My Own Portfolio : Dividend & Options Income Report Out January 2018

February has already been almost behind us. While it is outside still very cold, the sun has been present the majority of the past 2 weeks.

Why did I notice ? This month of February didn’t pass as I had planned. After I came home from my US travel, I was put on sick leave for two weeks by the doctor. A hospital scan revealed (Thank God) no physical injury such as a hernia. The diagnosis was a blocked nerf and stretched chest muscle causing all the trouble. The severe pains during the one week in the US although put my muscles structures in abnormal position and constant stress.  It took physical therapist more than 1,5 week to loosen up my muscles back in a normal behavior. Muscles have a memory…did you know that ? I did not. I am almost healthy now and I will have to be careful the first weeks. Health is the most precious thing you possess. Take good care of it !

During my sick leave I read in the Belgian newspaper and on Twitter about the debate of the inheritance taxes in Belgium. All political parties seem to agree that the highest inheritance tax of 65% needs to be lowered. On the exact implementation and rules of the plan the parties seem to differ of opinion. The inheritance tax is SO old that it does not fit with current family structures and family situations. I personally don’t understand why a government needs to tax AGAIN passing on of wealth from parents to kids. The government has taxed ALMOST EVERYTHING during the whole life and at the end you have to give them  65% of your wealth. How cruel is that ?

Did you know that in France the inheritance tax is 75%? A very wealthy person in France told me that story. When you have a lot of net worth, it is better to leave the country before passing on your net worth to your kids in France. The 3rd generation of the family will be poor again after being taxed 3 times when staying in France. Being rich in France has severe consequences…right? In Sweden there is no inheritance tax at all. NOTHING ! Well… that is why the Swedish people are so much happier, right ? Wouldn’t you be much happier if your kids pay NO inheritance taxes? I would for sure.

The interview of Frank Peeraer,CEO of Fortuna Financial Group also did catch my eye recently in the financial newspaper De Tijd. He stated that wealthy Belgians still prefer to invest in real estate versus investing in the stock market. Investors believe real estate is a safer investment and still fear a market correction. Investors also prefer to invest in real estate because they get fiscal tax benefits for doing so. So the government is manipulating the market. The net return of rent is around 3% while investing in a REIT would have given you 8%. Taxes for investors in the stock market have only increased drastically during past years. Investors are hunted like demons by the Belgian government. Frank arguments that it would be MORE FAIR to impose a 0,5% wealth tax that includes all net worth including real estate compared to taxing now ONE GROUP of stock market investors. He is damn RIGHT !

So let’s go towards to our Market Analysis.

Market Analysis

When we analyse the performance of the SPY (screenshot 21 February) we can conclude that the volatility has returned in the markets. Last week I heard nothing else then BUY THE DIP and the market correction of past weeks was swiped away for 70%. But that does not mean we will continue the bullish trend. Look at this headline from an article of Thomas H. Kee Jr. ,a former Morgan Stanley broker and founder of Stock Traders Daily.

Thomas states in his article that it is all a matter of supply and demand. Why did higher rates suddenly become important in 2018 and not in 2017? Earnings do not matter, inflation does not matter, politics do not matter and the level of interest rates does not matter.  Those mentioned ancillary variables can affect supply or demand, so they can play a role. But it all boils down to supply — how much money is out there buying stocks — versus demand — how many people are selling. To measure supply and demand in the stock market, we compare buyers to sellers, Thomas states. “If there are more buyers out there, the market will increase regardless of the ancillary variables, and in 2017 there were more buyers than there are in 2018.

The measure of stock market supply and demand is premised on new money. A buyer who is buying a stock using proceeds from a sale of stock does not positively impact demand because the sale offsets the demand. Another way of saying this is that you cannot churn old money and expect markets to grow. That means new money matters most. The Federal Reserve and European Central Bank (ECB) were the second source of new demand for the past five years. The asset purchases they made came from a theoretical printing press. There was nothing natural about those asset-purchase programs, but still they brought a new buyer to the table. Central bank asset purchases have been like clockwork for five years, and the impact on new money demand by this non-natural source was significant, until now.

In January the combined asset purchase program of the Fed and ECB was slashed, and it no longer significantly skews the natural demand levels. The reason this market seems to care about higher rates, and other things it did not care about last year, is that the fake money is almost completely dried up. When new money demand declines significantly, as it has, things that did not matter before start to matter again.” With the Central banks cleaning up their balance sheets, a new situation will occur and it will be interesting to see how the markets respond to that.

So next important date to watch is March 9th 2018 when there could be the first rate hike.” If we get many interest rate increases, the stock market will go down hard. I don’t see this happen in the coming weeks but down the line, maybe in 2019 for sure when the recession kicks in. But I can’t also predict the market, it’s my 2 cents opinion for what it’s worth…lol.

Just be prepared when a stock market correction happens…

In coming weeks we can retest the 259 support level again according to me. Let’s see if we remain in that trend channel.

Let’s dive in the numbers of my January Dividend Income Report.

Options Income & Dividends received in January 2018

Last year we already earned more than 1000$ options income. Let’s see if we can do better this year. We continue to invest in our Options Investing training this year. We follow a training from a 35+ Wallstreet options veteran and we booked also a 2 day training in Antwerp from Piet Vannoppen. Options Investing Education is key in 2018 ! Meanwhile we continue to earn our dividends. In December I didn’t perform any options trades as I wanted to relax on our vacation in Curacao without having to worry about the stock market. I did not even have Internet in my room in the hotel. So total relaxation…

In January 2018 we received a total of 1050,26$ dividend income. We received 258,75$ from monthly paying stocks or ETFs. And we received 791,51$ from quarterly paying ETFs. Not as much as last year but we sold some of our high dividend ETFs at purchase price during past market correction. We didn’t allow it to go red and with a loss. We are just a bit more cautious in current market environment.

Below you see the monthly summary overview of the cash flow coming into my bank account.

Portfolio Analysis and Growth

No changes in our portfolio. We keep 7 positions in our portfolio.

The Euro/Dollar trend

We keep on following the EURO/USD valuation.  The Dollar became weaker in past months compared to the EURO and the EURO rallied to 1,25. A higher dollar has a negative impact on our EURO conversion statement in our broker but we do not intend to convert any dollar in our account for years.

Going forward

Going into March we will remain cautious with the FED date 9 March in our mind. The markets will be more volatile according to us. We will search for good premiums to sell. I am also learning strategies on how to make money when the markets go down.

Below you can see the detail summary table of our monthly payouts including losses and the row Options Income. We made a great 11% start of the year. As we sold end of last year some high dividend paying ETFs, we will have to replace them with options income generating strategies or replace them with new dividend payers.

What do you think about our monthly performance ?  Did you receive equal cashflow money on your saving account ? Don’t hesitate to leave your comments and feedback. Let us know what you think.

Good luck with your personal finance strategy! As usual we end with a quote. 

 Sources : Marketwatch