Monthly Results: May 2013

So I thought I would look for some benchmarks to start out my monthly results post.  From Morningstar, I see that the US Market index return year-to-date is 17.49% as of yesterday, 29 May 2013.  The Rescue My IRA YTD return is 7.80% - that’s below the Morningstar benchmark, which I am only having a look at for comparison purposes.  My goal for the account is a 12% annualized return, and so far so good as far as 2013 goes – looks like we’re on track, if not a little ahead.

I am writing this post tonight from the brick terrace at Hawksbill Cabin, my country house in the Luray, VA area.  I’m taking a week-long vacation out here, away from the hustle and bustle of the Washington, DC area, where my wife and I live full-time.  Hot topic of the week is our prospects for retirement – and so that is the backdrop for my monthly results post.

(By the way, I keep a blog about the weekender lifestyle, called Hawksbill Cabin, which you can find in the blog list on the right.  Or click here: www.hawksbillcabin.blogspot.com).

May was another of those months where we saw the market hit some new highs.  I said goodbye to some long-held positions in CSX and GLW, and I took advantage of the market to roll-up a couple of positions, trading accrued options premiums for stock gains that I hope to recognize in the future.

For that reason, the month won’t show up as one of my best in the history of this account, but when I do finally recognize those gains, I can expect some good months. If I were trying to live on the cash flow from this account, which is how I imagine things will work out when I retire, this is a month where I would have to rely on cash reserves to tide me over.   

I am showing negative results in the options premiums section of the account, but I had a decent dividend month, and there were some nice stock gains to boot.  Between those two revenue streams, the account has a .54% return; I would have added another $1,000 or so in option premiums if it weren’t for the roll-ups.  So my monthly 1% goal was in reach – I’ve just postponed recognizing some revenue until the roll-ups are assigned, for stocks MSFT, CSCO, JPM and SPLS.

So, finally, here is a summary of the Rescue My IRA statistics for May 2013, as of the 5/29/2013 market close:

Account Status:

·         Total Account Value, 5/29/2013 Market Close:  $144,085.05 (vs. April close of $142,267.90)

·         Total Cash Reserve, 5/29/2013 Market Close:  $8,000.25

·         Core Stock Positions (as of 5/29/2013):   AFL (200 shares), CAT (100 shares), CMI (100 shares), COP (200 shares), CSCO (500 shares), DVN (200 shares), GE (500 shares), IP (200 shares), JPM (300 shares), MSFT (400 shares), SPLS (700 shares), TLT (100 shares)

Performance Metrics:
Option Premiums Collected (net, month of May):  -$2,281.18
Capital Gains Collected (net, month of May): $249.47

Dividends Collected (recognized on the ex-date): $480.06
Interest on Cash Reserve (estimated): $0.08
Total, Absolute Return:  -$1,551.57
Absolute Return, Percentage Basis:  -1.17%
Annualized Return, Percentage Basis:  -14.21%

Next Month To-dos:

June is a light month for dividends, with only $248.00 forecast from four positions:  TLT, SPLS, GE, and DVN.  At the time of this writing, GE and SPLS are in the money, and since GE is a June contract, it may well be called away early.  That will reduce my dividend haul by nearly $100, but there is a decent stock gain in the position that will offset. 

There are currently just three June contracts:  DVN, GE, and IP.  Only GE is in the money as we begin the month; I have duplicated the IP position in my conventional (non-IRA) Scottrade account. 

Last month I mentioned that I might “sell in May and go away,” and I was worried about that strategy to some extent.  I think there is more room to run in the market just now, at a minimum until the Fed begins aggressively changing its tune.  So I’m staying 95% in until the summer is over…and I am always looking for good bargains.

Ciao until next month!