Wednesday, September 3, 2014

Rescue My IRA August 2014 Results

After a bit of a hiatus from posting on the blog during August, I’m back.  It’s been quite busy at work during the last month, so I just couldn’t keep up with the pace of posting the results of my trades.  Looking forward to getting back to my normal pace during September…I do have 7 positions set to expire this month, so there is the potential that I will have a lot to post about!

Last month I mentioned reading an article a few months ago about just buying an S&P 500 index fund and sitting on it for years.  That passive approach differs from the active covered call strategy that I use with Rescue My IRA, but I had a sobering revelation as I prepared the data for this month’s report:  on August 29, CNN showed the S&P of returning 8.39%  year-to-date for 2014, while the Rescue My IRA has returned 8.07%.   

I don’t find that small variance discouraging or disappointing – on the contrary, I was pleased to see that Rescue My IRA so closely parallels the return the professionals and computers have been able to generate.  It’s hard work, but I’m still pretty happy with the results.  I’m not quite ready to surrender to the whims of the market, especially since I believe the deck there is stacked against small investors like myself.

Closing out the intro with my prognostication about the market – as September gets underway it does look like there is still room to grow, although navigating the increasing geo-political turmoil adds some risks to the prospect.  Valuations at these levels are making my job of picking covered call trades pretty challenging – hard to find quality picks that can meet my hurdle rate of 12% annualized return.  We’ll see what I can do – I’ll keep working on it.

Here is the monthly summary of Rescue My IRA statistics for August, based the August 29 market close.     

Account Status:
·         Total Account Value, 8/29/2014 Market Close:  $ 166,992.83, up from the July close of $163,409.85)
·         Total Cash Reserve, 8/29/2014 Market Close:  $37,154.83
·         Core Stock Positions (as of 8/29/2014):  AAPL (100 shares), CNP (300 shares), CRUS (400 shares), DIS (100 shares), FB (200 shares), GE (300 shares), IP (200 shares), JPM (100 hares), KRFT (100 shares), PFE (300 shares), PSA (100 shares), SPY (100 shares), T ( 300), TGT (100 shares)

Performance Metrics:
·         Option Premiums Collected (net, month of August):  $332.35 (0.22 %)
·         Capital Gains Collected (net, month of August):  -$638.20 (-0.41%)
·         Dividends Collected (recognized on the ex-date): $240.25 (0.16%)
·         Interest on Cash Reserve: $0.38
·         Total, Absolute Return:  -$65.22 (-0.04% absolute return, annualized return

Next Month To-dos:

Looking forward to September, I have an AMAZING seven positions set to expire this month, and at the time of this writing, all seven are in the money!  The positions are AAPL, CRUS, DIS, FB, JPM, PSA, and SPY.  Assuming all are called away, as I expect, the gains will total $2,318.09, or 1.50% of the starting account value this year.  If annualized, that would be an 18% return!

Only three positions are due to go ex-dividend, including PSA and SPY, which are in the money and will likely be called away before I can collect.  The other position is GE, with a December contract.  If I were to collect all the dividends, the cash yield would be $296.00, or 0.19% of the starting account value, but as it stands I will likely only collect the $66.00 from my GE shares.

Even with that kind of low return from dividends, with the forecasted capital gains, it looks like I should easily make my goal of 1% monthly overall return.  I’m already working on it, though!

That’s it for the August Rescue My IRA results post – another okay month, and trading in this account remains very rewarding.  Until next month, happy trading!

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