Play money update

The Crazy Ivan Account is currently up to $25,953.  Current holdings are all ETFs, one stock, plus a bit of cash:  DTN, INTC, IVV, JNK, MTS, PBP and XLE.  “Ivan” is up slightly from its high early this year.  XLE has been my worst performing investment, INTC (Intel Corporation) my best.  JNK has and continues to pay nice dividends… it’s currently yielding a fat 8.55%.

I’m happy to say the Ivan Account has beaten the S&P500 slightly so far this year.  I haven’t crunched the numbers, but I’d wager it has also done so with less volatility than the S&P500.  The best thing though is that I can channel my financial energy and emotion through this account, while leaving my other, larger nest egg largely untouched.  Plus making low-cost, tax-deferred IRA trades is fun. Bonus!

CIA Surpasses $25K

The Crazy Ivan Account (CIA) is currently up to $25,730.  Current holdings are all ETFs: 100 shares JNK, 100 shares SPY, 50 shares EFA, plus some cash.  So there’s some large-cap U.S., some high-yield (junk) bonds, and some foreign stock.

Right now “Ivan” is pretty sane, vanilla, and diversified.  And he has been doing very nicely.

Ivan Account Holds its Own

The CIA Account (yes, its redundant) closed today at $24,127.  The covered-call SPY play and the TOT stock buy continue to pay off.

Ivan Account Breaks through $24K

Today, the Ivan account closed at $24,060.  TOT shares lead the rise with a 1.7% gain to close at $53.95 per share.   SPY and JNJ also gained.  The only hold to lose ground was the CALL (SPY) SPDR S&P 500 ETF MAR 19 11 $115.  Collectively the SPY and its covered call were a net gain (as expected when the market rallies).

Finance Blog

This blog is a finance blog.   It discusses general financial topics;  both personal finance and business finance.  I’ve been discussing esoteric financial topics like algorithmic trading, CAPM, hedging, beta computation, fund construction, and long-tail pseudo-Gaussian statistics.  These are topics that the average investor probably could care less about.  I will try to stop this mostly, at least on this site.  For you quants out there I will start posting those types of posts to sigma1.co.  This finance blog will focus on more practical topics of personal finance like making good use of low-cost funds and ETFs, savings, investing, and building a long-term personal investment portfolio.

Sigma1 (site for the Balhiser LLC Σ1 Fund) will provide boring reading material that is fascinating to me but boring to about 99% percent of people.  This number is likely accurate because only about 1 out of 100 people I broach the topic with show any appreciable interest [pun not intended].

This is in contrast to this blog’s topics which are only uninteresting to 80-90% of people. Yes, verily, I maintain that 10-20% percent of people are actually interested in the practical investing topics on this blog (at least from time to time).

I know one thing; I like discussing finance with people.  I like talking with folks that have a job but don’t have a bank account.  I like explaining how free checking is better than paying for money orders.  I also like talking with folks who have $100,000 in a savings account earning 0.1% or folks who still pay $50-$100 commissions for trades.  I love to tell them about online investing options and research tools.

I also love talking about tax-loss harvesting and about the merits and flaws of the Black–Scholes option-pricing model. But, based on user feedback, I will cordon off these snooze-worthy topics on a separate site.

BTW, in closing, CIA is flirting with $24K, at $23,914.  Happy investing and Cadillac dreams.

CIA Performance Update

$23,547.  The Crazy Ivan Account (CIA) is performing well.  JNJ has been pretty flat, but TOT is up nicely. SPY is up a bit as well, while I have also made modest profits from expired SPY call writes.

Show Me the Money

This week was kind to the the two accounts I manage.   In its first week the Σ1 proprietary trading fund eked  out  modest gains; $25.00 invested last Friday has a NAV of $25.04 today.  The Crazy Ivan Account (CIA) is showing a nice  $23,473 balance.

I already had one person express interest in investing in Σ1.  I had to inform him that that was unlikely to happen in 2010.  I have a lot of reading and researching to do first.  Probably a visit or two with my LLC’s accountant and perhaps a visit with my lawyer who may have to recommend another lawyer more specialized in the industry.

Until then I must, sadly, say “no”.

But I can map out a tentative outline of possibilities.  Here a few potential thoughts.

• Initial share reference price, $25.00, dated Sept.17, 2010.
• Minimum initial investment: $10,000.
• Fine print:  Σ1 is not a mutual fund.  It is more aptly deemed a proprietary trading group (or entity) for experienced investors and is for risk capital only.  The types of risks associated with this investment group fund go well beyond those of established mutual funds.
• Long-term investment is encouraged.  In order to discourage short-term trading the following penalties will be assessed:
  • 5% fee for redemption of funds held less than 181 days.
  • 2% fee for redemption of funds held less than 365 days.
  • 1% fee for redemption  of funds held less than 2 years.
  • No redemption fee for funds held >2 years.
• Redemption requests (received by email) will be honored by mailing a check within 45 days of receipt.   Notional NAV of redeemed funds will not be lower than the minimum of the 5 closing NAVs in the 5 business days after receipt of the redemption request.
• Redemption requests must either a) Exceed  or equal $5000, b) 100% NAV of portfolio.   Redemption requests of $5000 or more that have lower NAVs will receive 100% liquidation as per terms above.
• Redemption requests will be non-revocable, unless written special dispensation is granted by fund manager.

If you have read this far, apologies.  This is very dry stuff, and very speculative at this juncture.  Thanks for reading.

CIA (Crazy Ivan Account) Update: $22,897

Since 11/9/2009 the S&P 500 Index is up approximately 0.5%.   In the same time-frame the CIA is up 9.58%.

Is this skill, luck, both?  I cannot say with statistical significance.

Suddenly Bullish

Call it a whim, but I’m short term bullish.  I just put in a market order for 100 shares of TOT.  It will execute the trade at market open tomorrow.   I’m also very happy about my JNJ buy-write.  It has worked nicely so far; I collected my dividend, and I’m about 50/50 to close out the option+position on Friday for a modest profit.

These are Crazy Ivan Account (CIA) trades.  My “sane and steady” portfolio is much unchanged.  I reallocated about 2% from equities to TIPS —  a relatively big move by my standards.  I also moved about $13K from equities to the newly re-opened Vanguard Convertible Securities Fund.  I viewed this latter move as largely an equities to equities move.  Both of these transitions are in my tax-differed accounts.  My taxable accounts are largely unchanged except for certain modest real-estate-related actions.

The common theme of my recent moves is pursuit of yield.  I’ve typically had a larger than typically overall cash holding in my portfolio.  I’ve preferred cash yielding 3-4% to bonds yielding 4-5% simply because of the flexibility.  In the same vein I’ve been pretty dogmatic about using any “spare cash” to pay down even my personal and company ~4-5% mortgage(s)/HELOC(s).  But with long bonds yielding 3% and cash yielding next to 0%, I’ve had to reinvent my investing posture.  Convertibles, munis, real estate, and modestly high-yield value stocks are gradually creeping into my investment mix.

Investing Like a Vulcan

If Vulcans were investors they would:

– Save.
– Buy from Vanguard.  (It’s the most logical choice)
– Buy no-load funds with low expense ratios.
– Do their investing homework before buying anything.
– Study historical market data (50, 100, 200+ years worth).
– Observe but detach from market sentiments.
– Invest for the long run.
– Diversify.
– Read the fine print.
– Just say “No” to stock pushers, brokers, and middlemen.
– Do their own research.
– Make their own decisions.
– Analyze the outcome of their decisions and learn.

My goal is to be a Vulcan investor.   Naturally that is not entirely possible, however, I believe I come reasonably close.  I save.  I read the fine print.  I say “No” to investing solicitations.  I do my own research.  I avoid loads and seek out low fees and expense ratios.  I invest for the long run.

I acknowledge my emotion.  I find outlets for it to leave my investing mind cool, logical, creative, and rigorous.  One outlet is the Crazy Ivan Account (CIA).  Using CIA play money releases my pent up investing emotions.  Another outlet is occasional gambling.  Why recklessly gamble big money on the stock/bond/options/futures markets when it is relatively easy to gamble small money at the casino and get free drinks to boot?  A $200 or $300 bank roll tends to last quite a while at a $5 craps table, often for several hours, if the “bad bets” (bigger house advantage) are avoided.

I say the object of gambling is to gamble…  To be irrational, even superstitious, and above all to have fun.  Whereas the object of investing is to maximize return and minimize risk.  Fun, generally speaking, should have little to do with investing.  All things equal, I believe that the best investments tend to be boring.  Accounting, and tax planning are also best when boring.  Enron accounting might have been exciting… but it was also disastrous.  The CIA allows me to bend this rule in a limited way, allowing my non-Vulcan desire for fun and impulsive investing to be contained.

I’m not a exactly a Vulcan investor, but I try to act like one.   Are you a Vulcan investor?  Do you want to be?  Please share your thoughts by commenting on this post.  Its easy.  I look forward to hearing from you.