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May 2015 trading, investing and dividends results

Another choppy, crazy month in the stock market is over. It was a month about which people have a saying: “Sell in May and Go Away.” If you have done that, you would lose money. I watch other investors and traders at StockTwits to see what they have to say about the market. I found a chart, see below, from a trader about “selling May” trading.
 

Sell in May
 

If you followed the May seasonality and sold all last three May months, and stayed in cash until September, you would lose money by being left out. I find this quite interesting.

So what about you? Did you sell your stocks in fear of a sell off?

If you are diligently investing, like I do in my ROTH IRA account, you should be doing well. However, trading may be a totally different story.

May 2015 trading results

For me, May 2015 was somewhat successful. It was, once again, extremely hard to trade this market, compared to last year. The stock market created a new all-time high this month, but failed to hold and follow through. My trading business experienced large swings from great up-moments to scary down-moments. As you can see in my Weekly monitor, my Net-Liq lost 10% last month.


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No matter how inconvenient it is, as a trader I must find a consent in those swings. I must find a way to deal with those swings and be able to ignore them. Lately, I found a few novice traders and investors being deadly scared seeing their Net-Liq swinging from one edge to another. They weren’t able to stomach that their account was down 20% one week and up 20% the other. This market is extremely hard to trade and being driven by fear can force you making trades which you wouldn’t normally do.

You may be interested in:
Options Expiration – May 2015 by Alex with My Trader’s Journal
Selling Puts to Buy Dividends by Dennis with Dennismccain Investing
Discover Financial Services (DFS) – Sold Jun 5, 2015 weekly Covered Call by Stocks and Options

As long as you stay the course (follow your trading plan), defend your trades, and try hard not to take a loss, or take a small loss only, the Net-Liq swings would be unimportant (all that depends on your trading plan and the way you protect your trades). As far as my trading, in May 2015, I was able to close trades making money and losing none. Of course, it may all change next month, but I hope not. In this light, my 10% down swing in net-liq doesn’t bother me. It is just a temporary drawdown. If my trades I have open, expire worthless this week, this same Net-liq will be back up where it was last month.

And that is the nature of trading. If you cannot handle it, do not trade or learn it first. I found an interesting post by Joshua Belanger, an option trader, where he listed at least four reasons why he is not posting his trading results. These up and down swings was one of them.

He says:

However, it was common to see traders up big…down big…or even scratch on the day. Not to mention the swings, from positive to negative…or negative to positive…the roller coaster ride that is called trading.

This can be discouraging to many. I feel it inconvenient, mainly when I have to post my down days (or weeks, or months). Yes, posting my trading results makes me feel guilty about my trading and about the results. It forces me to get better. But such forcing may be contra productive. It may force you into trading although you should stay out of the market.

But why do I post my trades? Well, I want to show to everybody interested in trading options that it is possible to make it (because 97% of traders lose money). But also, I want to show you that such trading can be also bumpy and not an easy quick rich scheme. I hope that my blog can do this job and it can be a helpful source to any trader or investor.

Below, you can see my May 2015 trading results. I post only closed trades here. You can follow all my open trades at My Trades & Income page.

$4.95 Stock Trades at OptionsHouse.com

 

May 2015 options trading result: $106.52 (0.91%)
2015 portfolio value: $10,977.82
2015 overall trading account result: -6.23%

 

May 2015 dividend investing results

My dividend growth investing strategy worked very well this month. My ROTH IRA was actually the only one account up in this crazy market. That may lead you to a question, why am I trading options and not just stick to dividend investing. Well, trading provides me with excitement I like, and also I hope that I will be able to build another good source of additional income which can be used to invest into dividend stocks. If you look at my dividend income below, you can see an interesting comparison:

My approx. $18,000 dividend account brings approx. $100 ($93.69 to be exact) monthly dividends.

However, my approx. $12,000 options trading account brings approx. $100 monthly premiums.

As you can see, my smaller account generates the same income as my larger account. It is nice, but there is a catch. It can be riskier and definitely it is not a passive income. You need to do some work than just buy a stock.

But there is a way to make options trading work without exessive risk and losses: stay small and do not overtrade. A golden rule, which I myself break time to time. Sometimes, I am driven by the market into breaking this rule (which is also wrong), sometimes, I break it because I am greedy, have enough available cash and want more trades (also wrong).

But back to my dividend investing. I used my accumulation strategy I wrote about in my last post. I bought a few more shares of my commission free RWX saving vehicle and accumulated approx. $980 savings. That means, that the next month after I receive June dividends, I should have my $1,000 saved (my minimum amount to buy a dividend paying stock to minimize negative impact of commissions).

You may be interested in:
Weekly Roundup – May 31, 2015 by Passive Income Pursuit
Stock Analysis: Lowe’s Companies by DivGro
June Stock Considerations by DivHut
$3,010,671 My Net Worth Update May 25, 2015 by Asset Grinder
My Stock Watch List For June 2015 by Jason with Dividend Mantra
Dividend Income for May 2015 by No More Waffles

 

What dividend stock would you buy if you were me?

I published a small poll wondering which stocks you would buy with that saved $1,000. As of now, readers voted for Chevron (CVX), but the poll is still open and I am interested in knowing your pick.

If you have a minute, please, go and vote which stock you would buy.

 

May 2015 dividend stock buys: none
May 2015 dividend stock sells: none

 


Get up to $150 when you start trading with Motif

 

May 2015 dividend income: $94.31
2015 portfolio value: $18,561.26
2015 overall dividend account result: +6.37%

 

ROTH Dividend Income
My ROTH IRA dividend income breakdown per month and per company.
 

All accounts

Besides trading and dividend accounts I also have 401k account, emergency savings account, etc., which I do not report in detail. You can review those accounts in my “all Accounts Value table at the bottom of My Trades & Income page.

From that table you can see that all my accounts are up 8.99% for the year. Considering how bad the market was this month I think, this is not a bad result.

What do you think?

How about your investing or trading result?
 

What is my market expectation for June 2015?

Trading this market is difficult. Calling where it will end or go is even worse. However, although many people think it is impossible to predict the market, I believe, it is possible. Of course, I do not mean calling the exact number where the market ends. I mean where the market may go. We can look in the history. The past trading may give us some clue. It is not 100% guarantee.

Today’s market is fear driven. Many investors believe, that FED would raise interest rates which would be bad to stocks. But, as Jim Cramer said, would you raise the rates in a faltering economy?
 
 

Nevertheless, investors are fixed to FED too much and stopped thinking rationally. We have to deal with it.

You may be interested in:
Stock Market Top-Callers Are Missing One Key Ingredient by Chris Ciovacco
Greece, facing euro zone exit fears, designs new two-euro coin by Karolina Tagaris with Reuters
More Weight Added To Equity Bear Case by Dana Lyons
Here’s why traders on New York Stock Exchange floor aren’t convinced the bull market is over by Akin Oyedele with Business Insider
Rate Hikes and Market Returns by Chad Gassaway

I mentioned above that following seasonality in May 2015 could lead to bad results, if you sold in May and ran away. But not all seasonal patterns may be bad to follow. Recently, I found a website by Dimitri Speck who worked hard to create charts about seasonal cycles. He combined all data of several indexes into one chart per index to create a pattern of cycles. An interesting seasonal pattern or cycle was a pre-election year for DOW index, for example.

We are in a pre-election year and May worked very close to what this cycle shows. Will June work the same way?

Pre-election year

If the market continues to show the same pattern, we may see June end higher. I cannot say how high it would go, it may be only a little growth, but it may be higher.

For the next week, we have a Greece deal or no deal event in front of us which may move this market higher or down. Another event would be Friday’s employment report which also is a market mover, so expect bumpy trading next week.

I hope you had a great month in this crazy market. I hope your investments or trades performed the way you wanted. And if not, do not worry. This craziness will end one day and the stocks will perform once again. If we see a correction, many wait for it so desperately, it will be great for dividend investors as well as for traders. And if the market continues higher out of this 7-month of going nowhere it will also be good for you. So don’t let anyone out there derail you and keep holding tight to your investing or trading plan.

And if you have a minute, share with us your investing or trading story!

Happy trading and investing!

 





4 responses to “May 2015 trading, investing and dividends results”

  1. Hi Martin,

    Great wrap-up report!

    It will be interesting to see what happens with the FED continually dodging raising rates. I suspect the market will drop like a rock once they announce. My guess is this bull market has about a year or so before it ends. But until that happens, as Cramer says, “BUY, BUY, BUY”. And save some capital to invest in some awesome values during the inevitable turmoil :)

    Blake

    • Martin says:

      Blake,
      Well, the higher rates are actually good for stocks, but you are right, people won’t see it that way once it will be announced and there will be a huge selloff. I think FED knows that or understand this consequence and they are afraid doing it. That’s why they are testing waters sending out notes about raising rates but not doing it. They see whenever there is a chance, just a chance, of raising rates the markets sell off everything. Like last week. We went from 2134 all the way down to 2079 within two days. Imagine what happens when the rates are really raised. But after the sell off, stocks should start rising again.
      Thanks for stopping by and commenting!

  2. DivHut says:

    Thank you for mentioning DivHut in your round up. It’s always much appreciated. Great results with your options too by the way.

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