Introduction

Hello and welcome to the April 2024 issue of I-Dog Capital Monthly!

April was a less active month for the fund, as I had a transition at work and took some time off after a very busy tax season. Going forward, the fund is about to get a lot more interesting, but April was more of a “springboard” month. Quite a bit happened, amounting to not much, and we remain poised for takeoff.

We’ll get into some of what happened, and this month’s insights will be much shorter. I’m happy you’re here, so let’s get into it.

My positions

April 2024 ended without a position in SPLG, and I am considering trading other tickers in the coming months. I am exploring funding the account and opening a new trade. Unfortunately, April did not close how I wanted it to, but I look positively ahead to May.

The fund’s current holdings are as follows:

• $183.58 in 2 shares of $BIL
• $1660.50 in cash

BIL currently trades at $91.79, and our cost basis is $91.5, giving our 2 shares an unrealized gain of $0.58. We have received dividends totaling $0.40, and $0.40 in 2024.

The fund’s total value is $1,844.08

My Performance

The fund’s performance in March was -1.5%. The fund’s performance year-to-date is 1.9%. Since inception, the fund has returned -8.9%.

By contrast, the S&P 500 is up 6.32% year-to-date. The S&P 500 fell 4.45% in April.

My Trades

The fund’s activity in April is as follows:

First, I purchased 1 share of $BIL at $91.43. That brought my $BIL position up to 2 shares, currently yielding 5.31%.

Second, I received a dividend from my current 1 share of $BIL of $0.40.

Third, I rolled forward the $57 SPLG put from April expiry to May expiry. Closing the April put for -$3.00 and opening the May put for $40.00 netted a gain of $37.00 for this trade.

Then, I attempted to link a bank account to the brokerage account and make a deposit. However, my broker is having issues linking the account. As a result, I was charged a -$30.00 reversal fee, and no money was deposited into the fund.

Finally, I bought back the $SPLG 57 Put for -$40.00. This was the same price as I initially sold the put for, so no gain or loss was recognized. However, buying it back does cancel out the gain of $37 from the earlier trade.

The Fund’s Total P/L in April 2024 was -$32.60. Most of this loss was due to fees that I won’t be paying again. I want to fund this account, but there are issues to figure out first.

Insights

So the first negative month finally arrived. In the grand scheme of things, it’s nothing we can’t bounce back from, but even so. You probably noticed the entire stock market dipped in the month of April? I mentioned previously that the S&P 500 Index fell 4.45% during April. It seemed like the market took a breather, digested some new economic data, and settled into a reality that the Federal Reserve may not be cutting rates anytime soon.

April’s data releases were not reassuring to folks who believe we’re still due for the proverbial “Soft Landing.” For a while, it seemed like the US economy was just absorbing the high interest rates, currently 5.5%, and just chugging along. Indeed, this is not quite the case. The economy continues to grow, but at a generally slower, more realistic clip than in the years immediately following covid. Q1 GDP preliminary readings came in at 1.6%, much lower than Q1 2023 GDP at 3.4%. The Unemployment Rate rose to 3.9%, and wage growth fell to 3.9% Year-on-Year. Long, slow trends of disinflation continued to firm, and the economy continued its gentle descent from prior years’ inflation, back to normality.

In short, they brought us back down to Earth. Back to the 2016-2019 growth rates of the mid 2% range.

But prior to April, the market felt like it was sure that conditions were different, and that the Fed should cut interest rates a few times this year. I-Dog Capital thought that was too rose-tinted to work in January, and I think it now even more. The economy continues to be resilient, and not broken by interest rates. Teetering in some places, strong in others, but on net, resilient. The interest rates are doing their job, and have helped to blunt price increases in late 2023 and 2024. Inflation as measured by CPI has solidified in the low 3% range, as I predicted last year would happen, and as I wrote about in last month’s issue. The market is simply adjusting to the new short-term reality of higher-for-longer interest rates.

We can get into the economics and the data in next month’s issue, you’ll appreciate a shorter issue this month. But brokers must have adjusted their margin allowance on securities, because after rolling the $SPLG put, I was margin called and had to post collateral to keep my account whole. This is where the account linking issues came in, the fee was charged, and I eventually just closed out of the position for no loss on the trade. But I am going to sort the issues out, and hopefully starting in May, I will be funding I-Dog Capital and making some real money.

Conclusion

The fund was challenged a bit this month, but so was the market in general. April was an opportunity to learn a little about margin requirements, and our stream of monthly dividends began. We’ve made some preliminary moves, and now we’re ready to start funding an actual strategy. I hope May is the month that we begin! I hope you enjoyed the April 2024 issue of I-Dog Capital monthly, see you next month.

Categories: I-Dog Capital, Uncategorized