Monday, May 31, 2010

Monthly Review - May 2010

May was a very bad month for financial progress with extensive losses across all my investments compounded by adverse currency movements only partially offset by positive cash flow on my properties and modest savings.

Here are the details:

1. my Hong Kong equity portfolio declined significantly. There were two trades this month with large positions in CCB and Sinopec being added following ELDs being exercised against me

2. my ETFs all fell in line with their respective markets (Hong Kong, Russia, Taiwan and India)

3. my commodities all declined (ETF, silver, HOGS, NICK)

4. all of my properties are let producing a positive cash flow and making a positive contribution to my net worth. I have two repair bills due (a replacement for a very old air conditioner and a partial repainting due to mold)

5. currency movements compounded the losses as the USD rallied strongly

6. I did two ELDs over China Construction Bank and Sinopec - both were exercised against me

7. savings were positive with income and expenses both being average

My cash position is currently low following repayment of a loan from Mrs Traineeinvestor and the ELDs being exercise against me

For the month, net worth fell by 3.9%. The year to date increase is 4.9%. The good start to the year came to a grinding halt with this months significant losses.

While it was expected that the markets would give back some of their gains, the size of the losses in a single month was much larger than my expectations. Given that the 3.9% is net of principal payments on my mortgages and my savings and that about 46% of the net assets is currently represented by property equity (which did not fluctuate), the losses on the mark to market equity and commodity portfolio were much higher than appears - roughly 8.4%. That is a large decline for one month.

Although I do not keep comparative numbers, it seems fairly clear that the portfolio outperformed when the market was rising and underperformed when the market was falling - this is the opposite of what was expected when I constructed what I had believed to be a (mostly) conservative and well diversified portfolio.

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