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My Investments 1Q 2013 results

This 1st Q 2013 statement is my first publicly presented results and it will be a bit longer than the reports I will be posting in the next quarters. When I was thinking about how I wanted to share with you my results I was considering providing monthly reviews. Later, I decided to use quarterly reports as usually published by businesses.

It was always my dream to invest and trade stocks as a business and this quarterly evaluation may be a step toward this goal. I will be publishing my results on quarterly basis and try to keep it as close to the companies results as possible while keeping simple and readable.

As a business owner I would like to evaluate my goals I set at the end of 2012 and if necessary modify them to reflect the needs and development of my investing business. Although I set the goals I do not demand myself strictly following them if the situation requires it as long as such change benefits to the overall goal of growing my fund so it will become self-sufficient and able supporting me and my family without a need to wake up every morning and go to work.Money

Late Start May Require Aggressive Approach To Catch Up

As my regular readers know, I started investing relatively late. My early investing career was one madness gambling which lost me a lot of money. It took me 7 years to realize how stupid I was, so today I have to take a very aggressive approach to my investments.

By being aggressive I do not mean to invest recklessly into hot picks or chasing the home run stocks (I already did that and it didn’t work), but saving aggressively and invest every single penny. Cut the corners wherever possible and find stocks which are high quality and have great dividend history.

Timing Stock Entries May Generate Bigger Gains

Another approach is to apply “trading” way of investing to increase a profit potential of the stocks I am buying. A “trading” way doesn’t again mean fishing for the bottom and trying to time the market, but trying to get as better or as low price as possible when purchasing stocks of my interest. That means, that I want to be waiting for the stock to go into correction before I buy and when that happens I want to trail my conditional order with the falling stock, so I buy it only when the stock reverses and goes back up. This method is different from some investors who buy stock on regular basis, for example every month they invest a certain amount of dollars no matter where the stock is currently priced. If you have 20 or 30 years time frame, I bet this is a valid approach. I do not have such a luxury of time, so I need and want to try to hunt every penny possible. Once I buy a stock I am interested in, I hold.

Reinvest Dividends

Next step to reach the goal and be aggressive is a standard dividend reinvesting. It’s been proved many times by many studies that reinvesting dividends outperforms the entire market and beat it by a large margin.

OPM – Other People’s Money

OPMAnother aggressive approach is using “other people’s money” and leverage. I am a supporter of using margin and options in order to leverage my account. I will write about this approach in another post sometimes later. If you however ask other investors about using margin, they will run away from you and they will try to scare you from using it. A typical standard wisdom is not to use it all. If used correctly and carefully, it can be a great servant to you.

Options – Another Monthly Dividend From Every Stock

Last step is using options. In my previous trading career I used options a lot. All sorts of advanced options. It was great and I made a lot of money. I made $1000 within 2 days. Within 6 months I doubled my account. Well, that was part A of the entire story. The part B is, that in another 6 months I lost them all. Some people out there will never tell you that. In parties and meetings you will mostly hear the part A story. I had a friend who was constantly supplying me with a great trading success he had trading options. I was biting my nails of anxiety listening to his stories. After 5 years he revealed his account was still below his initial deposit when he opened the account because of loses he suffered and somewhat forgot to disclose.

After my experience with options I respect this trading vehicle, but decided to go back to basics and trade covered calls and put selling only as long as I learn perfectly how to manage these trades to be profitable.

Let’s review my goals from the beginning of the year.

My 2013 Goals Review

I set my goals for the two accounts:

  1. Lending Club
  2. TD account

The table below shows the progress of the goals:

I set the goal for Lending Club to reach 14% annual rate as measured by Lending Club platform. Although it may not be very relevant metric I use it because it was easy to quickly measure the progress without uploading data to a spreadsheet and calculate the true return. But I will potentially do it.

As far as TD account, I am very satisfied with results. Within this 1st quarter I was able to rebuild my portfolio. I recovered my account to a level prior to a complete loss which occurred last year. See the chart below.

TD Account

I still have more goals to go, but as you can see I reached the level from October 2011.

My 2013 Dividend Income

I am still building my dividend income. It will be a tough goal due to some changes I will make today and I may not be able to reach this goal by the end of 2013. I still will continue as hard as possible to reach this goal.

The chart below shows my 1st Quarter dividend income:

1st Q dividends

My total dividends received this year in TD account was $160.25

My 2013 Options Income

My income from selling covered calls and puts was excellent so far and I am close to collecting $383 monthly. If this trend continues in the following months I may have a very successful year. However, these results may be tricky, since many trades are still alive and may turn bad before expiration.

The chart below shows my 1st quarter results:

Options income

The trend of mu options income is satisfactory so far. My goal for the upcoming quarter is to maintain this level, but since I am going to modify my goal for 2013 year, the income development may slow down.

My 2013 Overall review

Here are data from all my accounts I have:

The charts below show my portfolios (TD account and ROTH IRA) performance vs. benchmarks:

Portfolio vs Benchmark

The beginning of the year (January 2013) drop was caused by stocks I originally refused to sell such as ONTY, which I wanted to keep for option income and I refused to acknowledge that this stock was a bad holding. The second drop in price was caused by a quite extended holding of ARR, which also suffered a significant drop. I no longer hold these stocks.

My 2013 Goals Adjustment – Debt Elimination

I am going to adjust my goals priority. I am realizing that I have a problem with a debt. At first, I wanted to be eliminating my debt while still saving money for investing. I am realizing that this is difficult and I am paying too much money on interest which could be otherwise invested.

I have a mortgage debt and credit cards debt. At this phase I am not going to focus at mortgage debt. I will however focus aggressively on my credit card debt.

My initial debt was $30,446.30 as of September 2012.

Over time I was able to lower the debt down to 26,803.91, but later raised back up $28,752.65. This debt transfers to $3,744.23 annual interest (a $312.02 monthly interest payment).

That is not acceptable for me.

Debt Track

Credit Cards

I applied strategies such as refinancing of the debt moving credit card debts into a lower APR debt or 0% APR debt. I will use these strategies along with aggressive payments toward the debt elimination. I will also pay down all available payments towards the debt. For that I am suspending some payments towards other accounts except an emergency account.

The main goal will be to eliminate the credit card debt completely by the end of the year 2013.

Image courtesy of Grant Cochrane / FreeDigitalPhotos.net

 





16 responses to “My Investments 1Q 2013 results”

  1. Daddy Pig says:

    Martin,

    Love the post. Great detail and info. I think ill have to run a quarterly summary like you in the future. Keep plugging away at those credit cards.

    • Martin says:

      Daddy Pig,

      Thanks a lot for stopping by and dropping a word. I am really happy for it. I will try to get rid of that debt as quickly as I can. Thanks again for stopping by.

  2. Congrats on the success, better things to come!

    Cheers!

  3. Haha, I love it when people always tell about their successes, but forget about any “failures” along the way. I have a friend that always talks about his employer stock, which has increased four times since 2008- 2009. However, I know he “trades” hot stocks like Monsanto, triple leverage ETF’s etc and he never really tells me how these go.

    When I talk to him about dividends, that puts him to sleep ;-0

    • Martin says:

      DGI, this is what many times made me frustrated before I realized that it wasn’t the whole story. Now I take these “investors” making millions with a huge margin of reserve before I believe them. Thanks for stopping by.

  4. Martin,

    Great to see you take such an interest in your personal finance by setting clear and concise goals. The graphs and charts are awesome.

    Like others have pointed out, that credit card debt should be priority numero uno. I’d be focusing on that with laser-like focus and hammer it away until it’s completely vanquished.

    Once you have won that war and your enemy whimpers into the night as nothing more than a memory, your investment accounts will surely take off like wildfire.

    Best wishes!

    • Martin says:

      DM, I sure take it as a first class priority and will fight it with all my might. And I am an optimist and I will defeat it. Thanks for stopping by and dropping a word. I appreciate it a lot!

  5. Martin says:

    Write 2 reality,

    no worries, I do not take it personally. I know I exceeded a level of my debt tolerance and thus decided to knock it down first and then continue in investing. And of course I will be reporting my debt fight too. I too know that it will pay beg. Imagine that almost 4k goes towards interest annually. How much I could increase my savings for dreams such as vacations and contributions towards investments every year! another 4k on top of what I already do!!! Heck, no more debt here!!!!

  6. Nice monthly review Martin! Like the others have said, getting rid of that debt will pay huge dividends (no pun intended) down the road!

  7. […] Martin shares an awesomely technical review of his investment strategy and how it’s been working (or not) for him over at – My Investments 1Q 2013 results […]

  8. Martin says:

    @ PIP,

    I totally agree with you. When I was paying the debt off I was thinking I can manage both – investing and debt, but the pressure was too high, so i am now going to focus on the debt first. I at least was able to get my investing account to the level where I am satisfied with it and now I can jump fully into the debt elimination process.

  9. Great job so far. I like the quarterly review. Once that credit card debt gets knocked out you’ll be able to really see some gains in the portfolio. By trying to focus on everything at once the progress is much slower. And as you mentioned the interest on the credit card debt is most likely well above what you could make through investing. Keep up the good work.

  10. Martin says:

    @Marvin,

    thanks. It took me a lot of time what data and numbers I wanted to publish to show the complete situation. It is not bright and nice result yet; as you may see, many positive numbers are actually contributions, but i bet over time it will hit the speed.

    I am glad this was inspirational for you. Thanks for stopping by :)

  11. Martin says:

    @MFIJ

    I agree and hope too. I will be very aggressive in knocking it out and pay it off as quickly as possible. Then I get back to investing.

    Thanks a lot for stopping by and commenting.

  12. Wow! Very detailed and informative Martin. I will have to take some advice from this for sure.

  13. That was a great write up. Hopefully, you’ll get your credit card debt knocked out soon. Then you can start putting even more money into investing.

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