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2019 trading and investing results and 2020 goal

It took me a lot of time to kick myself into writing this report. I wanted to be regular in doing so, but it was hard lately. I was busy at work, and also busy at studying trading qand investing. Although I have 14 years experience in investing in stocks and 10 years in trading options, there is still a lot to learn.

It is hard to see that since I decided to go aggressive in trading options – trading SPX spreads – in 2014 I must admit, I got nowhere. I studied a lot and I thought I knew a lot and I could beat the market. I must admit, I failed.

And that admission is painful. It is hard to admit, that for last 5 years I was going in circles and I was, in fact, in a boom-bust type of trading. A wave of great optimism was replaced with a wave of pessimism and vice versa.

And why I did it? Why did I want to be aggressive and trade like a pro all sorts of trades from short term to long term Iron Condors, bull put spreads, or call spreads? Well, I was greedy, I wanted to get rich with limited capital really fast. And being under-capitalized can be very costly. One small mistake and all your gains are wiped out.

And here is the effort of trying to be rich quick:

 
boom-bust trading
 

And this ridiculous performance got me to abandon this kind of trading and go back to what I was doing before – selling puts against dividend stock until I got assigned, then hold the stock, collect dividends, and sell covered calls.

It is slow and small at first, but it can speed up fast. Before, my annual average portfolio returns were around 30% – 45%, compared to 300%+. But what good does it make when I triple my portfolio in a year when I give it all up the very next one? None. And I am becoming too old to keep experimenting. If I was still in my 20s, I wouldn’t mind playing more and figuring out how to trade and not lose.

And here is the post published in October 2019, when I finally decided to return back to the roots. But first, I wanted to consolidate my accounts which after Trump’s reckless trade wars got hit by volatility and I decided to keep the bad trades open rather than closing them.

If I have closed, them, I would have realized all the loses. And I didn’t want that. I knew, that I could fix those trades but it would take time to do so (and I am glad I did it, in fact), because as of today, my accounts are recovering fast – also thanks to the extremely bullish markets.

 

 · 2019 Options Trading Results

 

In 2019 we made the following income from selling options:
 

Business account: $13,548.00
ROTH IRA account: -$5,549.00
IRA account: $1,467.00
 

Overall, the income was not bad. But, what was the problem is that this income was delivered with trades which later on got busted and I started rolling them away to keep them alive. If I closed them, the income would vanish along with the cash and net liquidation value of the accounts.

Here is the cash of each account at the beginning of the 2019 year and the end:

 
boom-bust trading
 

Net liquidation value of the accounts:

 
boom-bust trading
 

 
IRA Equity:

IRA account equity
 

ROTH Equity:

ROTH account equity
 

Business Equity:

TD account equity

 

 

 · Dividend stock investing

 

Dividend investing was doing great. In 2019 we had dividend stocks only in ROTH and IRA accounts holding for the whole year. In our Business account we started buying our dividend stocks at the very end of the year, so the impact was not as visible as in the ROTH and IRA.

The great feature of dividend buying was that the brokers I use for trading went also “commission free”, so I could start buying single shares. That is very helpful in reinvesting dividends and profits from options.

We re-invest all dividends as if we would participate in DRIP but this time, we can choose which stocks to buy, unlike with DRIP where the dividend is automatically re-invested into the same company which paid the dividend.

In 2019 we stopped trading options in our ROTH account (it was too much to manage) and we now engage in dividend investing only. later we may add some small options trading but not at this point.
 

In 2019, we made the following income from dividends:
 

Business account: $2.27
ROTH IRA account: $902.91
IRA account: $1,393.00
 

 

 · Dividend stock holdings

 

Here is a review of our accounts stock holdings:

 
Traditional IRA
Trading Results
 

ROTH IRA
Trading Results
 

Business account
Trading Results
 

So, what happened to our 5 year plan? Well, you guessed it. The plan went down the toilet. As of now, I am grossly behind and without aggressive trading, it might not be possible to actually reach the plan.

Here is the plan as of today:

 
Trading Results
 

As you can see, going into year 2 of the plan, the account was supposed to be $42,062 in net liquidation value. It ended with $3,972.70. so, this was a disaster. at least, I will not have to pay those taxes. And in January 2020, I am pretty much where I started. The nice jump in net liquidation value in January 2020 was due to the fact that I could successfully liquidate and close some of the bad trades which either expired worthless or I could close them for a small debit. This is encouraging because now I have a free capital to trade. I wish I could say that in 2019.

 

 · 2020 Goal

 

Our goal for 2020 year is simple:
 

Business account:

1) Keep fixing the bad trades to get out of them by year end.
2) Keep trading options against dividend stocks (see CCC list) using cash secured puts and covered calls, trade around existing positions or buy new positions if assigned.
3) Time to time when opportunity occurs, it would be OK to use spreads against SPX and SPY, for example butterflies, debit spreads, or single long options. At this time, we will not engage in credit spreads unless hedged otherwise.
4) Free the remaining bad SPX trades and free the rest of the net-liq. That would mean, that my net-liq should go back to the cash equivalent of $25,000.
5) Deposit $12,000 dollars to the account this year.
6) Hit 50% gain on the portfolio growth. That would end the portfolio net liquidation value to be $55,000 at the end of 2020.
7) Invest in dividend stocks, re-invest dividends, and options proceeds and make $2,000 in dividend income in 2020.
8) Accumulate high dividend yield aristocrats with 6% + yield (see CCC list). after we reach 100 shares, we start focusing on other stocks to accumulate.

 

IRA account:

1) Keep fixing the bad trades to get out of them by year end.

No other plans at this point.

 

ROTH account:

1) Keep reinvesting all dividends to high quality dividend growth stocks (see CCC list).
2) Select high yield stock to boost dividend income, for example, in the CCC list, there are a few aristocrats with 6% + yield. accumulate these stocks first as long as we reach 100 shares of each stock. Then focus on other stocks.

No other plans at this point.

Good luck all in 2020 investing year. Let’s see how this year goes and what results it brings.
 
 





2 responses to “2019 trading and investing results and 2020 goal”

  1. Reinis says:

    Hi Martin!

    I have been following your blog (and Facebook groups) for a while, started around March 2019, when I followed your advice to sell options on dividend stocks. That is one of the best advice I have ever read. Simple and very effective.

    It has been a good year, In total, I made ~ 10K both from dividends and options ($2,500 dividends) in 2019.

    Around Sept 2019, I started to sell verticals on SPX, SPY and Gold Futures – in this short time, it has been the boom-bust cycle for me at least twice.

    Just like you, I’m returning now back to the roots – selling puts and calls on dividend stocks. And maybe once in a month one 45 DTE SPX Iron Condor. Also might use ratio call back spreads on SPX or other instruments.

    Anyhow thanks for sharing your work,
    Good luck and keep it up!

    • Martin says:

      I am glad to hear that the strategy works for you. It worked for me too, so I have returned to it. Very few SPX trades these days. Thanks for posting.

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