November felt like it went by in a blink of an eye. At least I made money as the month flew by. Once again, I finished the month at a new monthly closing high and had decent realized gains. I limited the churn in my account by avoiding the weekly options on TLT and had more time to focus on investing instead of trading. The broad markets have been on a ridiculously long stretch of weekly gains and although we could see a dip this week, post-Thanksgiving, I expect to see the indexes higher by the end of the year. I’ve raised my exposure, but could still put more cash to work.
I ended November with a Net Liquidation Value (NLV) of $110,593.44 and a Net Asset Value (NAV) of $110,661.80 according to Interactive Brokers (IB) after finishing October with an NLV of $109,267.77. That gave me a gain of $1,325.67 (~1.21%) on paper for November and a realized gain for the month of $1,068.40 on five closing trades. I received no dividends in November and don’t expect any in December since I no longer have any long positions. Quicken reported that I have $110,661.80, the same as Interactive Brokers.
My allocation percentage of individual stocks came down some as I reduced my DIS allocation and added in a leveraged large-cap ETF. My biggest risk comes from the three different naked puts I have on leveraged ETFs. My SSO January naked put is only 3.71% out of the money. My two different UWM January puts are 14.68% and 17.62% out of the money. I’m more confident with the UWM puts not being assigned since their strikes are so far below the current UWM price, but if there was a massive sell-off, these could hurt me quickly. December tends to be a good month for small-cap stocks, so I’m going with historical norms will keep an eye out for unexpected black swan events. My BA and MDY puts are in the money by less than 1%, which makes them risky in the sense that there is less downside cushion, but I also have more upside potential with these two and expect both to continue higher over the coming months.
My MDY December $165 put is my only December put scheduled to expire this month. I’d like to wait until January to take the gains on my January puts to delay the taxes on capital gains, but if I see a big momentum shift instead of a Santa Claus rally into the year’s end, I’ll dump them and look for a better trade.
If all of my naked puts were assigned, I would be 90.13% invested in this account. At the end of October, I was invested 5.65 percentage points lower than I am now. This month is one of my higher allocation percentages this year, but I’m still leaving gains on the table when I should’ve been pushing harder and taking more calculated risks.
This is my asset allocation in my IB account as of the end of November:
- Large-cap ETF: 11.30%
- Mid-Cap ETFs: 23.95%
- Small-Cap ETF: 26.75%
- International: 0.0%
- Oil: 0.0%
- Individual Stocks & Other Sector ETFs: 30.27%
- Bonds: 0.0%
- Short ETFs: 0.0%
These are my returns according to Quicken through November 28, 2014:
- YTD Return: +10.62%
- 1 Year Return: +12.42%
- Average Annual (not cumulative) Return since November 18, 2009 (when I opened my IB account): +8.42%
According to Morningstar, here’s how I compare to the major indexes (including dividends) through the month’s last trading day, November 28, 2014:
- Dow Jones Return: YTD change +9.92%, 1 year change +13.42%
- S&P 500 Return: YTD change +13.98%, 1 year change +16.86%
- NASDAQ Composite Return: YTD change +14.73%, 1 year change +18.02%
- Russell 2000: YTD change +1.99%, 1 year change +3.99%
- S&P Midcap 400: YTD change +8.87%, 1 year change +12.23%
The VIX ended the month at 14.03 and the VXN ended at 14.74. These month-ending levels only slightly below the previous month’s ending level. Due to November’s steady ascension for stocks, the VIX and VXN didn’t bounce around much at all.
The CBOE SKEW Index finished November at 131.89, a little more than six points above its October close, but still well below the spike it had a few months ago. Like the VIX, the SKEW doesn’t seem to indicate there is much fear out there right now.