The Market didn’t like the FED meeting and what they came up with after they finally admitted that the inflation may not be as transitory as they were trumpeting last few months. In this trading report, we will look at our investing and trading results, and focus on the market direction and how to protect our portfolio against the new inflationary cycle.
Let’s go and review this week’s investing and trading.
Here is our investing and trading report:
|Options trading results|
|Options Premiums Received:||$974.00|
|01 January 2021 Options:||$4,209.00||+16.65%|
|02 February 2021 Options:||$4,884.00||+15.41%|
|03 March 2021 Options:||$5,258.00||+12.79%|
|04 April 2021 Options:||$2,336.00||+4.30%|
|05 May 2021 Options:||$6,346.00||+9.22%|
|05 June 2021 Options:||$2,554.00||+3.65%|
|Options Premiums YTD:||$25,587.00||+36.55%|
|Dividend income results|
|01 January 2021 Dividends:||$53.04|
|02 February 2021 Dividends:||$63.00|
|03 March 2021 Dividends:||$30.31|
|04 April 2021 Dividends:||$139.70|
|05 May 2021 Dividends:||$167.45|
|06 June 2021 Dividends:||$109.38|
|Portfolio Dividend Growth:||8.44%|
|Ann. Div Income & YOC in 10 yrs:||$15,942.33||19.80%|
|Ann. Div Income & YOC in 20 yrs:||$795,593.16||988.25%|
|Ann. Div Income & YOC in 25 yrs:||$649,650.04||891.04%|
|Ann. Div Income & YOC in 30 yrs:||$6,948,865.15||8,631.57%|
|Portfolio Weighted Beta:||0.74|
|Our 2021 Goal|
|2021 Dividend Goal:||$1,071.42||56.41%|
|2021 Portfolio Value Goal:||$42,344.06||165.34%||Accomplished|
Dividend Investing and Trading Report
Last week, we have received a $43.99 in dividends income. We feel that the income will be growing faster as more of our holdings mature and become eligible for dividend payouts.
The chart below indicates our current annual dividend payout from our dividend Stock holdings. A dividend growth investor needs to be aware of this payout from each stock. The chart indicates that some stocks contribute (or will be contributing to our income with large sums while others contribute very little. That can be a problem. If a company that contributes with large dividends suddenly cuts the dividend, it will have a very significant impact on our income (for example, if OMF cuts the dividend, or suspends it, the impact on our portfolio dividend income will be significant.
I am OK with this imbalance during the accumulation phase but plan to address it in the next phase of cultivating our portfolio. In other words, in the next phase, I will be accumulating stocks with lesser payout to match the stocks that pay more in dividends. If a company cuts the dividend, the impact of a lost income will be mitigated.
Last week, our dividend income reached 56.41% of our dividend income goal.
Options Investing and Trading Report
Last week we didn’t trade much. We rolled a few trades that got in trouble. We also reopened some of the trades that expired two weeks ago and we were waiting for the market to show its direction.
The new trades and adjustments delivered $974.00 options premiums last week.
We had a few trades expiring this week and we may re-open them next week (but that will depend on the market). The following trades expired for a full profit:
1 TSLA Jun18 660/670 bear call spread for +0.70 credit
1 TSLA Jun18 530/540 bull put spread for +0.83 credit
1 KBE Jun18 50 put / 60 call strangle for +0.67 credit
1 O Jun18 65 put for +0.45 credit
1 ABBV Jun18 108 put / 123 call strangle for +0.86 credit
1 AES Jun18 24 put / 27 call strangle for +0.31 credit
1 OXY Jun18 26 put / 32 call strangle for +0.52 credit
We had to roll our APAM trade, and our KBE puts got in the money. I was not able to roll the trade (I was not in front of the computer) and we got assigned to 100 shares of KBE. However, in the inflationary environment, banks should perform well and KBE is a banks’ ETF. So I plan on staying in the position (if I have enough cash in the account, due to SPX open trade, over the weekend, the account pricing is messed up by the broker and I can’t see what buying power I have available, so I have to wait until Monday to make the decision whether to keep KBE or close the position). If I stay, I will be selling covered calls.
You can watch all our trades in this spreadsheet and you can also subscribe to our newsletter for our trade alerts.
Expected Future Dividend Income
As the table at the beginning of this report indicates, our aggressive dividend growth stocks accumulation is starting to show significant progress in our future dividends income. Our portfolio dividend yield and dividend growth will be bringing us almost $152,246.48 in 20 years and $6,863,144.95 in 30 years. We will keep aggressively accumulating dividend growth stocks to generate liveable income sooner than in 20 years. And the portfolio is starting to show this to be happening.
The chart above shows how our future dividend income based on the future yield on cost develops and what dividend income we may expect in the future. The expected dividend growth depends on what stocks we are adding to our portfolio and the stocks’ 3 years average dividend growth rate. It is interesting to see what passive income we may enjoy 10, 20, 25, or 30 years from now.
Market value of our holdings
Our non-adjusted stock holdings market value increased from $78,473.04 to $83,739.91. Last week, we added a few stock positions to our portfolio, such as 10 shares of ICSH, 100 shares of KBE (put assignment), 20 shares of TSN, and 10 shares of WBA.
Our goal is to accumulate 100 shares of each stock of our interest and we are getting to that goal. However, as mentioned above, this harms our dividend payout and portfolio growth. Although, it is temporary. Therefore, once we reach this goal (which we set because of the ability to trade covered calls), we will start accumulating these shares to equalize our dividend income rather than have an equal amount of shares.
Investing and trading ROI
Our options trading delivered a 3.65% monthly ROI in June 2021, totaling a 36.55% ROI YTD.
Our account grew by 240.32% this year.
Our options trading averaged $4,264.50 per month this year. If this trend continues, we are on track to make $51,174.00 trading options in 2021.
Old SPX trades repair
This week we have not done any adjustments to our old SPX trades. We are still sitting on those trades and waiting for the untouched side to close so we can roll the trades again. The goal will be to roll the trades until we will be able to close them for at least break even and release the buying power. We will keep doing this only if the resulting trade will be a credit trade or a very small debit. If adjusting these trades would require adding more new money, we would rather close these trades and move on.
Accumulating Growth Stocks
Last week, we didn’t add any speculative or growth stocks to our portfolio.
Accumulating Dividend Growth Stocks
Last week, we added 10 shares of ICSH, 100 shares of KBE (put assignment), 20 shares of TSN, and 10 shares of WBA to our portfolio.
Our goal is to reach 100 shares of high-quality dividend stocks and build a weekly dividend income as per this calendar, but we have made no changes to this goal last week:
You can see the entire spreadsheet here.
The FED announced at its last week’s FOMC meeting that they may raise the interest rate in 2023. But not just once but possibly twice. The stock market didn’t like it and retreated from the all-time high.
In the last few weeks, the S&P 500 traded sideways in a narrow channel, it even broke the upper channel trendline but it was not convincing at all. On Wednesday and especially Friday, the market retreated hard. Currently, the market is trendless and there are no signs of direction. It can go anywhere from here.
The FED is also prepared to start reducing its bond purchasing program (at least they talk about it). That could pour more fuel on the market’s downward fire. There are several dangers for the market.
The FED is going to hike interest rates, but European Central Bank, ECB, announced that they have no interest in raising their rates and that they will keep them low at 0.00 to -0.5%. If FED does raise rates, that could spark outflows from the US markets to European markets and we might see a substantial correction.
This can easily tamper with Fed’s intentions.
Why did value stocks drop?
In the inflationary environment and rising interest rates, value stocks and low PE growth stocks perform the best. One would see banks, insurance companies, and tech stocks actually making money, not the meme stocks, rallying. But on Friday, everything went down, except the tech stocks that should not have gone down. What the heck? So why the stocks that should strive dropped? The reason was the dollar. The dollar jumped up after the announcement. But this appears to be a brief shakedown and market repositioning. Nevertheless, the growth stocks seem to be back.
The best strategy? A mix of both, the growth stocks and value stocks.
70% probability of going down
Overall, I am still bullish and I expect the market to go as high as $4,800 – $5,000 by 2023. The reason is that the overall S&P 500 earnings expectation for the next years and the following year is extremely strong (the US economic growth is expected to remain above 5% well into 2022 and the inflation will decelerate according to Wells Fargo, and S&P 500 EPS is up to $220). That will fuel the market up. The interest hike is already priced in today’s market and unless FED comes up with any surprise (or the economy) all the events are priced in. Nothing new to expect.
But short term, we may see some correction.
The best scenario is that from here we would bounce, and continue higher. The market is sitting at a 50-day moving average and it went nowhere for months. It could be an end of a consolidation pattern. But I do not see anything that would confirm this trend, so it is just speculation.
We could continue lower to retest the previous lows before we go higher again.
But given how extended the market is, inflated by cheap money, I lean towards the declining scenario and I think we will see a correction. If we break the 50-day moving average, the $4,000 level or $3,966 level (that would correspond to a 7% correction, so we may even overshoot that target, if the market decides to go down) is very likely.
Investing and trading report in charts
Account Stocks holding
Our stock holdings still do not beat the market. However, I expect it to change over time. S&P 500 grew 44.03% since we opened our portfolio while our portfolio grew 14.35% only. On YTD basis, the S&P 500 grew 14.19% and our portfolio 7.36%.
Account Growth YTD
I expect our stock holdings to start outperforming the market as they mature. However, these are just our stock holdings. The entire portfolio beats the market by far thanks to monetizing those positions.
Our goal is to grow this account to $1,000,000.00 value in ten years. We are in year two.
Investing and Trading Report – Options Monthly Income
Investing and Trading Report – Options Annual Income
Our dividend goal and future dividends
We are on track to accomplish our dividend income goal, currently, we are at 56.41% of the goal to reach $1,071 of dividend income this year.
However, the chart below indicates that our dividend income will possibly exceed this goal as we accumulated enough shares to receive $3,548.03 in dividends.
Our account cumulative return
The chart below indicates our cumulative adjusted return. It shows how the last week’s selloff shook down our returns but we are recovering along with the market.
As of today, our account cumulative return is 22.85% (since March 13, 2021).
Conclusion of our investing and trading report
This week our options trading exceeded our expectations. I hope, the rest of the month will be even better.
We will continue accumulating the dividend growth stocks in our portfolio to reach 100 shares. We will also replenish our cash reserves to bring them back to 25% of our current net-liq value.
We will report our next week’s results next Saturday. Until then, good luck and good trading!The post 2021 Week 24 investing and trading report first appeared on Hello Suckers ....