I eked out another month of gains (that’s six straight, I know – nothing to brag about when the markets do the same), but ever so slightly and at a slower pace than most of the stock indexes. I continued to run my account conservatively with the majority left in cash without even using options enough to risk much of that to option assignment. I ended August with a balance of $80,443.28 according to TD Ameritrade and $80,690.30 according to Quicken (Monday’s trades haven’t settled). That’s a gain of $213.48 over my July finish. In my July summary I noted that I stayed more risk averse than I should’ve and I now I have to admit I repeated the same mistake in August. The funny part is I plan to do the same for September probably (unless something crazy happens with jobless claims or another indicator that makes me change my mind). My August gain was better than a loss, so I’m not actually upset with my move based on my uncertainty of the market direction in the near term.
I resolved one my uncertainties from August. I left my old company, just before being part of a lay-off, and started my new job on August 31st, yesterday. My pay rate goes up close to where I was before I changed jobs and my stress goes down. My time away from home will be close to the same since my commute is farther, but I’ll only be working 40 hours and will be able to work from home some. I’m not sure how much time I’ll have for investing/blogging in my new role, but plan to continue to try for both per usual. With the main goal of September to get a good start to my new job and establish myself, I’m not setting a monthly growth goal for my account. I didn’t pay much attention to it in August and don’t want to be tempted in September when my focus should be to my job that’s going to bring in a lot more money than my trading account could, even on a great month. (I do have a couple of limit orders left out there, so something could go my way still.)
On my path to pass the Series 65 I finished studying my Kaplan study book and started the practice tests. I’d like to be able to take the test in September, but don’t even feel comfortable setting that goal yet without knowing what my work days will be like yet. Then I need to figure out when I can take the test on a weekend, outside of family activities, like coaching my son’s soccer team. Ideally, I’ll sit for the exam at the end of September and can get my next growth opportunity moving forward for me while on my latest employment contract. I’ve already talked to a few people who have said they’ll work with me. When the paperwork is signed I’ll be sure about that.
I’m still trailing the major indices for the past 12 months, but I’m ahead for the year to date on the Dow Jones, S&P 500 and Russell 2000 averages. I’m not having as good a year as the Midcap 400 and the NASDAQ Comp are, but the year isn’t over yet. My conservative stance continues to hurt me, but if the indices get a down month I’ll look smart when I don’t lose as much, won’t I? I still feel confident that I’ll finish 2009 ahead of the indices and leave 2008 as my only year since I’ve been blogging not to do so.
I’m starting to feel a better sense of how these bubbles are formed. I’m not even managing other people’s money yet, but still feel that my account should be a solid measuring stick of what I can do. I feel I should be ahead of the indices and that means I should chase this rally and buy in more so I’m not left behind, even if I don’t believe in it. It’s a weird feeling to approach it this way. I haven’t caved yet, but can tell it’s becoming more likely that I will by the end of the year if we don’t get a good enough dip. It also leads me to believe that any dip will only be small and used as an entry point for those of us trying to keep up. At the risk of my full year return slumping, I think I’d rather not be fully invested in the historically treacherous months of September and October and then come back strong for the final two months of the year.
September 2008 was a horrible month for me (lost $20k), so just breaking even in September 2009 will bring my 12 month return higher. If I can pull out a gain in September, my 12 month return will look a tremendous amount better. I’m not trying to get too far ahead of myself, but the same goes for October too. Here’s how I compare to the major indices.
- My 1 year return: -32.46%
- Year to date (YTD): +17.72%
- Annualized return since 4/8/07 (blog’s beginning): -17.29%
- Deposits for month: None for August
According to Morningstar, here’s how the major indexes have done over the past year and the current year to date (YTD):
- Dow Jones Return: -14.85% 1 year, +10.79% YTD
- NASDAQ Composite Return: -15.14% 1 year, +27.40% YTD
- Russell 2000: -21.29% 1 year, +15.75% YTD
- S&P 500 Return: -18.25% 1 year, +14.97% YTD
- S&P Midcap 400: -18.17% 1 year, +23.10% YTD
The VIX ended the month at 26.01 and the VXN ended at 27.17. They both remain low compared to a few months ago which is keeping option premiums lower than last year, but not as low as a couple of years ago. The “text book” move right now would be to buy options while volatility is lower, but I’m still of the mindset that without actually knowing which direction we’re headed over the next one or two months, selling options in small quantities is better for me. By selling options I’m still making money if we go sideways. That could be our most likely direction for months to come.