A General Overview
April in Italy has been a month of hope, the third wave of Covid19 passed its peak and the government decided to loosen some of the restrictions that we had in place due to the pandemic. Although it’s nothing remotely close to “life as it used to be”, it’s a start.
In all fairness it needs to be said that many pandemic experts are opposing this new stance taken by our government, mostly because the numbers are still pretty high. On the other side we need to come to terms with the economy, which has been correctly put behind the sanitary issues so far, but that looks like it can’t be postponed any longer.
I really do not envy the people in command now, choosing what to do it’s not a walk in the park at all.
The good news is that I have restarted training for football much earlier than expected (I did say May in my last post, but technically the first training we did was in April). The bad news is that right at the first training I got injured to my right knee, the knee that already underwent two surgeries for football related injuries, and of course I am not an happy bunny at all about it. Hopefully it’s nothing majorly serious, but it cast a rather grey veil of shitness over my re-found happiness/optimism…
It looks like I might also start working again in September, it’s still early stages to say, but if all goes to plan (i.e. covid19 subsides) we might get incoming students once again. Finger crossed there, not being able to raise a single euro in 1 year has been pretty bad…
Europe is about to start reviewing all the “recovery plans” produced by the various countries, but it seems that not all the members already voted in favour of the Eurobonds that we will need to fund these plans, effectively it means that the commission might not have the power to raise the money with this new instrument. I think that it wil be voted in the end, but I expect some struggle on that side, still. When people will think about Europe as a single entity and not as a place where “our nation is” we might be able to move towards a USA-style model. Right now it’s just a collection of states, and it’s not that great to tackle bigger crisis as covid19 proved to be.
Explanation of terminology and graphs is HERE.
Let’s see the numbers:
|31 Dec 2014||0.00%||0.00%||0.00%||0.00%|
|31 Dec 2015||-3.33%||1.22%||-0.13%||-1.00%|
|31 Dec 2016||7.06%||1.14%||1.16%||-4.35%|
|31 Dec 2017||9.94%||1.04%||2.64%||-5.94%|
|31 Dec 2018||3.28%||1.24%||2.70%||-3.53%|
|31 Dec 2019||23.50%||1.35%||2.72%||-1.40%|
|31 Dec 2020||15.76%||1.28%||2.70%||-7.60%|
TR is decreasing (vs. previous month) – After ATH last months the portfolio took a little breather and TR fell a little.
YTER is decreasing (vs. previous month) – 1BPS decrease, solid gold. Keeping this metric at bay is paramount towards reaching the other goals.
Net Yearly YoC is increasing (vs. previous month) – Still behind ATH, 2BPS gained this month helps in going back up. Sadly, the target of 3% it’s still miles away.
Forex is getting worse (vs. previous month) – Lots of volatility on the dollar, 200BPS difference is a lot after all.
Dividends and Options
April income was 1369 Euro
Dividends accounted for 819 Euro (+34% vs 2020) and Options ended up with a 550 Euro score (+283%. vs 2020).
Up until the last days of the month I thought that April would have been yet another negative month, under the dividends collection point of view. Well, I am glad that I was badly mistaken, the negative streak of the first quarter of 2021 has been broken and the LH portfolio posted a rising month again! Very glad of this figure.
Options saw a very “troubled” month. In order to repair a bad position that I keep rolling since 2018 (yes 3 years now!!) on PG I decided to take an extra risk and split my short call in two short calls and a long call (to cap exposure). As a result I managed to pocket some money from the previous short call I had, which explains the good result. I still have 3 positions that I need to manage, fruit of mistakes of the past. Under the new “option deal” that I’ve started, April was rather poor, collecting more or less 100 Euro worth of premiums. In this market situation it’s really hard to sell puts, prices are very high and volatility is quite low.
Nothing to report
New Positions – Sold Position
Bought 100 AMS:AD @ 23.2 EUR
Ahold Delhaize is one of the major players worldwide in the supermarkets field. I have been looking at them for quite some time, but since I wanted to collect the first dividend (paid in April) I’ve decided to buy a position and at the same time I sold a Call for December with strike 24 (close to the money at the time). The rationale here is that I want more yield from this position, as taxes are high in Holland for dividends. The price is not ideal, so if the stocks are called away in December it’s not going to be a problem.
Bought 188 VTRS @ 13.45 USD
Viatris is a spinoff that Pfizer did last year. They spun-off the generics business, and as a result I was given 12 stocks (which explains why I bought 188 now). I like the business, I think it has a good potential to grow and most importantly pay a decent dividend. So far the stock has been under pressure and the dividend was not really all that great, but as I mentioned it’s a bet on a business field that I do not own. I don’t expect to see any decent returns before 2023 here…
The Financial Conclusions
I don’t really have many things to talk about, markets are still rising, less strongly than previous months (but this is normal). I guess there is still a credit of good news to consider, western countries are reopening, at different speeds but it’s not a major issue. When countries will lower the travel restrictions, the internal restrictions and so on we’ll see a flurry of great news showing people spending, eating, traveling, shopping and so on.
The old “Sell in May” tantrum started in April of course and did not quite work, there might be a bit of a pullback but I do not expect anything major.
Not that it matters what “I think”, but it’s clear that the whole idea of looking at the economy that will “be” in the future it’s not something that concerns the markets all that much. If you follow me, you know that I do not have a rosy view of the after-covid economic situation, I see a lot of potential threats to the economic activity and our economic wellbeing.
But so far, no hint of worry on that, the whole attention is focused on the vaccination campaign, the pandemic management and recovery efforts.
While I was more inclined in foreseeing a strong pullback in the first half of the year, I am starting to believe that if something will happen it will be when investors will stop thinking at the development of the pandemic and they will start focusing on “what next”, starting with “how do we pay back all the debt”.
I am really worried about what will happen next, as normally “paying back” translates in more taxes on capital and more taxes on properties, less pension benefits, higher VAT.
As we will move away from COVID I also expect movement on the inflation/rates front, this might depress equity markets (it usually does), and hopefully will bring back valuations a bit closer to Main Street rather than the moon.
I still think that prices are very expensive, this means that also my options trades are suffering. I am not willing to change strategy once more (selling options maybe at longer expirations), so I prefer to sit on the sidelines, hoping in a minor pullback to do some trades.
As usual time will tell, but unlike previous years I am not jumping to enter the market “no matter what”…