June 2022


A General Overview

So it happens that after 9 months of pretty difficult situations we managed to have our first holiday, just the four of us! This is the highlight of the month of course, we managed to spend a WHOLE week in the mountains (Dolomites) and all in all it wasn’t as bad as we thought it might have been.

Other happenings were less happy and more COVID related, basically the whole family got positive, at different stages. It was pretty hard to manage on the kids side because having to keep them at home with the glorious sunny weather that we have outside it’s not easy. This was a gentle reminder that the “first years” are not over yet, actually they just started. We need to get our mind wrapped around the fact that we’ll keep having illness “every other week” if we are lucky, with all the management that this brings along. Nothing more to report, covid is apparently on the rise again but nobody really cares anymore, I guess that after 2 years things have fallen a bit more into prospective and people are accepting to live with this disease. Shame that government side is not the same thing, they are talking about restrictions again… Oh well, we’ll see what happens.

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

MonthTRYTERNYYoCForex
31 Dec 20140.00%0.00%0.00%0.00%
31 Dec 2015-3.33%1.22%-0.13%-1.00%
31 Dec 20167.06%1.14%1.16%-4.35%
31 Dec 20179.94%1.04%2.64%-5.94%
31 Dec 20183.28%1.24%2.70%-3.53%
31 Dec 201923.50%1.35%2.72%-1.40%
31 Dec 202015.76%1.28%2.70%-7.60%
31 Dec 202137.13%1.35%2.69%-2.05%
Jan 202235.83%1.34%2.61%-2.75%
Feb 202235.70%1.33%2.63%0.45%
Mar 202240.68%1.32%2.64%0.19%
Apr 202241.87%1.31%2.65%4.09%
May 202241.54%1.32%2.72%2.06%
Jun 202234.62%1.47%2.63%3.47%
LH Portfolio Milestones + Monthly current year

TR is decreasing (vs. previous month) – 700bps what a whopper! What happened in June?!? Stay tuned to see…

YTER is increasing (vs. previous month) – 15bps taxes arrived…

Net Yearly YoC is decreasing (vs. previous month) – 9bps up, this is HUGE, but taxes kill this metric every year.

Forex is better (vs. previous month) – The rally in the dollar is helping a LOT here

Dividends and Options

Income this month was 3237 Euro

Dividends accounted for 2831 Euro (+115% vs 2021) and Options ended up with a 406 Euro score (+76% vs 2021).

Dividends

3K passed for the second time in a row, pretty impressive and very happy about it!

Options

Very good month for options, only one roll and a long call that expire OTM that carried a very good premium.

DCA/Increased Positions

Nothing to report

New Positions – Sold Position

Sold 400 ENIA @ 4.81 USD

First and last time I buy a ADR in USA. Basically these people decided to delist the ADR from NYSE, as a result I had to liquidate the position or get a managing bank to do it for me after 1 month and then see the money probably in 1 year time. Sold immediately at a loss, what a bad investment…

The Financial Conclusions

Apart from the ADR misfortune, I did nothing in June, pretty much like I did in recent months. Yes markets tumbled even more this month, as if they finally came to terms with the fact that interest rates ARE going to be rising and that there will be a recession sooner or later.

Inflation is out of control, or at least central banks cannot seem to hold it any longer, so here comes the cavalry (rising interest rates), to cool off economy and hopefully prices.

It’s all part of a very normal macroeconomic scenario, one that I’ve been talking about for a long time, because it was easy to see it coming. Why didn’t I trade it? Well, first of all I have no idea about the timing, and I don’t want to play that game. I simply suck at it, so it’s a match that I don’t even start (know your weaknesses). Secondly I don’t care about speculating on it, the investment thesis that I am following doesn’t allow for that, and I stick to the plan (be consistent).

In realty at the time of writing, media are passing the story that after a small recession things are going to be on the rise again as this is a “central bank” managed crisis and all is going to be well.

This way of reporting things is EXACTLY the same as the way media used to tell us that inflation was temporary. The reality of things is that central banks can HOPE to keep inflation under control, but it’s not something that they decide. Speculation drives inflation more than central banks, and looking at raw material prices in the last 6 months you can see that happening, big time!

Not only at raw material level. Take holidays. Apparently we are in the midst of a huge bubble for flights, services, fuel and hotels prices. My friends who own travel agents are desperate, flight that you could buy for 300 euro are now at least 1000 euro, the same goes for anything else holiday oriented.

Surely rising interest rates will cool down the economy a bit and there will be some recessionary pressure, we need to see if that recession is going to be “temporary” or longer than 2 quarters as media are now expecting.

Anyhow based on these expectations, that are totally bogus because there is no fact backing them up right now, markets are taking a pause from falling, despite remaining in bear territory.

As a result I am sitting on the sidelines, I think that the recession is going to be painful and longer than 2Q, I believe that we have not seen the “minimums” yet. I am only looking at some preferred stocks right now, because of interest rates rising, but either than that I don’t expect to buy much, unless they are dividend kings/aristocrats that have decent valuations.

After all, precovid lots of people taught we were in a bubble. Then the covid rally, and now this fall, but 20% from the post-covid peaks is really nothing, and the stock market growth was there mostly thanks to government money, low interest rates and lots of buybacks…

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