I had to roll, very very old and bad positions that I have in PF and that require long rolls trying to get out of them. But the month is not finished yet and I still hope in a couple of last trades to get a nicer set of figures! 🙂
      Ciao ciao
      Stal

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