June 2020


General Comment

Lake Braies, one of the gems that we have in the northern regions of Italy, Alto Adige.

Following the not so easy May, and the not so great news regarding unemployment from September you would expect me to post something about finding a new job or something like that.

No, instead the update starts with a week holiday that we planned at the beginning of the year, pre-COVID, and that we decided to take nonetheless.

Going for a while away from the city was really nice, the mountain is great and we all love it here at Stalflare’s Mansion, food was grand and so were the walks and bike tours that we managed to take while away.

Also our son liked the setting and the new experiences so all is great under that point of view.

Workwise I am starting to implement an “idea” of plan B. It’s “an idea” because right now things are not very clear and it’s a long way away from being definitive. If I get lucky maybe I could find a side hustle that could complement the loss of classes in the Fall semester.

Either than that all is moving along fine, my wife is back to work (part time), Italy is slowly regaining speed (and it’s waking up to the damage that an extended lockdown created).

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%
02.2013.04%1.35%2.67%-0.63%
03.20-5.82%1.27%2.51%-0.12%
04.200.91%1.26%2.49%-1.72%
05.204.68%1.26%2.53%-2.14%
06.205.82%1.36%2.52%-3.14%

TR is increasing (vs. previous month) – June brought some swings, but the uptrend seems to be confirmed.

YTER is increasing (vs. previous month) – May and June are taxes months, this explains the increase in costs…

Net Yearly YoC is decreasing (vs. previous month) – Despite a record month there is a slight decrease. Again due to taxes and the increase in costs.

Forex is getting worse (vs. previous month) – Euro gains again, and of course this has a negative effect on Total Returns.

Dividends and Options

If you remember my May update, income was down compared to last year, but I was expecting much worse than it actually was. And June?

June income was 3110 Euro.

Dividends accounted for 2127 Euro (+116% vs.2019) and Options ended up with a 983 Euro score (+36.27 vs 2019).

PLUS 116%?!?!?! Yes, well, I have to say that I was surprised as well, the result marks the best June EVER, since inception (the first two years I actually did better but that was because I had a huge bond payment that accounted for 2000 euro, so the dividend result was much smaller). Of course there is an explanation for everything, last June/July I sold many positions through Calls that were ITM and that I could not roll. The options were exercised on dividend, so I lost that income in 2019. Since then I’ve reinvested and of course things are catching up now. Some dividends have been moved to June and were paid in different months in 2019. Anyhow, no complaints whatsoever, I hope for more months like these! 🙂

Options also had a very positive run thanks to two old calls on KO and O that expired OTM, as I had rolled them several times the actual value was pretty high and now I get to reap the gains 100%, so while I reported losses in previous months these are compensated by the gains now. Power of rolling options, that is.

Options positions as of end of June

DCA/Increased Positions

Nothing happened here.

New Positions – Sold Position

Sold

200 BIT:BEC @ 10.80 EUR

B&C Speakers suspended their dividends, despite me liking this company I have decided to get out with a small gain, no dividend no party…

Bought

1000 LON:TRIG @ 1.22 GBP

TRIG is a company that invests in several project all related to green energy production, mostly solar and wind. I have to thank the fellow blogger DIY UK for talking about it in one of his posts, after some DD I’ve decided to add a position in a market that I want to start to increase in the future. The company is small, but has a good government grant coverage on most of their projects and has production in more than one country, so it’s not a UK pure play. There might be issues with new “un-granted” projects though, but many other “green utilities” are in the same position.

Conclusions

So how did markets do?

It seems to me that the post-Coivd economy is pointing strongly towards one sector only, technology.

Well it’s not true, of course there are other sectors that are doing fine, but technology is stealing all the headlines these months, QQQ (Nasdaq) is even higher than pre-Covid levels and I get to see twits about companies that are now worth more than the GDP of Germany or other countries.

It’s a crying shame that I never managed to invest in technological stocks, it’s one of the areas that I always managed to “miss” when I had the opportunity. I’ve had CSCO but I’ve lost that to a bad option trade, yes I made a profit but I was really sad to see it go…

Anyhow, Nasdaq is doing great, and generally the rest of the market in the US and Europe followed suit, on less buoyant terms and with sector distinctions of course (hotels and cruises are still doing bad, for example).

There was a sudden and sharp fall at the beginning of the month, but quickly the FED managed to put that story right again, with more intervention, more bonds being bought, more helicopter money.

It’s clear that monetary policies, the fact that COVID is slowing down a little and lockdown being released are major catalyst behind a market that to me seems a bit blind to the (plenty) bad news out there.

So what did I do? Well I simply decided to ride the wave and started selling puts, some of them aggressive, some of them at entry points on stocks that I’d love to accumulate at certain prices.

I really see no other way to trade in this market, buying stocks it’s really hard, there are 2 or 3 ideas that I have, but prices are still too high on those. On the rest of the stocks that I normally consider I see no opportunities at the moment.

I guess that I could say that for the first time in my investing history I feel a bit stuck. This feeling derives from the fact that I really do not trust this market, I do not like the excessive interventions that central banks are taking to avoid a recession (which I find to be healthy if it’s “driven” in the right way), I do not like the fact that companies that deserve to close are alive thanks for free state money and cheap loans. We are in a moment where it seems that there is “no way to lose”, and where it’s enough to “remain invested” in order not to lose anything.

It’s a paradigm that I can’t stomach, because it’s simply “too easy” and I don’t think it’s quite right to think along these lines.

At the same time I eye all these reports of surging amounts of trading accounts being opened. I know that retail doesn’t drive the market, but I also realise that retail is the cattle that needs slaughtering to keep bears and bulls alive and kicking.

As usual time will tell, but I do not think that we are really out of the woods of the crisis that we entered last February, I’ll keep my money in cash for the time being, after all three other major appointments are about to arrive, US elections, Brexit (for real) and the EU deciding how to support the countries stuck by COVID. Each one of these has the potential to trigger some corerction/crisis/recession.

Recession maybe it’s a big word, but the “real world”, Main Street, it’s already in a difficult state as I am writing now, only Wall Street seems not to notice…

4 thoughts on “June 2020

  1. Hey Stal, good to see your portfolio bounce back this past month after the turmoil earlier in the year. However I think you are right to be suspicious of a recovery and I also think we are far from out of the woods and will see more downward pressure as Q2 results are announced.

    Also well done adding TRIG…I hope it works for you and I think 122 is a good price and you have a favourable FX rate!

    I look forward to hearing more on your plan B…

    Liked by 1 person

    1. Ciao DIY!
      As I mentioned in the article I need to thanks you for TRIG and other ideas that you gave me to invest in renewable energy providers. I am looking at adding to TRIG if it falls in the 100/105 region, after seeing their portfolio and investment strategy I have to say that I like them quite a bit. Now I’ll work on unloading oil companies, but that might take some time as all my holdings there are deep underwater.

      As to plan B, right now I am giving help “pro bono” to a friend who wants to start a company, so let’s see, if that works out maybe I can help him running the business, it would be something I’d like to do, but it’s still very early stages in this story…

      Time will tell!!

      Like

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