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:

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.

Market Outlook

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 Net-Liq

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!

23 weeks of providing our investing and trading account report showing successful growth. We kept buying assets – dividend growth stocks and trading options around those positions. We consider our stocks to be assets, like real estate units which we rent to tenants and those tenants pay us rent. So our stocks, like tenants, pay us rent to own them – dividends and options premiums.

We also started our $100 Challenge account which is slowly but successfully growing. It will be a slow process to grow $100 to a large account, but I can already see that we will exceed our goal. I will be providing our $100 Challenge account report this Tuesday. SUBSCRIBE to our program if you too want to join our team and grow a small account to a large one.
 

Let’s go and review this week’s investing and trading.

Here is our investing and trading report:

Dividend Investing and Trading Report

 
Last week, we have received a $5.72 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 52.30% 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 $1,191.00 options premiums last week.

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 $127,118.28 in 20 years and $5,596,366.12 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.
 

Market value of our holdings

 
Our non-adjusted stock holdings market value increased from $75,289.49 to $78,473.04. We did not add any new positions last week.

 

 
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 2.18% monthly ROI in June 2021, totaling a 34.03% ROI YTD.

Our account grew by 251.54% this year.
 

Our options trading averaged $4,102.17 per month this year. If this trend continues, we are on track to make $49,226.00 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 SNOW to our portfolio.

Accumulating Dividend Growth Stocks

Last week, we added TD, SPLG, and ICSH 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.

Market Outlook

The market continued its sideways bound trading when optimism was replaced with inflation fears just to dismiss them later upon job report. Tech stocks continue struggling and the entire market seems to be consolidating. And that is good.

55% probability of going up

It is hard to say where we will go from here. It can be down as well as up. No one knows. We have to wait for more clues to find out. As of now, we are in a range and we have to wait. The market is slightly skewed to the upside but it can all change on a dime the very next day.

I still expect the stock market will most likely push to the $4,300 – $4,400 level (second half of July 2021) and then we may see some serious correction (15% to 25%) before the market resumes its uptrend. We are still in a very strong secular bull market, so do not expect any catastrophe or doomsday as talking heads and Perma-bears start crawling out of their holes. But that is just pure speculation.

Investing and trading report in charts

Account Net-Liq

Account Stocks holding

Or stock holdings still do not beat the market. However, I expect it to change over time. S&P 500 grew 46.83% since we opened our portfolio while our portfolio grew 16.69% only. On YTD basis, the S&P 500 grew 16.99% and our portfolio 9.70%.
 

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 52.30% 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 $3,387.82 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 27.15% (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!