March 2019

General Comment

• 

What did March bring? Lots of spring, and nothing more than that really.

Markets have been tame and behaved more than well growing constantly, allowing all specialised press and less specialised commentators to resume the “all time high”, “broke all previous records” mantra that we get in these cases.

These are the good news of course, but at the same time I keep seeing and hearing calls about a potential recession looming at the horizon.

Let’s start laying out the fact that the economic theory that rules our markets tells us that the economy is made of micro and macro cycles, what goes up must come down and vice versa, so a recession is a natural event.

I like to think of it as when you have a spell of dry weather, eventually rain will come and it shouldn’t be a surprise… Normally.

The real hard part is to understand when the markets will start pricing a potential recession, because as we know the stock market moves ahead of time and anticipates certain moves.

Potential catalysts like USA vs. China or Brexit seem to have been diffused, but as a recession is a natural state of the economy, we might simply have a down period due to the normal state of things.

We’ll see of course, what we are experiencing now is a pretty good start of the year, that makes it hard for a DGI/Options investor to find things “to do”, hence the “tame March”.

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

Month	TR	YTER	NYYoC	Forex
12.14	0.00%	0.00%	0.00%	0.00%
12.15	-3.33%	1.22%	-0.13%	-1.00%
12.16	7.06%	1.14%	1.16%	-4.35%
12.17	9.94%	1.04%	2.64%	-5.94%
12.18	3.28%	1.24%	2.70%	-3.53%
1.19	9.76%	1.26%	2.69%	-2.75%
2.19	12.02%	1.24%	2.69%	-1.95%
3.19	14.86%	1.22%	2.70%	-1.21%

Net Yearly YoC is increasing (vs. previous month) – A 0.01% increase… BUT STILL AN INCREASE! 🙂

TR is increasing (vs. previous month) – Rally continues so this metric goes up too.

Forex is getting better (vs. previous month) – Dollar getting stronger, dividends mitigating the currency differential, we are looking at getting this metric close to 0% soon I guess…

YTER is decreasing (vs. previous month) – Like previous month very little action means very little costs of trading. Taxes are due soon, this value is meant to rise, alas…

Dividends and Options

Looks like March was very similar to February, with dividends doing their job and options falling majorly behind (but in positive territory at least). We crossed the psychological threshold of 1000 euro total gain, which is good.

March ended with a 1006 Euro result.

Dividends accounted for 941 Euro (+27.81% vs.2018) and Options ended up with a 65 Euro score (-96.25% vs 2018).

Let’s see what got us to these results…

Dividends are “doing their job”, rising also thanks to the only trade done this month (see later) but generally showing some improvement. Options on the other side are lagging behind, long calls are all ITM at the moment so I did not have a lot of chances to exit from trades prior to their expiration as I did last year. At least there are no negative numbers, a very little consolation…

List of Options closed in January

Only one trade to report, I have been asked to add the price of the stock on the day of opening of the position, I am working on a new sheet to report trades and will add this data in the future.

DCA/Increased Positions

Bought 450 LON:DOM @ 2.36 GBP

Before ex-dividend, company is down but numbers look good to me, lots of potential for them if they start gearing up in Europe.

New Positions – Sold Position

Nothing to report

Conclusions

March followed the February mood and was rather uneventful if we save for an option sold and an incremental position on a GBP stock. It’s hard to say what will happen, commentary is negative, but markets at the moment don’t reflect this slow down. Nothing changes for the LH Portfolio, just less action, Dividends are meant to be boring so all is good under the Tuscan sun, let’s see what April will bring!