End of the Month Summary – November 2016

November was an amazing month, but for those of us who were short bonds, it was even better. I finally exited my TLT position in full as the price plummeted. I could’ve made more by hanging on and rolling my puts lower, but decided the easy money was made and I didn’t want the risk in my account right now, mostly for short-term personal reasons over concerns of the risk in staying short.

I ended November with a Net Liquidation Value (NLV) of $90,956.43 and a Net Asset Value (NAV) of $90,985.79 according to Interactive Brokers (IB) after finishing October with an NLV of $84,028.47. The difference in month end values gave me a gain of $6,927.96 (~8.24%) on paper for November and a realized loss of $4,516.22 on eight closing trades. (IB lists my realized loss for November as $6,371.00, due to a difference in calculating the base of my TLT short position, a difference of $1,854.78. I ran a report for the full year and IB shows a loss $581.82 greater than what Quicken reports. I’m not going to bother trying to figure out the cause of the multiple errors since I use IB’s tax forms and the total balance amounts match.) I received no dividends and paid $394.50 in short interest and dividends for my short TLT shares. The net total was a realized loss of $4,865.72 in November. Quicken reported that I have an account value of $90,985.79 the same as IB’s reported NAV after accounting for interest and dividend accruals of -$41.41. Due to rounding (I think), my Quicken balance was $0.02 less than the IB balance, so I removed the $0.02 that I added in August when I was off by the same amount.

My decision to sell covered calls on IWM and MDY was a little early, but the trade isn’t finished yet, so it could work out still. The majority of my gains in November did not come from my TLT position as I expected, but from the growth in my long positions on IWM, MDY, and DIS – in that order. Now that my portfolio is getting back to a more normalized allocation, I can start rebuilding a balanced account, but I’ll still take it slower and with less risk than I might usually trade since I expect to be divorced in the first quarter and will be splitting some of this account and rolling it into a new account only under my name as opposed to a joint account.

If all my naked puts were assigned, I would be 56.79% invested in this account. I am invested 10.29% percentage points less than I was at the end of October since I sold half of my IWM holding and my account balance increased. While the biggest part of the post-election rally might be in the books, I think I could do well by selling some out of the money naked puts for January and February.

This is my asset allocation in my IB account as of the end of November:

  • Large-cap ETF: 0.0%
  • Mid-Cap ETFs: 32.59%
  • Small-Cap ETF: 14.47%
  • International: 0.0%
  • Individual Stocks & Other Sector ETFs: 10.9%
  • Bonds: 0.0%
  • Short ETFs: 0.0%

According to Morningstar, here’s how I compare to the major indexes (including dividends) through the month’s last trading day, November 30, 2016:

  • Dow Jones Return: YTD change +12.62%, 1-year change +10.91%
  • S&P 500 Return: YTD change +9.79%, 1-year change +8.06%
  • NASDAQ Composite Return: YTD change +6.32%, 1-year change +4.21%
  • Russell 2000: YTD change +18.00%, 1-year change +12.08%
  • S&P Midcap 400: YTD change +18.15%, 1-year change +13.23%

These are my returns according to Quicken through November 30, 2016:

  • YTD Return: -5.97%
  • 1 Year Return: -6.85%
  • Average Annual (not cumulative) Return since November 18, 2009 (when I opened my IB account): +8.06%

The VIX ended the month at 13.33 and the VXN ended at 15.13. The VIX is 3.73 points lower than at the end of October and the VXN is 4.19 points lower than at the end of October.  Both volatility measures are well below their November peaks from the fourth of the month as uncertainty of the election subsided and stocks pushed higher.

The CBOE SKEW Index finished November at 126.39, only 0.27 points higher than the end of October. The SKEW moved as high as 141.18 on November 3 and as low as 119.79 on November 15 before settling in the middle by month’s end, once again not predicting any big hits to the market in the coming weeks.

 



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