July has just finished and “strangely” I have all dividend payments already in the bank, this means an earlier update. July passed away really quickly, I think that this is because of my current unemployed status which leaves me a lot of free time that tends to fly rather quickly. I am finally following a lot of things that I could not follow before, all in all I am really happy with the decision that I have taken, we need to see what the future holds but I am positive about it. Economically the biggest piece of news is the collapse of the Dollar against the Euro. Media is blaming the Trump administration that is casting shadows of uncertainty on the US, I guess that there are other forces at play (one could be that European stocks have less “lofty” evaluations than their US counterparts), rates are going to start rising in the Eurozone soon… As to me I am not particularly worried about the exchange rate, it’s a good opportunity to buy at a discount for us Europeans 🙂
The “Long Haul Fund” is my attempt of getting an “immediate” state of the art of all the investments that I am following. Pretty much like professionally managed funds I can boil all the activity down to a performance indicator, in our case Total Return. (Thanks to Dividend Life for this post on how to create a 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).
TR ratio keeps it’s fall since May, third decrease in a row. On top of the devaluation of the Dollar that I mentioned above I have had the total collapse of Carillion in the UK and STX in the US hitting me, Nothing that gets me worried but it’s not all flowers and roses out there.
Options Yield goes to 7.42% (+0.83% vs June), while Dividend Yield goes to 8.69% (+0.39% vs. June). July was a good month for Options (see later), and I might have to work on the formula to calculate the options yield, I might have some updates on that soon because I think that I am underestimating returns. Dividends saw a pretty good growth too, all is on track.
After the June move TER is lying ow again (luckily). There might be some jumps in coming months here because I intend to clean the UK portfolio a bit, and that normally comes at a rather high expense…
Retreating from the feasts of 4K earnings last month, July scored a very respectable 1858 Euro turnover.
Dividends were 731.64 Euro (+ 36,5% vs.2016) and Options scored a 1126.41 Euro (+1061% vs 2016). Option result is the second best ever (only by 10 euro), so I cannot complain, but it has to be said that the proceeds of the sales of the bond from last month have gone straight into options so an increase in income is to be expected.
Generally speaking I can see that Option income is highly affected by how aggressive you sell strikes, many rolls can contribute to a negative month. This is why I might be changing the strategy on some options selling longer Covered Call strikes on core stocks.
GE – Bought 45 shares @ 25.80 USD
Needed to start trading Covered Calls, GE is under pressure in a very strong way, but 100 shares unlock potential extra gains from selling covered calls, plus I believe that the company can start changing into something more modern and more performant since the old CEO has stepped down.
New Positions – Sold Positions
LON:SSE – Bought 150 share @ 14.50 GBP
SSE is one of the major utilities in the UK. This is a pure “dividend move”, they were going exdiv the day after my acquisition, very defensive, SSE has important level of debts, but also a very good consumer base. It’s the biggest renewable energy producer in the UK, great network but needs to work on customer retention.
SBUX – Bought 100 shares @ 55 USD
Nothing much to say about them, I wanted them at 52, but I have been waiting far too long, so I have decided to move in. Starbucks is a great company with great managers, new “core” holding of the portfolio despite the risible dividend yield.
None to report this month, I have a few active that are likely to be closed in August.
I have had a very long discussion with a bank manager from whom I will be taking some funds to another bank and will be closing my positions. Of course he was not happy and he tried to convince me that he did a great job and so on. The reality is that the funds that I bought through his advice did very well only in the last 6 months, thanks to the Trup Rally. When I told him about my tracker and the strategy that I follow the reply was mixed with scorn and defiance “oh well if you like to invest directly as a game that’s fine, but you can never beat the professionals”… How many times did I hear this in my investing life? I replied that I know perfectly well where my investments are taking me, while I do not know how a certain fund will behave as I do not have control on what they buy, plus I am not interested in total returns NOW, I might be interested later. He wouldn’t take any of that of course, but I did not change my mind.
Why am I telling you this? Well, the path to investing independently is ridden with things like these. Some come from professionals, some come from friends and family. I have a target in my head (generate a stable NET return of 2% per year within the end of 2017), and that’s what I am aiming at. Clearly I do not invest to lose money, so total returns and portfolio performance are important.
Bottom line is trying to stick to the plan, I am sure that there are better investments and investors out there, but as long as I get what I want I will never turn to others to manage my money anymore. Freedom of selling everything and send the cash tomorrow doesn’t have a price in my opinion…