December 2019

General Comment

Let’s start with the picture as usual.. Our son, Leonardo, turned 1! It’s quite incredible how one year passed already, despite me pretending not to notice, time is passing faster now, it means that I am getting older…

There are plenty of sings of this, looking back at how my life was without a kid, and now the differences are astonishing. Not sure if these changes are for the best or worse, it’s a different type of life that requires a lot of energies channeled in different areas that before I didn’t even know existed. Because of my line of work I get to stay at home a lot with the baby, unfortunately daycare in Italy is extremely expensive and fully booked, so we hope to get a space in September 2020 if we manage to pre-sign Leonardo in this coming January (hoping to be the first in line at the “open day” where all the places are assigned…)

Talking about babies and portfolios I actually hope that all these efforts that I am doing are going to be enjoyed by Leonardo later in life. I thought about setting some investment for him, but Italian law doesn’t allow non-adults to have anything in their name, so in the end I would have to set up something just for him under my name. Maybe it’s something that I’d love to do.

One thing that I’ve found out is how babies and their general management is extremely costly and, most annoyingly for me, I find it very inefficient. First of all there is a poor experience factor from the parents, lots of choices are wrong because of lack of knowledge/understanding. I don’t feel any grief for that though, it’s a learning phase. What gets me a lot is the second point of the list, the presents. We have been given a HUGE amount of stuff that he will never use/need, and that it’s just a waste of a good occasion to do something else that would be better. We’ve got lots of games, small clothes that Leonardo doesn’t even know they exist…

What would I do? Quite simple. I’d like to do like they do in China for weddings. You’re invited and a little red envelope is sent together with the official invitation. Each guest will use this envelope to put some money inside, all the envelopes are the same and are put in a big urn at the entrance of the reception.

I know it’s very “cold” in a way, people like to give presents, it’s part of the birthday/Christmas idea, but we have been given a lot of nice items that Leonardo doesn’t simply use and I keep thinking that it’s a lot of money wasted.

And my question is… what if I had that money and saved it for Leonardo to give him when he’s 18? Wouldn’t he love to have it all then, when he can actually use it and enjoy it? Hence the red envelope idea…

Of course my better half doesn’t share my view, but I am willing to insist on having my way!

Markets and finance are all in great shape, 2019 turned out to be a record year for equities, so nothing much to say apart from the fact that it looks all very unstable to me. We’ll see on the election year what will happen, USA tends to influence the world’s economy a lot after all…

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%
10.1919.80%1.37%2.68%-1.79%
11.1922.80%1.36%2.71%-0.33%
12.1923.50%1.35%2.72%-1.40%

TR is increasing (vs. previous month) – As markets ended in a buoyant note so it’s my Total Return metric. It’s not the “record high” but it’s nice to see.

YTER is decreasing (vs. previous month) – A little decrease in general costs is always welcomed by any investor. On we go, in the long run this metric should go towards 1%… hopefully…

Net Yearly YoC is increasing (vs. previous month) – So that’s it, a very very little increase salutes 2019. As you all know this metric is what matters to me, it’s the NET yearly Yield on Cost, which means that my portfolio had this performance in terms of dividend/option income. Regardless of what the market is doing.

Forex is getting worse (vs. previous month) – The dollar is showing signs of weakness, while the pound was recovering. Still, we are heading down again on this value.

Dividends and Options

December was a good month for the LH Portfolio, I’ve managed to outperform 2018 which is always a good thing!

December saw a 1106 Euro result.

Dividends accounted for 1030 Euro (+25% vs.2018) and Options ended up with a 76 Euro score (+100% vs 2018).

Let’s see what got us to these results…

The happiness of seeing a growing number vs. 2018 might seem strange, after all this is a DGI portfolio, so dividends and results should always be growing. The reality of things is that compared to last year I am invested with the same amount of money. This means that all the proceeds that I’ve got this year were not reinvested, thus not helping to concur to the snowball effect that we DGIers try to achieve.

Options were “quiet” this month, I didn’t do a lot of trades or protection on difficult situations, this explains the little profit that they brought which is always good to see.

List of Options closed in October

DCA/Increased Positions

Bought 100 EPA:MMB @ 19.50 EUR

I had already 100 pieces of Lagardere, adding another lot to trade aggressively some calls when the stock hits 20/21.

New Positions – Sold Position

Sold 500 EPA:PNL @ 2.03 EUR

Netherland Post was one of the worst investments that I’ve made so far, got it out of some poor due diligence on my side, got out now after they declared that they will not pay the dividend anymore. I waited until the Year End because I wanted to see if I could use the loss to compensate some gains, and this was the case.

Sold 60 LON:IMB @ 18.58 GBP

Imperial Brands is a company that did not touch its dividend but I feel it’s a dangerous play right now. Probably the weakest out of all the Tobacco majors, I have used the loss to “wash” some profits that I made in 2019. Will probably reinvest the money in LON:BATS, but not right now.

Conclusions

Investing wise, for a DGIer, this period is really boring. I can’t find anything to buy, the few opportunities that I spot pass away because I keep waiting too much to pull the trigger, but we are talking about 2 stocks in 1 month. It’s not a buyer’s market, in my opinion. I can’t understand where all this rally comes from, I don’t see a huge economic expansion ahead of us, but it’s clear that I’m mistaken.

My decision has gone into keeping the money, not rushing to reinvest like I did before. On one side I will miss the obvious effect of increasing dividends, but I can’t get myself to pay prices that I feel are a little too high (euphemism). 2020 might be an year of transition, as not putting the dividend money to work means a lower rate of growth of the dividend income.

We’ll see what the new year will bring, so far all is going well, and I can’t complain of the results that I am getting with this portfolio. On the other side I have not seen a bear market yet, so it’s a little too easy to way how great things are, the real test has yet to come…

One thought on “December 2019

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