End of Month Summary – February 2010

I’m pretty happy with how February worked out for me, especially considering that I’m not fully invested still.   I finished February with a combined balance of $103,076.06 ($91,897.17 with IBKR and $11,178.89 with AMTD) which is up from my January finishing balance of $98,663.75.  $1,500 of the increase is from the deposit I made on February 8th and $2,912.31 is from growth.  I’m 82.03% invested overall and of my equity allocation (aka my IBKR account) 79.84% is in use, meaning I have over 20% of my IBKR account in cash. 

As I pointed out in my S&P 500 chart a couple of days ago, we got an early technical indicator that it was time to invest heavily again in the short term.  With that in mind I increased my put selling and it has paid off so far.  I had to slow it down the week before options expiration so I could push more of my option expirations to the next month out and now I’m trying to do some more specific stock picking to keep my options weighted close to 50% each for the two forward months.  I’m considering taking my allocation to more than 100% of the cash I have backing the puts on the next dip.  We’ll see what I still think when the time comes.

I’m slightly ahead of the indices for the year to date, but not far enough to do much bragging yet.  I’m still happy to be leading instead of trailing though.  My 12 month trailing numbers are going to look rough compared to the indices for a while still I since I went so heavily into cash during most of 2009 while nearly every sector roared forward.  As 2010 matures and I’m inching higher in my equity allocation I should start to slowly pull away from the indices again.

Here’s exactly how my returns compare to the major indices.

My 1 year return: +27.02%
Year to date (YTD): +0.49%
Annualized returns since 4/8/07 (my blog’s beginning): -11.22%
Deposits for month: $1,500.00 on 2/8/10

According to Morningstar, here’s how I compare to the major indices through 2/26/10, the end of February trading this year:

Dow Jones Return: 1 year +50.59%, YTD -0.47%
S&P 500 Return: 1 year +53.62%, YTD -0.61%
NASDAQ Composite Return: 1 year +62.45%, YTD -1.36%
Russell 2000: 1 year +63.95%, YTD +0.66%
S&P Midcap 400: 1 year +67.00%, YTD +1.83%

The VIX ended the month at 19.50 and the VXN ended at 19.78.  This moves the volatility trackers to the low end of their range for the past two and half years, but still higher than their mid-2000s levels.  There’s really no telling at these levels if they’ll move back into their recent higher range or drop further to return to their past norms.  Premiums aren’t too bad at this level, so if you’re selling puts and calls to enter and exit positions it just means you’re making less now that recently, but the risk of a spike isn’t as concerning because on day zero the volatility doesn’t matter as long as you aren’t over committed to what you can’t afford to buy.