DGI Adventure – 06-02-2016 Month in Review – May 2016

Mr. Market was pretty boring in May, as stocks in general just kind of kept on keeping on. A lot of the stocks I’ve been watching are just not selling for very compelling prices right now. That doesn’t mean things were boring for the Wizards. Quite the opposite as a matter of fact. Let’s take a look at the month that was…

Portfolio Summary

See what I mean about the month not being boring? I finally transferred my inherited IRA from Raymond James to Interactive Brokers (IB). IB doesn’t support most of the funds that I held at the previous account, so that means (almost) everything got liquidated. Apparently FKGRX is okay, so I’m still holding that…for now.

I went from an already kind of high 21% to 68% cash allocation! Holy shit!

Additionally I transferred my traditional IRA and the taxable account that were also at Raymond James to Charles Schwab. I didn’t want to move those to IB, because the dollar amounts are too small to do much trading in. Plus Schwab supports those mutual funds. Otherwise that would be another $23K of cash to figure out what to do with. $228K is plenty to wrap my head around for now, thank you very much.

All in all, the liquidation locked in a capital gain, which I’ll talk about in the income portion. I’ve been seriously looking at moving out of Raymond James since my Unit Investment Trust kerfuffle back in January. I’m glad I waited for the market to come back up before I finally pulled the trigger.

Now that I have the ability to sell cash secured puts with IB, I need to decide how to classify the cash that’s set aside to secure the contracts. I’ve decided to go with “other”, so expect that allocation percentage to go up.

We also put $3,000 into Lending Club. My wife has decided she is going to run the peer to peer (P2P) lending portfolio because she likes the voyeurism of looking into people’s personal lives and credit rating and then deciding if they deserve a loan from us or not.

I added an account to the portfolio page back at the mother ship (acct #9). Since Mrs. Wizard has been taking the lead, I’m not sure how the loan investments are organized in terms of the account. After briefly logging in, it looks like it makes sense to just split it between “invested” and “cash”. The “invested” part of the P2P account is also being classified as “other” in terms of asset allocation. It’s probably technically more like a bond…but it’s not really a bond, so…IDK. I’m going with “other” for now. When I get my head wrapped around the whole P2P thing, I will probably write about it. Stay tuned.

Stock Purchases

After a drought that lasted through February, March and April, I finally made a move with 1 position increased. Projected annual income increased by $23.00 based on current dividends.

05/13/16 – GPS: 100 shares purchased at $18.15/share. Increased position to 154 shares with an aggregate cost basis of $21.69/share.

Pay Days and Raises

Dividend Income Tracker is published back at the mothership.

Total investing income of $7,471.48, with a net taxable loss of $(890.25). As I mentioned, I did okay with the liquidation of the beneficiary IRA locking in an ~$8,100 gain. I’m not sure which funds exactly sold for what amount, so I just recorded the gain once in aggregate based on the amount of cash that showed up in the IB account (less the LDLAX distribution). I don’t have to pay taxes on this capital gain, since it’s within a protected account. But then I lost $935.80 when the 100 shares of ABX I was using to cover the call I sold in April were assigned early on May 26 at a $9.00 strike. It was the ex-dividend date, and I didn’t think a $0.02 dividend with over 50 days remaining before expiry presented much assignment risk. I was wrong, which means I finally locked in those imaginary losses I’ve been putting off.

I haven’t had any capital gains or losses since I started this blog, so there isn’t any precedent for how to treat them in terms of income. My whole philosophy of dividend growth investing is that I don’t put too much thought into imaginary gains and losses. I think the corollary of that is you need to put a lot of thought into real gains and losses. If you sell for a loss…that is negative income…even the IRS will agree with that.

It bugs me a bit when other DGI bloggers sell a holding because management cut the dividend, or for tax loss harvesting, or whatever, and they don’t subtract the capital loss from their income. You lost that money. You can’t just leave it off the ledger.

Anyways money came in 10 “pay days”. 16 individual payments were received. Normally this is where I would compare this month’s income to the previous month’s and YoY. That’s kind of silly given the circumstances. Excluding the capital gains/losses, we pulled in $306.02, which is down quite a bit month over month and year over year. I didn’t get my monthly dividends from 3 out 4 of my fixed income mutual funds since they got liquidated before their usual distribution date. That would have been another $300 (ish). Whatever. Time to move on.

AAPL dividend payment is a $0.05/share increase of 9.62%.

COST dividend payment is $0.05/share increase of 12.5%

OHI dividend payment is $0.01/share increase of 1.75%

Normally a pretty sizable stock purchase along with 3 healthy dividend increases would represent a plenty exciting month. Add to that all the other portfolio craziness, and I’ve got to admit, May was a little overwhelming.

Now I just have to be disciplined, and make sure to not let all this cash burn a hole in my pocket. Still I would expect the next couple months to be pretty busy as well.

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