Tuesday, December 8, 2015

Rescue My IRA: November 2015 Results

During November, Rescue My IRA experienced a sideways month, even though the account value continued to recover from this summer’s correction.  The value closed above $170K for the first time since May, when it was above $174K – that’s great progress, since at one point the statement value was less than $160K.  At this level, the paper losses have been made up, but I am still working on some pruning in the account holdings – an activity that I hope will position the account for future growth.

Notable transactions included taking profits on LXK, which I had set up as a wash sale for a DDD position.  The was another corporate “financial engineering” position to deal with in HPQ – I’m just about convinced that merger plays should be avoided in this account, since most of my experience as a small time investor has been negative on these activities, and the loss on that position accounts for the negative capital gains shown in the update below.

Hopefully we’ll see a growth phase return to the market for a few months here.  I’ll continue to build cash reserves to the 30-40% level through the election, as I expect instability from that source and from whatever is ahead with the fed.  Meanwhile, here is a summary of benchmark results for November 2015 – as always, these amounts are net of commissions and fees. 

Account Status:
·        Total Account Value, 11/30/2015 Market Close:  $170,104.40 – continuing to recover from the correction, above the account’s 2015 starting point of $167,659.68, and October’s close of $168,803.81.
·        Total Cash Reserve, 11/30/2015 Market Close:  $33,272.30 – just less than 20%
·        Core Stock Positions (as of 11/30/2015):  AAPL (100 shares), CSCO (500 shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GE (500 shares), GM (200 shares), JPM (100 shares), MSFT (200 shares), NUE (200 shares), SPY (100 shares), SBUX (200 shares), XRX (500 shares)

Performance Metrics:
·        Option Premiums Collected (net, month of November):  $312.71 (0.19 %)
·        Capital Gains Collected (net, month of November):  -$1,975.40 (-1.18 %)
·        Dividends Collected (recognized on the ex-date): $124.00 (0.07%)
·        Estimated Interest on Cash Reserve: $0.20
·        Total, Absolute Return:  -$1,538.49 (-0.95% absolute return, annualized return not estimated) 

Next Month To-dos:

December is a great month for dividends, with $494.00 forecast on six account holdings.  Two of these positions have December in the money calls written against them, so the dividend haul could be reduced to $307.00.  There will be offsetting capital gains if they are called away. 

At the beginning of the month, there were seven covered call contracts set to expire.  I have already rolled three of them out, either as part of a position repair strategy or because the call premium was below $0.20, but four remain.  All are in the money, and I am forecasting gains totaling $770.23 on these shares. 

Month to date, Rescue My IRA has generated $264.23 in covered call premiums, mostly from the roll-outs I mentioned above.  Based on these estimated returns, the account has already generated most of the 1% monthly return I seek on cash flow measures.  We’ll see how things go as the month progresses – some year-end adjustments to the holdings may still make some sense.

That’s it for the November update.  Until next month, happy trading!

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