Performance Tracking December 2016

For calculation methodology see earlier post

2016 is finally in the books! This blog was launched in August which was a high in terms of portfolio percentage gains at around mid teens. PMs, dividend paying stocks and closed end funds all performed well upto that point. Since then, PMs retraced almost all the yearly gains and muni CEFs had the most severe setback as interest rates started to rise. The overall portfolio still managed a 10.87% yearly gain (using simplified Dietz method), but it’s not an “official” number since tracking here officially started in August. For the year-end summary I also provided the “chained” results based on monthly data.

Passive Portfolio

The passive portfolio without PMs managed a gain of 1.04% vs. 1.23% for the 60/40 bench mark. International equities, both developed and EM were sources of drag. PMs faired poorly. Gold closed the year at $1151, above last year’s closing but further weakness is expected into the New Year, with a low below last year’s low of $1045 possible. I would consider adding to my PM positions if that were to realize. I have not changed my target allocations, but I have rebalanced out of my small/mid cap blend into stable value funds recently. My IPS allows annual allocation reviews and small tweaks. My current plan is to re-evaluate when and if we see weakness in the first quarter. Major planned actions are to be out of bond funds entirely (use stable value funds only), and to increase my equity allocation by 5%.

Active Portfolio

The DGI portfolio outperformed SPY for once, 2.52% vs. 2.04%. Otherwise the relative performance since August stands at -3%. As part of the interest rate re-alignment, rate-sensitive stocks took a hit. It affected my DGI portfolio to a degree. That said I’m optimistic of its chances against SPY in the coming years since I tend to focus on high-quality dividend growers. My total gain from options activities (mostly premium selling) was over $2500 but I wasn’t very active in the latter part of the year. That’s something I’ll pick up again in 2017 with a goal of generating 1-2% of the account value at Interactive Brokers.

One of my main objectives for 2017 is to continue to grow my DGI portfolios, where most of additional funding will come from vesting of the RSUs from my employer. My long term goal is to assemble 50 stocks at around $20K each. In December, I picked up some Gilead ($GILD) based on valuations and its cash position. Pharma, financials and tech are the sectors I’m paying most attention to right now.

Plan and Forecast

I laid out my S&P predictions here. The year-end rally did materialize although stalled at Dow 20K. Lots of capitals gains probably have been deferred to 2017 to take advantage of potential lower tax rates. A 10% correction is not out of the question. I have set aside amounts for Roth IRA and 529 contributions that will be deployed at the end of January/early February or whenever the correction materialize. Other than that, I actually don’t have a lot of spare capital and will be using option strategies such as synthetic equity to take advantage of what I believe will be a two-year long rip-roaring bull market.

Leave a Reply

Your email address will not be published.