End of Month Summary – July 2010

July was a very good month for me, as I’m sure it was for all investors who were long stocks.  By the end of July my combined accounts balance was $112,122.50.  I have my equity based assets with Interactive Brokers ($100,777.73) and my debt based positions with TD Ameritrade ($11,344.77).  Quicken was a little off and said my combined balance was $112,293.24, basically due to the difference of what each uses for closing prices at the end of the day (I think), last trade versus current ask.

After finishing June with a combined balance of $102,037.08 and adding $3,000 after the first week of the July I’m pretty happy with my gains.  That gave me a paper gain of $7,085.42 for the month which is in line with what the S&P 500 did for the month and I am taking less risk with less volatility.  It’s not all about what I could do in one month though, I still need to finish the year better than the Dow Jones and the S&P 500 to be completely satisfied.  I’m barely ahead of the Dow for the year, but beating the S&P by a couple of percentage points so far.  That can all change within a couple of days, but I’ll take what I can get for now.  With five months to go in the year, there’s lots of time for big changes still. 

I had a realized gain of $2,539.88 in July, but I’m still holding onto some positions where I’m sitting on a paper loss.  Eventually those will have to hit my books and I’ll break my streak for the past 11 months of having a realized gain every single month.  I took a realized loss of $125.64 in August 2009.  Although, I might have enough premiums in those impending months when I finally take my losses to outweigh any realized losses on the underlying stocks.  That’s not my goal as much as making the right trade for the time is.  Either way, I shouldn’t even face this until September when my covered calls on my “losers” are due to expire.

I’d be 129.15% invested if every naked put was assigned and every covered call wasn’t.  In other words, I’d be almost $30,000 on margin if the markets tanked.  Then again, if the markets suddenly fell my VXX positions wouldn’t be assigned and I’d have $10,800 less on margin.  Also, some of these positions (SPY Sept 101, EEM Sept 36, NDAQ Sept 17) are fairly far out of the money still and appear to have a low probability of being assigned.

These are my returns according to Quicken through 7/30/10:

My 1 year return: +7.94%
Year to date (YTD): +1.99%
Annualized returns since 4/8/07 (my blog’s beginning): -8.63%
Deposits for month: $3,000 on July 8th, 2010

According to Morningstar, here’s how I compare to the major indices through 7/30/10:

Dow Jones Return: 1 year +17.50%, YTD +1.87%
S&P 500 Return: 1 year +13.92%, YTD -0.11%
NASDAQ Composite Return: 1 year +13.63%, YTD -0.64%
Russell 2000: 1 year +18.20%, YTD +4.79%
S&P Midcap 400: 1 year +22.96%, YTD +5.45%

The VIX ended the month at 23.50 and the VXN ended at 24.52.  Both of these volatility trackers are down substantially from last month, but not to levels that would be considered historically low.  It shows that some fear is subsiding, but not to complacent levels yet.  Volatility could continue to drift lower for the rest of the summer, but I expect another tick higher by September if not October.