May Report

All figures are in US Dollars unless otherwise stated. This month saw weaker performance especially when compared to the market, but net worth still increased and investment returns remained positive for the eighth month running.

Income and Expenditure



Expenditure was $2,154 while take home pay of $5,248 reflects receiving two months pay this month - we don't get paid in June - and my income tax payments which I treat as negative income. 403b contributions totaled $1,792 and Roth contributions $333.33 as usual. Non-retirement investment returns were more moderate than in recent months ($3,530). Retirement investment returns were also weaker ($804). The Australian Dollar fell a little deducting $2,120 from returns measured in U.S. Dollars.

Net Worth Performance
Net worth rose by $US9,220 to $US433,011 and in Australian Dollars gained $A14,471 to $A523,530. Non-retirement accounts reached $US239k. Retirement accounts rose slightly to $US194k.

Investment Performance
Investment return in US Dollars was 1.02% vs. a 3.07% gain in the MSCI (Gross) World Index, which I use as my overall benchmark and a 3.49% gain in the S&P 500 index. Non-retirement accounts gained 1.52%. Returns in Australian Dollars terms were 1.68% and 2.18% respectively. The markets were again very strong this month but my U.S. Dollar returns are still beating the indices year-to-date:



The contributions of the different investments and trades are as follows:



The returns on all the individual investments are net of foreign exchange movements. Foreign currency gains appear at the bottom of the table together with the sum of all other investment income and expenses - mainly net interest. Trading worked out well in the end despite some setbacks along the way. Stock index trading (NQ/QQQQ and ES/SPY) produced nice results this month while very bad trades in Salesforce.com and Interactive Brokers lost the most.

Progress on Trading Goal
Trading in my US accounts netted $1,567 a 5.6% return on trading capital. The model lost 0.9% while the NDX rose 3.2%. This is the first time the model has had a losing month in more than a year and a half. In the light of that, my positive performance is rather surprising as up till now I have tended to lose in months when the model has even a weak positive performance. Seems my trading is improving at least in the stock index trading area. My goal for the year is to end up with at least as much in my three accounts - regular trading, Roth IRA, and IB - as I've put into them. The accounts have reached $53,758 with $63k contributed - so I still need to gain just over $9k. Since the beginning of the year the trading capital gained 64%, the NDX has gained 9.7% and the theoretical model gained 35.3%.

Asset Allocation
At the end of the month the portfolio had a beta of 0.48. Allocation was 30% in "passive alpha", 66% in "beta", 6% allocated to trading, 5% to industrial stocks, 4% to liquidity, and I was borrowing 11%. I've brought my Australian Dollar exposure down to 64.5% from 69.5% in January. The goal is to eventually reach 50%.