If I was to name this month it would be dubbed “Revert to the Mean” month. I’ve been ahead of the major indices for annual returns for a while and then I get hit with the worst total dollar loss in a single month that I’ve ever taken, although I ended with a realized gain of $268.21. The losses I have on paper will be realized soon enough I’m sure. Basically, my account reverted to the mean return for the major indices. I like to think I’ll pull ahead when the market turns or flattens out, but for now, the law of averages got to me and knocked some sense into me.
According to Quicken, my account balance is $80,422.15. Ameritrade says I have a balance of $80,603.16. I’m down approximately $19,000 from last month’s end. That’s nearly 20% in one month. It would’ve been worse, but I rallied more than $5,000 on the last day of the month. This is the reason I continue to sell my new calls farther out of the money – every good rally does wonders for my account balance. At least I haven’t thrown any new money in my account and lost it. We’re being more cautious and hording more in our checking account and taking care of some stuff around the house.
My annual return is slightly better than the NASDAQ, slightly worse than the S&P 500 and Dow Jones Industrial averages and a fair amount worse than the Russell 2000 and Midcap 400. Possibly the only reason for me to feel good about the numbers below is that I can tell my wife (who gives me 100% control of this account with no second guessing me) that we are no worse off than we would have been if I had not been managing our account. I’m in line with most index ETFs. Of course, I could’ve used my time for more productive uses, but she knows that I’ll be back strong once I can shake off this slump.
Here’s exactly how I compare the major indexes:
- 12 month Return: -26.45%
- Annualized Since 4/8/07 (blog’s beginning): -15.28%
- Deposits for month: None
According to Morningstar, here’s how the major indexes have done over the past 12 months:
- 1 year S&P 500 Return: -25.99%
- 1 year Dow Jones Return: -23.44%
- 1 year NASDAQ Return: -26.57%
- 1 year Russell 2000: -17.23%
- 1 year S&P Midcap 400: -20.01%
The VIX ended the month at 39.39 and the VXN ended at 42.58 both nearly double August’s ending values. One would think this is a good time to sell options, but I’m not ready to stomach the risk of deeper falls. I’d rather live to fight another day.
Alex, this may sound crazy, but my dad traded a paper account in thinkorswim from 100,000 to over 3 million in less than 1 year. we are waiting til i am back over 25K to do what he does. now, he does options, but he’s good. 30x money in one year is almost unbelievable. review your strategy, remember i lost alot in 07 about the time the markets changed and good luck…. and, don’t forget you and your wife will still blow by that 100k in due time, so i wish i had the 80k you did, though it doesn’t make your current month losses feel better, just don’t give up, or lose your head like I did, and go to ZERO for pete sake, stay cautious, opportunity is there, you know Buffett is in GS and GE now, maybe you could get some stock and due covered calls?