Portfolio Updated With October’s Carnage

I make it a point to only update my portfolio spreadsheet once at the end of each month.  Psychologically, this allows me to (attempt to) focus on longer term factors and not waste precious time staring at the P&L.  Click here to see the spreadsheet

  • Enlightened-American Portfolio: -12.1% YTD (including dividends)
  • DJIA: -30.2%
  • Nasdaq: -33.3%
  • S&P 500: -32.9%
  • DJ WIlshire 5000: -32.9%
  • Reuters 2000 (smallcap): -29.3%

After the current slo-mo crash in the markets, I could not resist for several reasons.  First, my portfolio has exploded with new additions as I attempted to catch falling ginsus.  Second, the bottom had fallen out of a few of my holdings and puts (CHK, ESV, AUY, TLM, NXG). I’m a little late on my posting my updated investment strategies and tactics but a glance at the portfolio yields some clues on areas that I’m focused on.  I have to say that the most attractive sector as it stands now seems to be the gold mining stocks whether major producers or the juniors.  These guys just haven’t kept up with the metal itself and some of the big ones are available at prices last seen with gold @ $600 or lower. Also, I’ve tweaked some of the accounting methods for my option holdings as detailed below:

  1. Assigned put options are now calculated with the initial premiums deducted from the strike price of the assigned stock.  Previously, the shares were shown as bought at the strike price and the put option premium booked as realized gains.  For example, I previously wrote puts on ACAS at $35 for an upfront premium of $5.50.  Instead of showing an initial entry of ACAS @ $35 and realized gains of $5.50, the spreadsheet now shows an initial entry of ACAS @ $29.50 and no gain on the put option.  I believe these changes more accurately reflect the financial reality of the positions affected.
  2. Open covered-call options written against existing positions are not booked for gains until the contracts have been assigned/expired.  In either case, these call options will be booked separately from the underlying position even though it effectively augments the returns of that position.
  3. While not specifically a change, I wanted to point out that outstanding option contracts are listed with no weighting or effect on the portfolio until the contract is closed.  This is especially pertinent with the naked put options as some of these positions would be heavily underwater if assigned today but this is not reflected in the portfolio spreadsheet.  The reason is simply that I automate the updating of my data and I haven’t found a way to do that with option prices.  While this has the potential to overstate the portfolio’s performance, my sense is that this effect is minor and partially balanced by not listing the average-down prices of positions as well as the missing interest and cash positions.

As always, YMMV and I highly recommend reading the disclaimer.

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