I finished off of my highs of the year and I still pulled out a 26.27% return for all of 2007. I’m really happy with my account for 2007. I always like to compare myself to the indexes, especially the S&P 500 since I’d likely have a large part of my portfolio in an index fund if I wasn’t actively managing my investments. I love that I beat the major indexes by so much. Below is a list of what the indexes returned in 2007.
- 2007 S&P 500 Return: 3.53%
- 2007 Dow Jones Return: 6.43%
- 2007 NASDAQ Return: 9.81%
- 2007 My Account Return: 26.27%
I’m not only happy about the return I had for the year, but also that I was able to contribute so much to my account. I figured that if I could contribute $18,000 ($1,500 per month) every month and make 20% I’d have just under $59k at the end of the year. If I could pull out another miraculous year and hit the 40% mark, I’d have over $65,000. My 26.27% return didn’t meet the dream of 40%, but beat my basic goal of 20%. The biggest factor was our contribution amount. We came up with $40,500 to add to our account in 2007 and only missed a deposit in the month of March when I was still working on our taxes and held back the cash to make sure we were prepared.
I don’t think we’ll make such large contributions in 2008 for a few reasons. In 2007, we both found out we’d be losing our jobs and cut our regular spending a good bit. I worked as a contractor and took only a few days off the entire year so I was able to make a little more than normal. My wife received her 2006 bonus in the spring of 2007.
In 2008, she won’t receive a bonus. She got a raise in her new job, but I’m taking a temporary pay cut in my new job as part of my income is commission based and I’ll have to work to get back to where I was. We also plan to buy a new car in the second half of 2008 and do some work on our house that we delayed during our self-imposed spending freeze.
As an early January tradition, I have to set financial goals for where I want to be by the end of 2008. Using a similar guideline as last year, I’m planning to have at least 20% returns and deposit $2,000 each month. If that works I’ll have over $131k by 12/31/08 and if I can maintain that dream return of 40% for 12 months I’ll have nearly $150k by the end of the year. I doubt the latter will work as described. I’m going to have to dig in and actually work at my new job (as opposed to the past two years at AT&T), so my returns will probably suffer. That said, if I do as well as I believe I can, by Q4 I will be making more each month than I did on my last job. Coupled with my wife’s growing career, this will set us up for a beautiful 2009 and beyond.
- December 31,2007 Account Value: Ameritrade: $89,469.75, Quicken $89,604.20
- Deposited $10,000 on 12/5/07
- Capital gains in 2007 from trading account: $19,151.88
Good job on beating the markets by such a nice margin. I am impressed with your blog. Your goals are very similar to my own, (although, you have alot more capital than me). I am hoping to retire from my job in 5-7 years and just have fun investing. Like you, I am confident, its just a matter of time, while building up capital.
Anyways, good luck to you in 2008! I hope you hit your 40% goal (which just so happens, is the same as mine!).
Congrats on crushing the indexes. 10 or 15 years like that and you’ll be able to retire 😛
I am new to Option Trading. I have learnt Option basic and started with Vertical Spreads.
I am interested in learning your way of Option Trading. Would you please give me some guidance, where I can start learn about your “My Trader’s Journal” and put my real trades?
Thanking you in advance for you any help
You started with 43,573 on 4/8/07, made 40,500 deposits and end balance of 89,470, for a gain of 5,397 or 8.11% — 11.09% annually. Did I miss something?
Mule65, Yes you missed a couple of things. The biggest is time value. I list when I made each deposit and how much each was on my Current Portfolio page (http://mytradersjournal.com/stock-options/current-portfolio/). Your math assumes that $40,500 was in the account from the beginning, but I made monthly deposits, including $10k in early December. That is why your math is different. That’s why I use Quicken.
My starting figure was from before I started this blog, but had my trading journal in Word and all trades in Quicken also. I list my beginning balance and my pre-blog deposits on my Current Portfolio page too.
If you have the time, I welcome the audit. I posted each trade since I started within 8 trading hours from when I made it and most within 1 hour. Load my details in Quicken or any other software that accounts for time value and you’ll see my claim is accurate.
On the capital gains mention, I have more in capital gains than I have in paper gains right now since I have a few long positions I’m sitting on a loss right now for the individual stocks, but am working them with covered calls now. Those will be losses in 2008.
Shishir, there’s no easy way, but to read a lot and practice. You can go back and read my previous posts to catch up some for my trading model. Be careful though, what works for me might not work for you.
You might also want to start with the “Beginners” section in the Category group on the left sidebar. I tag those specific posts especially for those just getting into options and investing.
I am not a financial advisor and am not certified to give financial advice. Trade using your own research at your own risk.
One thing that’s hard for many to understand is gain vs ROI. Your return on invested dolloars is higher than total gain on the account value. One thing that options can allow is much higher gains on few dollars invested. You’ve done awesome this year given the market ups and downs. Wish I had quit at the end of January of last year. I’d be sitting pretty. I get to write losses for this year, as well as carrying forward. 2008 must be a catch up year…..
I have traded stocks and shares in a more traditional sense in recent years. However, by using leverage responsibly and trading through Options a savvy investor can make a quicker return without tying up capital. Great blog, lots of good tips and congratulations on your continued success with Stock Options.
Nice returns, maybe I should pay closer attention to what you are saying? 😉
Congratulations on a great set of results. Wishing season’s greetings and all the best for the year ahead.
Profitable trading, OP