Wednesday, January 2, 2013

Returns -- Through December 2012

This Covered Calls Advisor blog began in September 2007. The performance results have been as follows:



















The Covered Calls Advisor uses the Russell 3000 Index as a benchmark against which the Covered Calls Advisor Portfolio is compared. The table above shows that the Covered Calls Advisor Portfolio has outperformed the Russell 3000 benchmark by a total of 13.67% over the 5.3 years that this blog has existed. As shown above, the corresponding average compound annual return-on-investment outperformance of 2.45% per year. This average is slightly below the Covered Calls Advisor's desired range of +3% to +5% outperformance for long-term results obtained from a well-managed covered calls investing program.

As also shown in the table above, the Covered Calls Advisor Portfolio (CCAP) underperformed the benchmark Russell 3000 index by 5.08 percentage points (+9.07% minus +14.15%) in calendar year 2012. One reason for this relative underperformance is the underperformance of emerging market equities compared with U.S. equities during this period. The benchmark Russell 3000 index consists solely of U.S. stocks whereas the Covered Calls Advisor's Portfolio has contained about 35% exposure to international (primarily emerging market) equities. While this emerging markets exposure has penalized comparative performance during the past two years, the Covered Calls Advisor maintains a commitment to the long-run benefits of global investing, namely:
(1)Improved portfolio diversification; and most importantly
(2)Achieving overall portfolio return-on-investment outperformance.
Another reason for CCAP's relative underperformance in 2012 was some counter-productive efforts at market timing.

As 2012 concludes, my wish for each of you is for a Happy and Prosperous New Year in 2013!

And remember the Covered Calls Advisor's motto: "Stick With Covered Calls".

Godspeed,
Jeff

2 comments:

  1. I appreciate you taking the time to share your covered call strategy with us. However, the underperformance the last 3 yrs concerns me. I wonder how much commissions have contributed to the underperformance? Would it be better to compare your strategy to a buy-write index?

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  2. Thanks for posting your questions. The last time I analyzed commissions they were 1.0% of the total portfolio per year. I prefer a broad stock market index as the benchmark because I want to compare covered calls investing against what most buy-and-hold stock market investors would be likely to achieve.

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