≡ Menu

Financial Transparency 31JAN2018

Another month in the bag.

music selection:  “Can’t Get Enough” — Bad Company

ASSETS:

Wells Fargo (taxable): This is down 696 dollars, a 2.27% loss versus last month. The new mark is at 29,985.

Interactive Brokers (taxable): This is up 16,125 to 339,962 a gain of 4.98% versus last month. It has been two really strong months in a row with things set up for two more strong months based on options premiums to be fully earned by that time.

Interactive Brokers (tIRA): I show 2,817 in gains here this month to 165,862 which is good for a 1.73% monthly gain.  Pretty good for a stodgy portfolio of mostly insurance stocks.

Checking: I’m up here to 13,092, a gain of 8.98% on the month. A withdrawal of 3,450 will be made in the next few days to fund my first HSA account after changing my Obamacare provider to a compliant plan.

Total Assets: Good news over all as I’m up to 548,901 at the end of January. That is good for an overall monthly gain of 3.65%.  This is a little better than the monthly performance from December.  This unlikely to be sustainable rate is a pace of 43.79% annualized return.  I should be so lucky.

 

LIABILITIES:

House: Paid

Car: Paid

Taxes: I expect to have a “refund” of about 5,000 for 2017.  I will apply that forward to 2018 and need to make quarterly payments of about 1,250 to meet the current year’s liability.

 

WITHDRAWAL RATE:

The budget is again set at 25,000.  Against a liquid networth of 548,901, that is a withdrawal rate of 4.55%.  Current annualized distributions, dividends, and interest come to 30,450 or 121.80% of budget.  I also earned 6,472 in options income during January which puts me well ahead of pace to generate an additional 25,000 for safety factor.

 

SPENDING:

It was a good month.  Spending was only 1,309 dollars for the month of January.  I have a largish electric bill due in February due to the unusual long cold spell (I have electric heat, yuck!)  I should still be able to come in under 2,000 for the month, keeping on track to meet budget even with quarter tax payments.

Devour your prey raptors!

{ 4 comments… add one }
  • Chris B February 1, 2018, 9:07 pm

    Nice sub-5% WR! Looks like your portfolio is growing too.

    I recommend doing a “correction simulation” that envisions a scenario where the S&P drops, say, 20%. To do this, you’d make a list of all your stock and option positions and their current value. Then multiply 20% by the beta of each stock you own or hold options positions on. Mark down (or mark up) the value of your holdings accordingly (using delta to estimate the options, then inflating them a bit to account for increased IV in a rudimentary way). Finally, simulate the effect of damaging options assignments – e.g. you’ll be assigned some high-beta shares on the way down.

    Not only would this be an interesting exercise, it would also help evaluate your portfolio’s sustainability if this bull market ever turns.

    My index-fund-heavy portfolio’s beta is close to 1 except for my UVXY puts and 3 high-yield bonds. Lower would be nice, but this hot market has been punishing hedgers for years.

    • The Lizard King February 2, 2018, 12:15 am

      That is an interesting exercise Chris. I occasionally let Interactive Brokers perform a similar test on an automated algorithm. It isn’t a perfect simulation because the Beta on my UVXY puts is poorly accounted for, I think. At any rate, trailing stop losses are a huge part of my strategy. I’ll be tightening my stops as the bull market gets increasingly crazy. I will almost certainly miss out on the top. It is a “fair” price to pay to ensure I don’t sell at the bottom though.

  • Joe February 4, 2018, 5:08 am

    Trailing stop losses are a great idea. Gets you out with a good profit and you avoid a huge decline if it happens.

    • The Lizard King February 4, 2018, 4:31 pm

      The key is having a mechanical system that takes irrational emotion out of the process!

Leave a Comment

*