Search This Blog

Wednesday, December 31, 2008

Returns -- For Calendar Year 2008

Wow! What a Year!
We have to go back to the Great Depression to find a stock market performance that was worse than this year. For 2008, the S&P 500 declined by 38.3% which makes 2008 the single worst percentage decline since 1931, when the S&P 500 declined 43.4%.

The Covered Calls Advisor Portfolio(CCAP) declined by 20.48% in 2008. While this is certainly not a satisfactory result, when viewed in direct comparison with the 38.39% decline in the Russell 3000 Index ETF (ticker symbol IWV) overall stock market benchmark, the CCAP substantially outperformed by a total of 17.9 (38.39%-20.48%) percentage points. Consequently, this advisor remains encouraged by the results that can be achieved through a disciplined and persistent strategy of selling near-month covered calls in a diversified portfolio.

The single measure used by the Covered Calls Advisor to determine overall portfolio investment performance results is called 'Total Account Value Return Percent' -- a simple example demonstrates how this measure is calculated:
If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.

Detailed CCAP results are shown below and are compared, as stated previously above, against an overall stock market benchmark for the comparable time period, namely the Russell 3000 Index ETF (ticker symbol IWV).

Full Year 2008 Results (Jan 1st through Dec 31st, 2008):

CCAP Full Year 2008 Absolute Return = -20.48%
($205,071.35-$257,886.51)/$257,886.51

Benchmark Russell 3000 Full Year 2008 Absolute Return =
-38.39%
($52.00-$84.40)/$84.40


Finally, as shown in the sidebar near the top of this site, the Covered Calls Advisor's Overall Market Meter continues to show that a SLIGHTLY BULLISH investment posture is appropriate at this time. The corresponding covered calls investing approach is to write near-month primarily slightly out-of-the-money covered calls. By 'slightly out-of-the-money', this advisor means that covered calls positions should be established, on average, in the range between 1.0% and 2.5% below the strike price for next-month covered calls.

Wishing You a Happy and Prosperous New Year in 2009!

Regards and Godspeed,
Jeff

No comments:

Post a Comment