January 2020

General Comment

New Year was rather uneventful as our kid was sick we spent the night at home, just the three of us, which was rather nice I have to say.

Kick off on the new semester was rather positive, we even managed to “book” daycare for our son starting September… Yes that’s the bad piece of news, we couldn’t find any other solution in the short term, meaning that I get to look after him most of the time at home, when I am not teaching. As he grows up so the attention that he requires increases, putting a lot of stress on anything stock market/work related that I have to do… Not easy.

Either than that nothing special really happened. Worldwide Coronavirus is getting the spotlight, scary but as far as we are told “under control” at least on the European side.

UK left the Union, not happy about it, I still think it’s a mistake but I guess we’ll have to see how this pans out.

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%
12.1923.50%1.35%2.72%-1.40%
01.2021.13%1.36%2.65%-0.45%

TR is decreasing (vs. previous month) – January was the first negative month since August 2019. Total return of the portfolio was clearly affected.

YTER is increasing (vs. previous month) – A very little increase, due mostly to the payments that I must make to the accountants that looks after the calculations necessary to calculate taxes on investments.

Net Yearly YoC is decreasing (vs. previous month) – Target in 2020 is to pass 3%. The start is terrible, lost 7 bps mostly on bad option trades. This target might be hard to reach in 2020 too…

Forex is getting better (vs. previous month) – Brexint gave the pount a little breather, dollar is getting a little stronger, nothing special to report here, technically close to 0 is a good result as it means that currencies are not affecting results in the PF too much.

Dividends and Options

January was a “train wreck” of a month the LH Portfolio, only positive that I can find is the fact that I didn’t post a negative number….

The final score? 180 Euro.

Dividends accounted for 956 Euro (-17.36% vs.2019) and Options ended up with a -777 Euro score (-533% vs 2019).

Let’s see what got us to these results…

Dividends suffered because of the stocks sold in 2019 through options. Comparing the two months (2019 vs. 2020) aroun 250 euro worth of dividends are missing because of the sales. Keeping cash like I am doing now comes with some losses, and I expect to have other months like this.

Options are negative, mostly due to PG and SBUX options that I have had to roll to 2021. Initially I thought about letting the stocks go, but I later changed my mind, considering that 2020 is hardly going to be a stellar year like 2019, and hoping that prices might come down enough to get out of these trades with profit and keeping the stocks in the portfolio.

List of Options closed in October

DCA/Increased Positions

Bought 14 BIT:IMA @ 60.40 EUR

I have “inherited” IMA after one of my holdings (GIMA) was taken by the mother-company back under it’s direct control. Price was down, so I thought about adding few pieces to reach the optionable lot on this stock for future option trades.

Bought 90 PUK- @ 27.49 USD

Prudential USA preferred stock. I had 10 to “test the waters” of this equity, mostly to understand how the broker was going to manage interest payment on it under the tax point of view. Satisfied with what I saw I bought more shares and placed myself to have a full position on this stock.

New Positions – Sold Position

Sold 210 BIT:ATL @ 20.5 EUR

Atlantia is in the middle of a scandal for poor maintenance of the Italian highway network, which led to the death of 49 people and the collapse of a major highway bridge last year. The government is looking at revoking the concessions for the highway, but whether or not that is going to happen is not certain. What is certain is that they will have to pay huge penalties and I believe that surely this will affect dividend policy in the short run at least. On top of really despising the management of the company for what is coming out to the public, under the investment point of view it’s risky to keep ATL so I’ve decided to sell for a small gain.

Bought 200 BIT:CASS @ 7.25 EUR

Cattolica Assicurazioni is an Italian insurer, not hugely famous or anything, but it gained some spotlight after Warren Buffet decided to buy shares in it. I did not take it then, but started following the stock, latest ER are not terrible and they have a good plan for the future, so on a dip I’ve decided to take a small position in it.

Conclusions

2019 was a splendid year for equities, hands down. It’s hard to envisage a growth like that in 2020, so it comes with no surprise the fact that January was actually a negative month for the markets. I believe that there are many more to come. Coronavirus acted as a catalyst for some profit taking (I would not call it a “fall” or “major pullback” yet), despite the fact that it will have repercussions in the months to come in terms of trade, travel and “tensions” on the market.

Developments on that situation have yet to be defined, but the looks of it is that governments are acting in a decent way to try to prevent the spread of the virus, which, lucky for us, is not as mortal as Ebola or other badass viruses that we already know.

UK is out of Europe, but “not yet” under the actual economic point of view, as all will stay the same till the end of the year. Important will be the negotiations that will start now on what trade is going to be after 2020, that’s a turning point for the UK economy as well as the EU zone.

So the first month was negative, no major worries, I am actually looking at lower markets in the near future to try to buy something, because despite this small “fall” prices are still pretty high and I cannot see many occasions out there…

One thought on “January 2020

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