I did my private financial stress test this morning. Moving from Venezuela to Portugal increased my expenses considerably. Back in Caracas I had my fully paid up condo and basic food is a heck of a lot cheaper. I say basic because imported olive oil, for example, is through the roof. I left Venezuela on April 8, 2019 so I set my start date on April 1, 2019.
From April 1, 2019 to yesterday the S&P 500 is up 33% while NASDAQ is up 43%. After covering all my expenses my port is up 10%. During the bull run I funded an euro account in Portugal, last contribution Feb 2, 2021 good for almost six month. Currently the euro account is good for 5 months total or 16 months local expenses.
Stress test says, “No Stress!”
The interesting thing is that over three years there is no stress in the market, S&P 500 up 33% while NASDAQ up 43% but if you fixate on the recent highs pundits go ape and investors sell low to fund cash at the wrong time.
The S&P 500 high was January 23, 2022 and the NASDAQ high was November 19, 2021. By then The Captain had funded his euro reserves and that’s part of the secret of having a ‘sturdy portfolio.’ Trying to squeeze the last penny out of a bull run is not a good idea. Back then the port had between 10 and 15% cash, now it has a 3.5% margin.
A bear market is not a good time to sell covered calls, too much capital loss. During the six months from December 2021 to May 2022 the covered calls only funded about half of my ordinary expenses. June and July have already funded three months worth of expenses.
LTBH 73.4%
Income 29.8%
Margin -1.4%
Calls -1.7%
The Captain