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October 2017 results

October is over and it brought a few significant changes to my accounts.

When I changed my daily job, I begun a 401k transfer to a self directed IRA account. At first I transferred my old 401k to TD Ameritrade. I also asked TD to adjust my fee schedule to get better assignment fees and have the same fee schedule as I had on my other accounts.

To my surprise they didn’t provide me with better fees. I was also surprised by how uncommunicative my “account manager” was. I tried to call her many times, left messages and she never got back to me. So I contacted the client support and asked them what fees can I get to my new IRA account. They offered a standard schedule of $6 per ticket + 0.75 per option contract and $10 for assignment.

My old accounts had $1.50 per option contract, no ticket fee, and $15 per assignment. I hoped to get a similar schedule as Tasty Works offers. It didn’t happen.

So, I transferred my new IRA account to Tasty Works ($87,600 worth account).

I also transferred my existing ROTH IRA account ($23,000 worth account).

I transferred all my other margin accounts (only about $200).

And I will be transferring my business accounts as soon as some of my existing options trades end ($25,000 worth account).

Once all my accounts will be transferred, TD Ameritrade will lose an actively trading client worth of $135,000 dollars. It is probably insignificant to them so they do not bother. I think, after TD bought Scottrade, they think they have big enough clientele so they do not have to worry about a speck like me. Their choice.

However, the transfers will have impact on my account reporting as I do not have access to the old accounts as of now, so I will be skipping my ROTH IRA detailed reporting this month.


 · ROTH IRA account:


As I mentioned above, I transferred this account from TD Ameritrade to Tasty Works this month and thus the report is not complete and some data will not be available or accurate (for example, I was able to retrieve my dividend income, but my options income is skewed by the transfer as TDA shows it as a small loss and Tasty Works doesn’t show it as of yet; or it shows it as a statement not available).

October 2017 net-liq: $22,858.87  ▼ (down by $396.37   -1.70%)
October 2017 dividends: $88.60   (down from previous $89.45)
October 2017 options: -$4.04   ▼ (down from previous $74.40)
XIRR: 9.03%    



Monthly dividend Income:


My dividend holdings:

Current data not available.

Options Income
(Click to enlarge)


 · TD account:


Our trading account continued its recovery mode and growing well. We weren’t taking many new trades but rolled old ones only. We will start trading actively this account again once all old trades are gone.


October 2017 net liq: $25,182.88   ▲ (up by $1,859.01;  7.97%)
October 2017 options: $523.34   ▲ (up from previous $108.87)
XIRR: -23.52%    


Month-to-moth trading results

Trading results

(The red dots on the chart indicate income estimate, blue bars actual earnings.)



We are presenting you our month-to-month business performance review:


 · Lending Club


Lending Club investing keeps annoying me again. I simply cannot stand that I have to deal with irresponsible stupid people who go to you via P2P lending, borrow money from you evidently with an intention of not paying it back. What bothers me is that I have absolutely no control over the lending process and eventually recover the losing money. With options, I can use all sorts of strategies to repair a trade. With stocks I can use a stop loss to minimize my loss. Here, I can do nothing. Once a note goes bad. It is most likely a 100% loss on that note. You can do nothing to fix it. All you can do is taking more notes to dilute this loss. It still looks like throwing good money at bad ones. Where is a guarantee that more notes will dilute the loss and not add to it? Nowhere.

The single note I mentioned in my last report is still bad. It went from a Grace period into Late period and is close to becoming default. I consider this note already lost. This once again convinced me that investing with Lending Club is not investing but a crazy hazard and I advocate you not to put money in this vehicle. Lending Club advertises opening an IRA account with them and I recommend not doing it.

Nevertheless, I deposited $500 dollars in this investment and that’s all I am willing to do. I will keep investing according to my rules and see if this gets any better, but I am very skeptical.


October 2017 net liq: $497.24   ▲ (up by $83.10   20.07%)
October 2017 interest: $5.17   ▲ (up from previous $2.28)
XIRR: -13.32%  



 · IRA Account


I started trading this account in October 2017 and so far it went well. I set the following strategy/rules for this account (and actually, I will be using it for my ROTH IRA too, but my ROTH will need some consolidation before I will be able to apply these rules):

1) Trade against dividend stocks only.

2) Do not exceed 50% of available capital.

3) Trade cash secured puts to generate income (avoid spreads as much as possible, limit spreads to one or two trades at a time only).

4) Avoid opening a trade around earnings of the stock, choose a different stock then.

5) For 2017 & 2018 year only trade 9 trades (1 contract per trade over 9 weeks) at one time, use same stocks if possible.

6) Spread expiration of contracts to have expiration every week, use 45 DTE, use calendar to spread the trades across months.

7) Open a new trade only when the old one expires.

8) Roll in the money puts as much as possible, if rolling not possible, let puts assign.

9) When puts get assigned, keep the stock, collect dividends, and sell covered calls.

10) If the stock gets too much in the money when selling covered calls at or above purchase price will be worthless, wait holding the stock to avoid rolling calls if the stock recovers sharply or use covered strangles.

11) Roll covered calls as much as possible, if rolling not possible, let covered calls assign or convert to puts or covered strangles.

12) Build a portfolio of 30 dividend growth stocks (DGS) using options selling and money allocation management as described below.

13) When the monthly income reaches $1,000 or more, use 50% of the income to purchase dividend growth stock (DGS). Use stocks in the watch list.

14) If the monthly income is below $1,000 a month, use 50% of the total 6 months income. Twice a year evaluate 6 months income and buy dividend growth stock if the 6 month income reaches $1,000 or more; (for example, if from January to June the total income will be $1,800, use 50% or $900 to buy dividend growth stock, then repeat the same process from July to December).


October 2017 net liq: $87,594.86   ▼ (down by $51.37;  -0.06%)
October 2017 options: $313.00   ▲ (up from previous $0.00)
CAGR: 12.64%    







 · Conclusion


Although I issued a small warning about slowing economy my market and economy outlook is still bullish as the latest earnings season once again proved that the economy is still strong. It had no impact on the market and we saw new all time highs. I still think no investor or trader should be selling their positions based on the valuation. If inflation is included into the equation then this market is still very cheap and may run higher.

Since May 2017 I keep saying that the US economy is improving and accelerating that we saw increasing year-over-year sales, earnings (the second best since 2011), in June 2017 I showed you the numbers on consumer confidence. increased capital expenditure, corporate profits, all up. And this trend continues as recently financial media reported revised GDP above 3%, something I have been saying since June 2017 that our economy is increasing from lack luster 1.4% (and back then to 2.5%, now to 3%).

As long as we see this improvement there is no need to be selling your stocks on valuation. Instead, buy every dip you can.

What do you expect from the stock market in October? What is your strategy for the rest of the month?

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