Strategy, Methods and Targets on the investments that I follow are explained here.
The “Long Haul Fund” is my attempt of getting an “immediate” state of the art of all the investments that I am following. Pretty much like professionally managed funds I can boil all the activity down to a performance indicator, in our case Total Return. (Thanks to Dividend Life for this post on how to create a Fund)
TR stands for Total Return. I try to add in the calculation all costs and everything that I can possibly calculate if I were to sell all my financial assets now, and see what I am left with. This means that the percentage is not 100% true, because some calculations are made with approximation, but it’s a very close call.
YoC is Yield on Cost. This metric is useful to me as I can see what is the return that I generate yearly (and from inception) of all my dividend, interests from bond and option trading activity. Clearly these gains are also part of TR, but YoC it’s an important measure when the horizon of the investment is 15+ years.
TER is Total Expense Ratio. TR has all costs included, but YoC don’t, as one of the original targets is for the fund to yield AT LEAST 2% net every year, Total Expense Ratio is important to calculate the net return. Also it’s an important metric to keep under scrutiny as commission and taxes can cripple the best trading system sometimes.
The aim of the Long Haul Portfolio is to generate a sort of “pension fund” to go along with the meager pension that I am likely to receive from the Italian government. Unfortunately it seems that it’s not an Italian issue only, governments are cutting down on pensions and increasing the retirement age more and more, the certainty that I have today is that all the taxes that I must pay to the national pension scheme are going to be given back in a very small part.
This is why in 2014 I have decided to take a more active role into the management of my investments.
Targets and methodology already changed but these are the main points that I try not to “betray”.
PF Net Performance – at least 2% (this is including everything, dividends, commissions, taxes, whatever)
Number of Equities – max 60 stocks
Dividend Strategy – Stocks in the PF must pay a dividend, any suspension/stop of dividends will result in immediate sale of the asset.
Options Strategy – On core stocks try to trade long covered calls aiming at making at least 20% on the average price and with a strike that covers at least 1 dividend payment. On other more speculative moves selling puts and if assigned sell calls to get the stock out in the quickest amount of time. No trade must lose money (if possible), so rolling IS an option.
In the Portfolio section you can find more details about the state of the art of my investments.