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!
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.
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.
If Vulcans were investors they would:
- 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.
- 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.
My employer has generously given our lab the day off to celebrate some of our recent successes, giving me a four-day weekend. What a precious gift — time. Time to relax and see a concert, time to clean the house, time to blog at balhiser.com. This gift off one day plus the Labor Day Weekend got me thinking about time and investing and how the two relate.
Time is a critical factor in investing. Interest and dividends are paid out over time. Inflation adds up over time, as does compounding. Annuities pay out over a lifetime. And, of course, pundits debate whether it is worth it to try to time the markets.
Time shows up in just about every financial formula, starting with the basic time value of money computations.
And, naturally, savings accumulates (or debts) over a period of time.
Putting this all together time is generally on your side as an investor. Especially if you are in your 20′s, 30′s, 40′s or even 50′s and investing in retirement. Having a 20-year plus time horizon is very likely to help smooth out the huge market ups and downs.
The biggest gotcha about time is inflation. Certainly inflation is my greatest concern. A dollar today is not worth what it was 10 years ago. I paid $1.00 for a Hershey Bar this week. 10 years ago I could have bought 2 for $1.oo. The other big gotcha about time is uncertainty. What will taxes be for IRA and 401(k) withdrawals? What will the economy look like? Will I have a job and will my pay keep up with inflation and taxes?
That said, I still believe time is on the side of long-term investors. Tax-deferred compounding of IRA and 401(k) assets is very helpful. The tax deferral of unrealized capital gains in taxable accounts is another investing boon. Finally the tax-free advantages of Roth IRA and 401K assets is another helpful option to help leverage the power of time.
Enough about that. A quick Crazy Ivan Account update: $21,750. Nice appreciation of late. Even my Barclays ADR (BCS) is up from the initial purchase price. Quite wild ride on the banks. The covered call I sold on SPY is in the red, but the 100 shares of SPY are in the black by more. That how covered calls generally work out — smoothing the volatility out of both the ups and the downs.