September 2019

General Comment

Another month has gone and we are finally entering the latter part of this 2019, last trimester, lot of wrapping up to do. Of course September belongs to the middle part of the year and we can safely say that judging at the numbers that we saw, the weakness that markets felt in August simply was not confirmed.

On the contrary, similar to other recoveries this year, there was a sort of mini-rally that effectively recovered August losses in the space of 10 days, going to meet new highs in the latter part of the month. There are some sectors that are underperforming of course, but even those managed to climb back a little.

Political situation is pretty much the same, Trump is still doing Trump, China trade wars are still on the table, at the end of the month WTO added a little chunk of uncertainty allowing the US to raise import duties against the EU. The low (and sometimes high) key mantra that I keep hearing is of a recession coming, that we are in a slowdown phase, that governments are going to use monetary stimulus to get the cycle to expand again. I am not sure about the recession to be honest, there is still quite a bit of space in terms of monetary policy easing that can be used by central banks to get money into the market, but I am pretty sure that the downturn has already started, judging from the data that we can see. The fact that government use monetary policy to keep the markets up is something that scares me a little, I don’t see an exit strategy that is “soft” from this situation… But they know more than me so I’d like to think that they know what they are doing.

September 2019 saw the Portfolio hitting an absolute record, a Annualised Net Total Return of 3,82%. This little feat deserves a picture of the Winged Victory of Samotrace from the Louvre Museum in Paris, where I was with the school earlier in September!

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

MonthTRYTERNYYoCForex
12.140.00%0.00%0.00%0.00%
12.15-3.33%1.22%-0.13%-1.00%
12.167.06%1.14%1.16%-4.35%
12.179.94%1.04%2.64%-5.94%
12.183.28%1.24%2.70%-3.53%
1.199.76%1.26%2.69%-2.75%
2.1912.02%1.24%2.69%-1.95%
3.1914.86%1.22%2.70%-1.21%
4.1916.86%1.21%2.83%-1.87%
5.1912.73%1.22%2.81%-2.42%
6.1914.41% 1.44%2.64% -3.17%
7.1916.13%1.43%2.66%-2.74%
8.1915.82%1.41%2.66%-1.98%
9.1919.11%1.39%2.75%-1.09%

TR is increasing (vs. previous month) – Clearly a buoyant market brings the Total Return of the portfolio up. This month it set the record since I started investing. Can’t complain of course, though this metric is less interesting than others as I am not planning to divest any time soon.

YTER is decreasing (vs. previous month) – Costs keep falling, great news. I did not perform many trades this month, but it’s good to see that this metric is falling.

Net Yearly YoC is increasing (vs. previous month) – Now this is good news, fuelled by the decrease in costs and a very good month in terms of dividends and option premiums this metric is getting closer, once again, to my target of 3%.

Forex is getting better (vs. previous month) – Dollar is fuelling this great result, as in September it was getting stronger and stronger. Pound still weak, I wonder if there will be a change of direction once Brexit receives a final outcome…

Dividends and Options

Markets were having fun growing and engaging in bull runs and my dividend and options income seemed to have followed suit! September was the second best month in 2019 (so far).

September saw a 2365 Euro result.

Dividends accounted for 1902 Euro (+41% vs.2018) and Options ended up with a 463 Euro score (-29.81% vs 2018).

Let’s see what got us to these results…

Back in June/July I lost some stocks due to Covered Calls that were DITM and were called away prior to dividend date even, that money was reinvested almost immediately but it’s now that we start seeing the cash flow of those acquisitions. On top of that there was a special dividend from ORI, but that hardly changes the picture in September. The rise, substantial, was on the new stocks, a very welcome result after months of poor numbers.

Options on the other hand saw a moderate decrease, but here I am not so much interested in the swings that this trades have, it’s all about the final result that I am concerned, so we’ll review the score at the end of the year. It’s good that the score is positive, that’s important.

List of Options closed in August

DCA/Increased Positions

Nothing to report

New Positions – Sold Position

Sold 100 VTR @ 62.5 USD

I had a double exposure on VTR because I wanted to be able to sell a NTM call when my average price was passed, and see what happened. I collected more than 1 year of dividends with the premium at the time, and of course got the dividends up to September, when thanks to the high value of the stock the call was executed before expiration. Made money from the sale, premium and dividends, that was the plan.

Conclusions

It’s hard to understand why there was such a recovery in September, everyone is talking about slowdown, potential recession, bad numbers, productivity decrease and so on and so forth, and yet stocks are up. I guess that easy money coming from QE have found their way in stocks (bonds are returning virtually nothing), but that’s not an healthy move from the market.

So far I cannot complain about the results that I am having with the PF, I expect that there will be a downward movement sooner of later, hopefully strong enough for me to repair some of the positions that are in danger of being called away. I am also eager to re-invest some of the cash that I have made from the calls that were executed, but prices are simply not right at the moment.

Life-wise (because there is more than stocks) things are all ok, still teaching, still trying to be an half decent father to the little one, still planning to escape to different countries (though this one is more of a dream than a real possibility). Got back on the bike after a trip with the school to Paris, even 10 days of inactivity are enough to throw me out of shape, I need to be more consistent in my training, but it seems that time there is a bit of an issue… Oh well…

One thought on “September 2019

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