Performance Tracking January 2018

For calculation methodology see this post.

It was one of the best Januaries for stocks in history. Despite a pull back in the last couple of days, $SPY finished up 5.64%. Its chart now has all the appearance of a parabolic rise. Bonds took a hit however, as rates rose with inflation fears with the economy heating up. $AGG was lower by 1.13%, bringing the 60/40 down to a still very respectable +2.93% for the month.

My passive account was up 3.5%, without PMs it would have been up 3.61%. In other words, PMs were again the source of a small amount of drag. Stable value funds definitely helped with the returns in January. Small cap and total international underperformed while EM did slightly better than $SPY. The active account gained 16.38%, propelling the total portfolio to a monthly gain of 11%. This is the fourth record in as many months, and by a wide margin. The main return driver was options which were responsible for nearly 3/4 of the dollar gain.

The individual stocks were +6.67% for the month, +1.06% relative to $SPY and +5.17% since last April. The FI CEFs took a hit of -1.19%. While the multi-strategy funds benefited from interest rate swaps and foreign positions, the muni CEFs took it on the chin. The flattening of the yield curve squeezes leveraged funds from both ends. The FI CEFs were -0.07% relative to $AGG this month and +6.98% since last April.

Transactions: added $NAC as its discount widened to 10%. It’ll be a good trade as long as rates stabilize somewhat. This month I executed my first volatility based trade with $UVXY calls. This is a new, long-vol strategy based on a technical indicator and readings. It has the added advantage of being negatively correlated with my equity and other option positions. Indeed I could afford to take a much larger position than I did. Other transactions included adding $OSTK puts, $DIA calls and moving up other short put positions.

End of Month Portfolio Composition

PMs were at 11.3%, equities 51.9%, fixed income 23%, cash 5.1% and other 8.6%. The “Other” category was composed of 3X ETF 0.4%, and options 8.3%. Exposure from options grew to equivalent of 97.8% of the total portfolio, for a leverage ratio of 11.8X. Total portfolio equity exposure increased to 150%.