Performance 2013 … and best wishes for 2014 !

I just checked my performance for 2013 and as shown here I’m pleased to see that I managed to beat the S&P total return. In a nutshell: in 2013 I made €48,204 (Euros) with a €135,859 investment, equivalent to 35.5% versus 32.4% for the S&P total return. What makes me more happy is that it’s the 6th year I could beat that index. What makes me even happier is that this year it was done with the biggest amount invested, therefore the gain is substantial in absolute terms. I do though worry because besides 2008 and specially 2009 none of the latest years’ performance has been significantly higher than the S&P.

2013 has been a sabbatical year. I concentrated on doing things like spending time with my family and building my house. So basically this year I did little on the securities investing front. I did look at the market and kept an eye on my companies. Since I found no interesting new investments and no reason to sell I kept my portfolio basically intact. The gains from 2013 are mostly the result of investments from earlier years.

I had little activity, but it’s worth mentioning it. I added 13 shares of CAF, a spanish train builder. Most of the shares were bought under 280 Euros (currently at 380). Some of them were for my sons, I manage money for 3 of them.

I recently liquidated my mother in law’s portfolio. She needs the money to buy a new apartment. She had a very good result of around 60% for a period of a little more than 2 years while I managed some of her money.

I sold out my 20 RYAAY (Ryan Airlines) shares. I like the CEO and the company but I have learned to dislike the business enough to stay out of it. I sold them in May at 49 and the shares are currently at 47, I did not avoid a terrible drop but they did underperform the market quite a lot since back then. I had a bit over a 30% profit in a long time, with a small amount invested, so the investment was not good.

My 300 TLT shares short position was closed @107.98 by my broker by the end on October. TLT is currently at the same price so I have not lost anything by staying out of it. On the contrary, I saved the payment of dividends and interests on the short amount. I have been thinking, specially today, about reentering the trade by shorting TMF (Direxion Daily 20+ Year Trsry Bll 3X Shr) a leveraged fund. The good thing about it is that it allows me to invest much less on the short amount for the same possible return, therefore saving money on the short interests. The other good thing is that it hardly pays any dividend compared to TLT, there is a substantial saving there too. I still think that the long dated treasuries market is way overvalued and I plan to profit from it. The TLT short played out well even though it was closed (by luck) prematurely. I believe that there is still much more room for the treasuries to go down so I might soon enter that trade again, possibly with TMF this time.

I added a couple of VXX shares short by the end of August. I still think that VXX is designed to go to 0 and plan to keep shorting it indefinitely and add to my shorts at every possible opportunity when the volatility jumps a bit.

I sold out my small XHB (home builders fund) position (8 shares) by the end of May @32. It was a small legacy position that I had since before 2008 (the housing crash). I waited and sold out when it recovered its value. I normally dislike having funds and small positions so Im glad I got rid of it.

On the selling put options side I had some good results by closing some shorted puts after they became worthless. Like that I basically gained 1400 USD by closing in January 2013 a couple of Berkshire Hathaway strike 62.5 and strike 65 puts which had become worthless. I did the same in the 1st semester 2013 by closing a shorted strike 10 AMAT put and a strike 10 Dell put gaining 143 and 191 USD respectively. I also made some 120 USD by selling covered puts against my TLT short position, not much, but every amount, no matter how tiny, is always welcome.

On the forex side I basically made a bit under 600 Eur profit. Mostly by borrowing dollars to buy Dell shares when the dollar was quite low with respect to the Euro. When the Dell shares were converted to cash due to the privatization for the company I covered the dollar debt at a lower dollar price.

With Dell (without counting the 600 Eur profits from the dollars borrowed to enter the trade) I basically had a 5000 USD profit when the merger was consumed @13.75 by the end of October. I invested in average 1000 shares, the vast majority in 2012. The investment profit took around 18 months to materialize so it was quite a good one. 4250 USD were gained on stock appreciation, 550 on dividends and 191 on a shorted put.

The activity above produced results that are quite small compared to the appreciation of the companies I had from before. The best move in 2013 was basically to remain inactive and let the companies I admire and own run its course.

I think 2014 can be a tough year. I do not see much value left and even though the companies are not overvalued in average, the playing field starts to get tough. I am not used to play and profit in markets like this. So I am being cautious, to say the least. If I concentrate on something it will possibly be on reducing positions and following specially closely what I own.

That would be all for now, sorry for my past silence. I now feel that I have more time to dedicate to investments and I possibly will come back to them soon. For the time being I am doing one of the best investments I discovered: building a great house that I am shaping with love ! I do not want to publish pictures of it yet because I believe that a work of art should only be shown when it’s completed so for the time being I will only show a rock I found that was obstructing our garden (I’m the one on the right) !

De Werkers

Best wishes for 2014 !
jrv

About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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9 Responses to Performance 2013 … and best wishes for 2014 !

  1. Olav says:

    Best wishes, jrv! Good job last year! I think the market is overvalued and buying (out of the money) put options to speculate on a correction.

  2. David says:

    Awesome result! I like the way you’ve proven that inactivity is a valid for of investing :)

    All the best

  3. Brett says:

    I know you don’t want to show your house until it’s completed but seeing how it is built is always interesting as their are different ways.

  4. Rommel says:

    Congratulations on the good 2013 results! Looking forward to seeing your masterpiece when you are done with it. Try and post more often!

  5. Anonymous says:

    Hello JRV, great results for 2013. I look forward with anticipation for more your your postings in 2014!

    Cheers
    Wee

  6. Joao Nunes says:

    Hi JRV, nice to hear from you again. I wish you a wonderful 2014!

  7. nick says:

    carry on with the great work. exciting to see what lies ahead for you, and what I could learn from them.

  8. Gary says:

    congrats on a nice year :)

    quick question for you – how do you short VXX a few shares at a time with interactive brokers… don’t they still have that silly rule requiring round lots (unless you use basket trader)?

  9. jrv says:

    Hi Gary thanks, I never had a problem to short small amounts, even 2 or 3 shares can be shorted, and I don’t use basket trader nor anything special. IB is the best and cheapest broker I know of, they offer a wide availability of products all over the world and it works very good.

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