October 2020


General Comment

Two to go.

This is the feeling that I got at the end of October, two more months to go. Then 2020 will be over, and of course nothing will change because we the whole concept of time and years it’s all human made.

Our cat, Prjanik (the name of a sort of cookies in Russia), doesn’t have an idea of what a year is.

But as human beings it’s nice to believe that all of a sudden 2021 will come in and swoop all the shitness that 2020 brought, a fresh new start, hopes and dreams restarted!

The reality of things is that all the bad news of the first months of the year that will come in 2 months are all “priced in” already (to use a concept that is dear to us investors).

For example we know that coivd is going to stay with us till Spring/Summer for sure. Yes vaccines are going to arrive, slowly at first, but we know that they will take time to actually take effect.

I know that I will be again unemployed in January as American Universities cancelled their foreign plans already.

We know that Q4 will be bad because of the second wave of contagion, and we know that 2021 will not be stellar as everyone seemed to think.

And these are just examples, but as you can see there is a lot that we know of 2021 already, so when the bad news comes, it will not be “bad” at all as we discounted it already in 2020, adding to the negative feelings that we have for this year already.

The World stood waiting for the US elections to take place and other than that there was little to report. In Italy, despite being “virtuous” on the COVD management side of things we wrapped up October with yet other “light lockdown” measures.

Main effect on me was the fact that I cannot train anymore, I managed to join a team to play football again and was very happy about it, but now it’s not possible anymore…

Oh well, I can only hope that these measures are actually useful and that we can go back to normality relatively soon, in the meantime I’ll concentrate on cooking… AGAIN! πŸ˜€

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%
07.203.92%1.34%2.56%-5.59%
08.206.18%1.33%2.57%-5.92%
09.205.50%1.32%2.59%-5.45%
10.202.26%1.30%2.53%-4.92%

TR is decreasing (vs. previous month) – Despite a recovery from September lows, the end of October proved to be quite bumpy for the stock markets as a whole, TR followed suit.

YTER is decreasing (vs. previous month) – I am still working on options solidly and very little trades on stocks. Options are cheaper to trade and YTER lowers considerably.

Net Yearly YoC is decreasing (vs. previous month) – 6 BPS, this is quite huge. Actually is all under control, rolling of 1 option is the culprit for this fall, but these are just postponed gains so I am not worried.

Forex is getting better (vs. previous month) – A bit better, exchange rates are cooling down a little (well actually the Euro is).

Dividends and Options

Beginning of Fall 2020, how did it go?

October income was -413 Euro.

Dividends accounted for 644 Euro (-6,55% vs.2019) and Options ended up with a -1057 Euro score (-N.A.% vs 2019).

Dividends

After the super results in June I was expecting negative months to come (in YoY terms). Four months in a row it’s pushing it a little, but I can’t change how these things are going. November and December will tell us if I can post a growing figure at year end, considering how 2020 was it would be a major success.

Options

One option spoiled the party, PG. I am rolling this baby despite being deep in the money, mostly to collect a bit more income and the dividends. I do not think that I can save this position at all, the shares will be taken sooner or later, but I am trying to make it “later” than “sooner”. This means taking losses (in accountancy terms) now, and will post higher gains when the option is closed. But for October 2020 it’s a major loss, second biggest since portfolio inception.

Options positions as of end of October

DCA/Increased Positions

100 T @ 27.8 USD

AT&T, what more can I say? I waited for the latest ER, I think it went quite decently and decided to increment my position. The aim here would be to sell covered calls NTM, also helped by the fact that I’ve lowered my average price a little.

400 LON:CTY @ 3.05 GBP

I am going to add if this position touches -20% on my average price. We came real close and decided to move.

New Positions – Sold Position

Sold

100 NEE-J @ 25 USD

One of my three preferred stock has been recalled by the issuing company, so I had to see it go. It’s a shame because I am losing the dividend stream in the short run. I took a long time researching this market and now I am on the look for more preferred ETDs, but prices are too high right now…

Conclusions

Usually October is a bad month for the markets, years of bad Octobers seem to confirm this popular view.

Right up to the end it seemed like 2020 was going to be different, but that changed when everything started to fall at the end of the month. We cannot talk about a meltdown or major crash, but it was a good correction that brought indices at the same support level that they touched in September.

To be hones I was hoping for a deeper fall, surpassing said levels, also thanks to the volatility that normally is included with elections in the United States. We’ll see what happens in November, but the setup that October left us was rather bearish.

What’s to be bearish about? Well, actually plenty of things. Europe is in lockdown again, yes, call it “light”, call it “mild”, call it “scattered”, call it “zonal” but still lockdown it is. Economic recovery posted in Q3 has halted, and we are back to square 1 with governments trying to help businesses and trying to keep hospitals running without being swamped by covid patients.

USA has the elections, an uncontrolled situation with the virus (but it seems that in America they don’t care that much about it) and growing unemployment.

Asia only seems out of it and getting slowly back to normality.

So I am not bullish at all, the economy has yet to feel the pain of this winter and of the spring to come, when countries in Europe will go back to normality we’ll see a lot of people getting fired and companies closing, I believe.

Stock markets anticipate the real economy, but in my opinion they have been running on hopes that everything would have been wrapped up with the first wave of contagion. We are in the middle of the second and there is likely going to be a third one in spring.

I remain cautious, it seems that central banks are going to start buying company bonds again (thus inflating the market even more), but it’s a tactic not a strategy, I don’t think that it can be done indefinitely.

2 thoughts on “October 2020

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