Sunday, June 28, 2015

Financial Planning Weekend Update - June 27, 2015

All the good news out of the Supreme Court had no effect on the markets this week as concerns about the pissing contest between Greece and Germany washed out my positions. That's sort of good news, since I had taken a chance on Monday writing calls at strikes below my cost basis. On the other hand the Greek Parliament voted overwhelmingly to hold a referendum on how Greece should act on July 5. As a result I suspect the markets will continue to drift until then.

By now it should be obvious that "austerity" always fails. IMHO, Germany and the rest of Europe should remember the Marshall Plan.

Whenever I need to cheer myself up I just look at this part of my spreadsheet:

Even in a month where everything seems to be pointed down I was still in a position to pull in more than $4000 in dividends and options premium. As long as Beth is still working we only need her salary plus about another $1200 to maintain our lifestyle. Although the potential capital losses are somewhat annoying they're not particularly damaging; it's only about -3%.

On a more positive note F is starting to show some life and GE seems to have settled in to a very narrow range as it sells off the various parts of GE Capital.

Tuesday, June 23, 2015

Tuesday Booze Day - New Horizons!

You want these - Horror In Clay
Those of you who know me know I enjoy the occasional adult beverage. I've been mostly a scotch and beer kinda guy with wine associated with particular dishes I've cooked. Lately though I've been thinking that with more time on my hands in the near future I should start expanding my beverage repertoire. So when I started seeing H. P. Lovecraft, and Edgar Allan Poe inspired Tiki mugs on Kickstarter I knew what direction I had to take!

Falernum #9

Falernum is a clove, lime and almond infused rum mixture that shows up in dozens of Tiki drink recipes. There are commercial versions available, but since it's not hard to make your own...

Falernum #9
Recipe by Paul Clarke
  • 180 ml Wray & Nephew White Overproof Rum
  • 9 Whole Limes, zested, the juice reserved
  • 40 Whole Cloves
  • 42 grams Fresh ginger, julienned
  • 28 grams Slivered almonds, toasted
  • 415 ml 2:1 Simple Syrup
  • 1 dash Almond extract
  • 135 ml Fresh Lime Juice
Cooking Directions
  1. Place the lime zest, cloves, ginger, and almonds into a superbag.
  2. Place the rum in a Ball jar, immerse the spice bag, and seal the jar. (Or just toss 'em all in and strain later.)
  3. Allow the mixtures to infuse for 24 hours.
  4. After 24 hours, remove the spice bag and squeeze as much liquid into the jar as possible.
  5. Add the simple syrup, almond extract, and lime juice to the infused rum.
  6. Seal, shake well, and use in your favorite Tiki drinks.
  7. Falernum #9 will keep refrigerated for up to a month.

I'm still collecting ingredients for my first real Tiki drink, so in the meantime here's a healthy morning smoothie:

Banana Daiquiri
Recipe by William Colsher
Yield: 2 Servings
  • 30 ml Fresh Lime Juice
  • 30 ml Simple Syrup
  • 90 ml Gold Puerto Rican Rum
  • 1 Ripe Banana, Sliced
  • 230 grams Ice
Cooking Directions
  1. Tare the ice into the Thermomix bowl.
  2. Add the rest of the ingredients.
  3. Process at speed 8 for about 20 seconds.
  4. Pour into glasses and enjoy.

Monday, June 22, 2015

Financial Planning: Options Monday - June 22, 2015

Well, the good news is that all my positions expired out of the money. The bad of course is that means all my positions are down significantly from mid-May. Things are looking up a bit however. This morning European markets bounced big time with Germany and France up 3.8% on positive Greek news. The S&P was almost 1% higher in futures trading but ended  the day up 0.61%.

This month I decided to go ahead and write calls on all my positions. You may recall that last time around I skipped a few because the underlying stocks were below my cost basis. Because I anticipate more range bound volatility (at least until the Fed makes it's first move) I believe the need to "buy to close" a few positions is far out-weighed by the benefit of additional income.

This month dividends ticked up a bit to $1241.00 and options premium brought in $3,217 at $144.25 in commissions yielding a total $4,313.75. As a result my cash balance is now $17,393.05.

I have an ultimate goal of $40,000 in cash and I should cross the half way point next month. That said, I'm starting to consider increasing some positions, specifically COP and ED. Conventional wisdom suggests ED will drift lower into the the Fed move. It's yielding 4.42% now and any serious weakness could drive that yield close to 5%. As for COP, I'll be looking at it should there be significant weakness in oil prices.

As always, comments are welcome!

Saturday, June 20, 2015

Financial Planning Weekend Update - June 20, 2015

What a week - although up overall, about the best that can be said is "losses were reduced". And of course, this being expiration, all positions expired out of the money. So there's that.

In fact, after last week's belly flop, this week was actually a more or less continuous rise in the S&P from 9:30 AM Monday until 4:00 PM Thursday. There were plenty of ups and downs inter-day, but only Wednesday was actually down and that only by about 2 points. Friday gave back some of Thursday's 1% bounce and here we are. I recovered about $966 of the previous week's paper losses and now I need to start planning for Monday's options.

Because many of my positions are significantly lower than when I purchased them I'm going to be selling calls near the current price rather than stretching out in time. This may mean I'll have to buy them back in July (as I did at May expiration). I have a solid cash position so that shouldn't be any kind of problem.

After all this I'm looking at a net gain of $9,878 since inception with $13,079.30 in cash for an annualized return of about 12.8%. Pretty good considering ED has been drifting down while interest rates drift up and COP has been clobbered by sustained low oil prices. Most of all though, this exercise continues to be a great education in working this kind of D&CC portfolio. With retirement now less than a year away I'm extremely pleased I started when I did.

Anyway... I'll have the usual options post up Monday evening and I've got something more fun than finance coming for Tuesday.

As always, please feel free to comment - I know I have a few readers out there, so chime in now and then, OK?

Sunday, June 14, 2015

Financial Planning Weekend Update - June 14, 2015

That was a miserable week indeed. Panic about Greece, next week's Fed meeting... and we're basically in the same spot we were in last week. We are coming up on expiration next week and the only positions that have been flirting with the idea of maybe being in the money are EMR and GE.

The FOMC meeting is on June 16 & 17 and it will come with a "Summary of Economic Projections" and a press conference by the Chair. Those summaries happen every 3 months they include information on thew board members' position on "Appropriate timing of policy firming" and the target rate for that "firming". In the March summary the count was 15 for 2015 and 2 for 2016. Seven of the 17 members had that rate at 0.625% in March. 

What's it all mean? Range bound volatility and a slowly strengthening dollar. 

Even with two horrible weeks in the books, the portfolio and what looks like a sea of red my cash position of just over $13,000 coupled with small gains in EMR and GE leave the net gain at $8,912 for an average monthly gain of 0.91% or an annual rate of 11.48%. 


Saturday, June 6, 2015

Financial Planning Weekend Update - June 6, 2015

This week started out looking pretty good. Then the wheels fell off on Thursday with panic about Greece, a too strong jobs report on Friday, and heaven knows what else spooking the market. Well, Friday brought the strong jobs report, Greece postponed their IMF payment, blah, blah, blah... Sure enough, the markets opened down Friday morning but were sneaking into green by 10:15 or so. Then levels just drifted through the close.

My portfolio is looking pretty sad, showing a substantial paper loss for the month although it's actually up $8,723 since I started this project back in March. And of course the dividends keep coming in.

Everything is "out of the money" at this point so for the next two weeks the main thing I need to think about is what (if anything) I want to do about the big losers. I'm especially concerned about COP. ConocoPhilips skipped an expected dividend increase this quarter and it needs WTI to reach $70 and  Brent at $75 to be be able to cover dividends from cash flow. With those futures around $58 and $61 COP could be looking at a price near $60 in the not too distant future.

I'm willing to give Ford more time to get the F-150 lines up to speed and show some positive momentum. Depending on my June premium income I may add to the F position to reduce my cost basis and increase dividend income.

Like all utilities, ED is interest rate sensitive. Should the Federal Reserve signal a raise in the overnight rate for fall I'll start looking for a dip to buy into. With the 10 year note at 2.4% all the utilities got hammered this week.

The last big loser is Proctor and Gamble. The company is in the process of selling off under performing brands so volatility is to be expected and patience is required. Even so, it's a little annoying to have to just sit on the shares so if it's still sitting in the $78 area by the 19th I may take a chance on selling something like the July 80 calls knowing I may have to buy them back. PG's next earnings announcement is scheduled for July 30.