Jan 2016 – Portfolio Review (- 2.5%)

YTD Performance

Dividends earned for the month were $260.10
Dividend Project = – 2.5%
S&P500 = – 5.1%

For more details, head over to my investment portfolio page.

A tough start to 2016

The markets are extremely weak with negative momentum building by the day. With such a weak start to 2016, it’s easy for me to forget about the return I was able to generate in 2015. Every part of me is focused on trying to make sure my portfolio can weather the storm. What I like about these market environments is that opportunities get created very quickly but I need to remain aware of the risks of the market’s continued weakness… and likely continued volatility.

While I’m still outperforming the market, I don’t like seeing my portfolio at a loss so #1 priority is to get my portfolio profitable which has not been easy so far. Secondly, I need to keep outperforming the market or else there’s no value in my investment strategy and I might as well invest in SPY which tracks the S&P500 index.

So the challenge is trying to identify opportunities in an overall weak market. It’s not impossible, just very difficult. The easiest ways to make money in a weak market is to buy put options. That’s great… but the market is also extremely volatile. What if we climb 3% in a week? That becomes a losing trade quickly. I could also buy call options on great stocks at great prices, but if the market continues to be weak then why buy now? And what for? I am trying to pay attention to the timing of my trades.

I think 2016 will be tough because of the comps. Take Apple for example, not so great quarter because they were up against a fantastic quarter previous year with the new iPhone 6 sales. Oil was higher last year than where it is now so those companies will suffer all throughout the year while reporting earnings. If there’s a bright side it’s that it can’t get any worse from here (from the perspective of ‘what to expect’). I still think the market has significantly lower to go this year if it’s not able to hold support levels, but the storm should clear this year and we should have a better 2017. While that would be bad for the markets, it wouldn’t be unexpected for me 🙂

Trade Alerts recap for this year

I won’t stop looking for opportunities or trying to take advantage of them just because I had a few losers, but I’ll recap some of my trades for this year:

  1. I bought SDLP shares to try and time the bottom on oil and profit from a move up… call it bad timing or just wrong but the trade didn’t go my way and looking back… I was better off to get rid of it than keep holding on. I will keep an eye on oil but I think there might be lower prices to come.
  2. I bought SPY put options and finally made some money as the market kept falling.
  3. I bought UA put options to hedge my call option in case the stock would continue to fall further. Turns out I shouldn’t have bought them because after UA reported earnings it crushed them in true UA fashion. At that point I got rid of the put options and I’ll just hold onto my call. Any further move down and I’ll just have to stomach it. The company has proven itself in an industry surrounded by weakness that it’s still able to deliver results.
  4. I bought IWM call options to try and time a reversal of the recent market drop but this trade didn’t really go my way. The market is down a bit more from where I sold and looks like it has room to fall even further. For now, I’ll stay on the sidelines but watching very closely for another entry.

I hope your portfolio is doing okay as we kick off 2016! Good luck and I’ll check in with my portfolio results after we close Feb (hopefully with a profit) 🙂