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Financial Transparency as of 31MAY2018

May 2018 results.

music selection:  “Wonderful Tonight” — Eric Clapton

ASSETS:

Wells Fargo (taxable): This is up 394 dollars, a 1.33% gain versus last month. The new mark is at 30,062.  Year to date, this account is down 2.02%, not fully recovered from the volatility events of January and February.

Interactive Brokers (taxable): This is up 17,784 to 305,253 a gain of 6.17% versus last month. Rising interest rates have begun to impact my fixed income investments.  Year to date, this account is down 18,584 or 5.74%.  This is largely driven by the dead money in the UVXY trade.

Interactive Brokers (tIRA): I show 383 in declines here this month to 166,438 which is good for a 0.23% monthly loss. I am watching my trailing stops here but nothing seems threatened at the moment.  Year to date, this account is up 2.08%.

Checking: I’m up here to 12,612 a gain of 3.22% on the month and 4.99% on the year.

HSA: This account is up 179 dollars to 3,459.  That is a 5.45% increase.  This account is small and highly volatile as I have it entirely in the triple levered UPRO.

Total Assets: Back above the half a million mark.  May finishes at 517,824. That is good for an overall monthly gain of 3.67%.  Year to date, I am down 2.22.  I am watching the yield curve closely for an inversion which will be my signal to tighten stops.

 

LIABILITIES:

House: Paid

Car: Paid

Taxes: I have a tax asset of 12,445.  I will prepay another 500 this month.

 

SIDE GIG:

I started with the local water board as a director this month.  I will be paid 150 a month for my services.  First check came out to 132 and change after OADSI and medicare taxes.

 

WITHDRAWAL RATE:

The budget remains set at 25,000.  Against a liquid networth of 517,824 that is a withdrawal rate of 4.83%.  Current annualized distributions, dividends, and interest come to 29,525 or 118.10% of budget. I also earned 4,278 in options income during May.  Annual options earnings  should easily cover the budget two times over this year.

 

SPENDING:

A little more spendy than usual this month.  I came in at 2,049 for the month of May.  That is a 17,930 annual pace so far.  October through December are more expensive as real estate taxes and insurance come due.  Should come in well under the 25,000 target however.

Devour your prey raptors!

{ 9 comments… add one }
  • chomper June 1, 2018, 4:20 am

    With your spending rate you have enough to do the 4% withdrawal rate, modern portfolio strategy, index funds, etc. strategy if you wanted to. I allocate some of my money that way using Vanguard’s Managed Payout fund (VPGDX). https://investor.vanguard.com/mutual-funds/profile/VPGDX#tab=0

    However, most of my money is in higher yielding assets though like closed end funds, and ETFs that target REITs, BDCs, MLPs, etc. My favorite is the John Hancock Tax-Managed Dividend Income CEF ticker HTD.

    Do you think the Fed is going to keep hiking us into a recession? I am hopeful with that all the chaos going on in Europe and these trade wars that the Fed will back off like it did back in 2015-2016. I think we would have had a recession back then if the Fed hadn’t thrown on the brakes. I’m hoping they will do that again and we can continue avoiding recession.

    If they stop at three rate hikes then I think that will indicate that they are going to be careful and not overdo. However, if they stick with four then I am going to assume they are going to keep raising no matter what.

    • David June 1, 2018, 12:36 pm

      We can’t avoid a recession under a debt backed fiat monetary system. At some point, the economy is saturated with newly printed money and do not need debt as much, but the interest drain is still there. Capital is destroyed faster than it is created and you need bankruptcies to write off outstanding debts to bring debts back in line with available money. The more time between recessions, the larger this gap and the worse it is because for every dollar created, 1.01 to 1.20 dollar is required to repay it. Recession or hyperinflation is the only way to reset the fiat ponzi for another cycle.

    • The Lizard King June 1, 2018, 1:59 pm

      The business cycle has been a fact of life for thousands of years. I don’t believe for a second we can avoid another recession. Will it be sparked by the Fed inverting the yield curve? That is my best guess right now. I’ll tighten stops if the 2 yr passes the 10 yr. If the 90 day passes the 10 yr, I’ll short SPY.

      The Fed really has no choice but to raise rates. It needs the wiggle room to cut in the next down cycle. Europe and Japan experimented with negative interest rates but I think that is truly bad policy.

  • chomper June 1, 2018, 2:57 pm

    Thanks for the responses. I really hope the next one is not like 2008-2009 again. That was scary and totally obliterated my portfolio. I eventually came out ok through dumb luck, and not losing my job. I have half of my money in bonds this time, but not sure if that will do any good.

  • Chris B June 1, 2018, 3:32 pm

    Rising interest rates, 1930’s style protectionism, and rising inflation are high on my list of concerns. Many of the governance factors we used to be able to count on to prevent dumb policy moves have disappeared under our new one-party system: Dodd-Frank, budgetary deadlock, international trade, and economically informed “elites” in leadership positions are all things of the past. In the midst of all this, the S&P 500 sits at a PE of 24.6, bonds have nowhere to go but down, and Trump’s trade wars will likely ignite inflationary pressures (e.g. 25% tariffs on Japanese cars will raise the price of all cars, huge tariffs on steel and wood will raise the cost of housing, Mexican produce will become more expensive). The latest sell signal: people are paying millions of dollars for “cryptokitties” – blockchain-generated cat avatars.

    Part of my fascination with this blog is watching a hungry lizard scratch out a living in such a dangerous environment. I have hedged or dialed back about half my market exposure, which is easy because I’m in the accumulation phase and can live without a cash flow. Retirees, however, don’t have this luxury.

    TBH, I think your portfolio is leveraged bullish and may need to change to a more neutral or bearish stance if it is to generate cash flow through recessions/corrections. Bearish credit spreads or condors come to mind. Bull market retirement is easy, but to survive something like a 2000-2003 stretch will require some creativity! That’s just my take. Good luck lizard!

    • The Lizard King June 2, 2018, 12:48 am

      Thanks Chris. I agree I have bullish bias. It is what the trend demands. I am watching trailing stops and will tighten them as economic indicators send up red flags. That process will naturally raise cash in a downturn while containing the damage. My 40% allocation to fixed income will ensure I can squeak by while waiting for the storm to blow over. At something that looks like a “bottom”, I’ll have cash to deploy into a high options premium environment. The thing I’m debating internally is when/if to short the SPY. I think if the 90 day t-bill yield passes the 10 year benchmark, I will do so. I have a list of 10 targets I think are good shorts for when the 2yr passes the 10.

      The beauty of the blog (IMO) is that it records my attempts in real time. Whether I survive or fail, there will be a permanent record others can learn from. Hopefully, I learn a few things myself.

  • Jrbroker June 2, 2018, 6:43 am

    If you guys are smelling danger why don’t just cut losses when they reach certain percentage? I know I will when my losses are of 15%,,, my positions are small so if they go down I Will be out and do not sweat of any positions,,

    • The Lizard King June 2, 2018, 1:50 pm

      I sort of do that. I am tracking trailing stop losses. For most positions, that is 25% decline off the most recent high at close. I’ll tighten to 20% or 15% as indicators warrant.

      • Jrbroker June 2, 2018, 2:44 pm

        Excellent, I thinks its the only way to avoid getting caught in a 2008 scenario, nobody knows when it will come, so you have to take what the markets are giving you right now and then when the inevitable comes, you will give some of that in return, thats the tradeoff…. I aim for 2% monthly on every trade, but maybe when I cut losses that will result in a 1% gain only, I can live with that

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