Let’s get started, Wednesday was just crazy, I didn’t get home until about 8 in the morning. I didn’t have time to write anything, I barely had time to do anything, and then I was off again to work. That’s just how it goes sometimes. Anyway, I was thinking about the January Review and I realized I left out some metrics I really want to track namely my rate of savings and my performance versus a benchmark. I feel like both of these are important metrics I should be tracking, if I’m not saving a high enough portion of my income I won’t have enough money by the time I retire, and a benchmark to make sure I am actually benefiting from my trading.
First up let’s talk about benchmarks, typical benchmarks are the S&P and Dow, I also use my current 401K. That gives me an idea of how I am doing against the market and how I am doing versus just dumping my money into a 401K and waiting until I retire, and let me just say, one me is doing better than the other. For January 2021 the S&P 500 was down 1.11%, the Dow was down 2.04%, and my own 401K was down 0.45%. I just googled the numbers for the S&P and Dow so those may not be entirely accurate, but I’ll give you a rundown on my 401K and that will lead us into the rate of savings. I actually did alright in my 401K; $577.51 (10.11%) invested in January which includes my company match. The return for January however was -$73.67 (-0.45%).
My Rate of Saving (ROS from here) is already above 10% and we are just getting started so you have to take the good with the bad sometimes. In the HSA I contributed another $234.62 (4.10%) which includes some company contributions as well; but I paid out $105.39 so I was left with $129.23 (2.26%). General Savings is a bit of a mix bag altogether I put in $1379.47 (24.15%) but I dipped into it for $402.34 and transferred some of it to the Taxable Account for investing. In the end $375 (6.57%) went to the Taxable and $602.13 (10.54%) stayed in General Savings. ROS is a total of all values in bold, which equals $1683.87 (29.49%) of my gross income for January. I actually don’t have a hard and fast rule or benchmark for my ROS. I want to keep it as high as possible, and I know that whenI start pulling money from my investing I want my ROS to outpaced my withdrawals and inflation.
I want to briefly add in a few thoughts about withdrawals and then we will get to the accounts. This is something I have been thinking about a lot, how and when do I start tapping into things to make that transition to living off my investments. So what I’ve managed to piece together so far is with Roth IRAs I can withdraw your contributions without the 10% penalty and I think without taxes because they were taxed when they were added. And I can convert regular IRAs to Roth but I can’t withdraw that as a contribution for 5 years and I’ll also pay taxes on it. I can also do a 72(t) distribution but since I’m 35 that would have to continue until I was 59½. My goal is to use only a portion of options income and leave the rest of it and any growth in the account. So its going to take some planning on my part to get everything set up. Since I don’t mind doing a stepped approach, meaning I with replace my income gradually to give myself the flexibility to shift to lower paying jobs or part time work as I go. I might be able to start sooner rather than later. I will have to do more research into it, but it does look like a possibility.
Okay, lets get to the Accounts! First up is the Taxable, and the checklist is back out to keep me on track. Last weeks HPQ Option closed OTM so I sold the $25 call this week and it got smoked. Currently sitting deep ITM with HPQ at $26.32 it is looking like it will close and I will be selling puts next week. I did get $14 for the call, that is up from the $10 made the first week of January. I did add SBUX to the stocks held, 2 shares at $96.59 and that is probably the last stock I will add until I set up some sort of system.
The Options Account is still tied up somewhat by IBM. I did roll the Call down to $122 on Friday for an extra $5 or so. This week I started out selling the $128 call again then on Wednesday I rolled that down to the $122 Call, altogether making just $13.70 for the week off of my position in IBM. XOM and T I just rolled the calls out to this week bringing in $43.35 and $18.35 respectively. XOM is deep ITM while T is floating around ATM and could go either way. Options brought in a combined $70.4 this week, down from $101.45 the first week of January. T also paid out its dividends on the 2/1 and I got $52 from that.
Finally the Rollover Account, IBM I just rolled the $122 Call for $51.35 and ADM I had to go down to the $52.50 call since I couldn’t buy a $53.50 at the time. That brought in $9.35 and it is currently ITM. $60.70 added altogether which is way down from the $209.40 I brought in the first week of January. Hopefully I’ll have the time to do a Wednesday post because some of these are ITM and I need to do a breakdown of what I actually made on the trades.
Finally onto the title, this is the Razzle Dazzle part of the checklist. GME and AMC have been all over the news the last few days and I wasn’t even going to say anything until YouTube recommended a video to me about them. This guy was telling people they should be holding onto these companies and even buying more and he rattled off several reasons based on short selling statistics that honestly I don’t fully understand. But that’s not my issue, he’s allowed to make whatever recommendations he wants and he might be very profitable in his trading. The comments though were just insane. One said he (or she) was holding over 100 AMC share that he bought at $16 (AMC is currently $7), another said he was continuing to add 100 euro a week to GME and AMC (GME is down almost 80% this week), another said her (I think it was a female) and her father are continuing to buy, and still another claimed someone advised them to sell GME, so they bought more. Lots of comments praised the person in the video on being a truth teller, and giving them the real facts. The guy had over 9500 followers and had only been posting videos for 3 weeks.
Now I caught myself blindly following advice from someone so I’m no better. I realized what I was doing and until I have the time and ability to do my own research I shouldn’t be taking someone else’s recommendations. These are highly speculative positions, we don’t know where GME and AMC are going to settle, and they are going to settle somewhere. Are they going to settle back to their pre-spike prices of $20 and $2? How many of these people are going to lose big and then write off the stock market as rigged or just for wealthy elites? I’m really worried about that. These days, when even the guy behind the counter of the gas station is talking about Bitcoin to his coworker while he rings me up (true story), I wonder how many people are actually investing in a way that is benefiting them long term. I wonder if my trading is benefitting me long term, but I’m on top of tracking everything and hopefully I can catch it before things get too sideways for me. I worry a lot of people right now are in the stock market just gambling, hoping to win it big. We have to do better.
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