Monthly Performance Report for
Stake
Net Current Yield
Annualized Percentage
Since Inception
Yield Performance
| Yield Summary | Year to Date | |
|---|---|---|
| Option Premiums | ||
| Capital Gain | ||
| Interest & Dividends | ||
| Brokerage Commissions | ||
| Management Fee | ||
| Net Current Yield |
Account Performance
| Contributions/Distributions This Month | |
| Net Investment | |
| Cumulative Net Current Yield | |
| Stake | |
| Account Value |
Asset Allocation
Commentary
Commentary
Account Value
The market value of all the securities in your portfolio plus the cash.
Accrued Fees
Asset management fees that you incurred, but haven't been billed yet.
Annualized Percentage
The Net Current Yield as an annualized percentage of your Stake. Obtained by taking your Net Current Yield for the month, dividing it by your Stake for the month and multiplying the number by 12.
Book Value
The purchase price of all the securities in your portfolio plus the cash.
Brokerage Commissions
Fees the broker charges to take your stock and option orders to the market.
Capital Gains
The difference between the purchase price and sale price of your stock once the position is closed.
Cumulative Net Current Yield
The sum of each month's Net Current Yield since Snider Advisors began managing your account.
Interest & Dividends
Interest earned from cash in the account (or margin interest charged by the broker if the account is in margin). Plus dividends paid as a result of owning specific stocks.
Net Current Yield
The income from option premiums, interest and dividends, plus the realized gain (or minus the realized loss) from stocks in all closed positions, minus commissions paid for stock and option transactions and management fees. This amount does not equal your taxable income.
Net Investment
All your deposits to the accounts managed by Snider Advisors minus any withdrawals you have made from these accounts. If you pay your fees directly to Snider Advisors, these fees are considered contributions to your account.
Option Premiums
The cash derived from the sale of options expiring in October 2008. These options were sold in the previous Trade Day.
Stake
Your initial investment plus any subsequent investments and minus any withdrawals, plus interest and dividends, plus the profit from any closed position, minus asset management fees. Commissions reduce the profit from closed positions.
Taxable Income
The amount of income you need to show on your tax return (for taxable accounts). This is calculated using different rules than the Current Yield.
Unrealized Loss (or Gain)
The difference between the purchase price of a security and the price you could get by liquidating the security.
| Jesse Anderson, CFA | |
| Email: | Janderson@snideradvisors.com |
Asset Allocation
The Fine Print
The yield calculation is different than the return calculation shown by most investment advisors. The yield is approximately equal to the total return if and when a position closes. While the position is open, there is typically some amount of unrealized loss. The total return measurement would include these losses and so would be lower than the yield. The rules of the Snider Investment Method prohibit selling stocks at a loss, but this does not limit or prevent the accumulation of unrealized losses which are not included in the yield calculation. These unrealized losses could persist indefinitely and may never be reflected in your net current yield.
The yield includes option premiums, interest, dividends, and realized gains or losses from closed positions, but excludes unrealized gains or losses from open positions. Brokerage commissions are deducted before calculating both the gross and net yield. The net yield has the asset management fees deducted. The percentage yield is the yield for the month divided by the stake multiplied by 12. The stake is all contributions minus withdrawals, plus the profits or minus the losses from any closed positions. For a complete discussion of the calculation of yield, please see the Performance Discussion page on our website.
The yield figures are unaudited and are subject to change. The information contained herein is current as of the date hereof, but may become outdated or subsequently may change. Past performance is no predictor of future results. All investments involve risk, including possible loss of principal.
Commentary
2017 Commentary
2017 ended the second consecutive year of extremely positive results for the Snider Investment Method. Of course, much of momentum was driven by a stock market that set record all-time highs consistently throughout the year. One of the strongest surges came at the very end of 2017 and these past few weeks at the start of 2018. This will get us off to a great start for the new year.
In my extended commentary for your annual report, I will cover the highlights of 2017, recap our performance for the year and end with a look to the future.
Starting with the most recent events and working backward, the year ended with headlines of the first major tax reform in over 25 years. Most agree we can attribute some of the recent stock price gains to the new corporate-friendly tax cuts. The full impact of the changes will likely unfold for many years to come. Everyone's tax situation is a little unique, but my research suggests most will pay 1% to 2% less in an effective tax rate.
*While we are covering taxes, I will quickly note that 1099-Rs will be sent out by the end of January. These report any distributions from retirement accounts. 1099-Combined, which cover all your brokerage transactions, interest, and dividends will be released on February 15th. We will review the data and send taxable account holders their information by early March.
The second highlight of 2017 includes both the continued strength in our economy and the gradual increases in interest rates. Throughout the year, the positive economic reports rolled in regularly. The 2nd and 3rd quarter both reported GDP growth in excess of 3% and the forecast is for even more in the 4th quarter. Along with economic growth, employment continued to improve with unemployment at its lowest level since 2000.
From 2008 through much of 2015, both fiscal and monetary policies emphasized economic expansion. That changed when the Federal Reserve made the first increase in interest rates back in 2015. The objective was to manage the pace of economic growth and avoid overheating with inflation. 2017 had three additional rate increases putting the target rate between 1.25 and 1.5%. With more rate increases forecast for 2018, the cash portion of your portfolio will earn more than it has in the recent few years.
2017 was also a big year for Snider Advisors and the Snider Investment Method. From an investment strategy standpoint, the biggest change came in the Spring when we implemented a new bankruptcy screener, RapidRatings. Similar to previous scoring systems, it is an unbiased rating system that provides an objective score for nearly all public companies. There are no analyst projections or forecasts involved in the calculation. It includes over 60 different ratios calculated from a company's financial statements. I've been very pleased with the change, but the true test will be in the future when the stock market experiences the next significant downturn. You can learn more about RapidRatings here.
The spring also included three big events for our company. First, because of growth, we moved from a state-regulated investment advisor to SEC regulation. Between discretionary and non-discretionary assets, we ended the year with over $115 million under management. In February, we officially moved to our new office in Las Colinas. If you haven't seen it, you need to stop by. A much more warm and friendly environment has made the move a great experience.
And finally, at the very beginning of the year we had the exciting announcement of the completion of some significant succession planning with the ownership transition from Kim and Jim to Tyler and I. While we have been running the business now for many years, I'm happy to report after one year of ownership we couldn't be happier. We look forward to many more great years, and we couldn't have done it without you. Thank you for your continued trust and support. (Click here to see the official announcement.)
To wrap up this year's note, I would like to review our recent performance. Overall, I am pleased, but it\'s hard not to be when the stock market is doing so well. We do have areas with room for improvement. First, I'd like to see us get back to more consistent double-digit levels of income. We should definitely get some help with higher interest rates boosting both interest payments on cash and the positive effect on call premiums.
The second half of 2017 saw a surge in stock prices with a strength that doesn't happen often. Between the cash portion of our portfolio and the capped upside from selling covered calls, it is difficult to keep pace when the market moves that fast. It is also easy for investors to move from being fearful of the market to a greedy, euphoric state of mind. Of course, this is one of the biggest principles of the Snider Method. Our consistent, systematic approach doesn't allow for our emotions to drive our investment decisions. Because if history has taught us anything, it is that emotion will cause investors to make the exact wrong decision over and over again.
Many aspects of our portfolio are the best levels we've seen in many years. We had more closed positions and as a result the greatest capital gains in our portfolio since 2014. As of January's expiration, we had the largest allocation to cash since June of 2014. Interestingly enough, this was the last time oil prices were over $100/barrel. While our basic material stocks didn't participate in the rally for much of 2017, all that changed in the last two months. Prices have charged higher and set that portion of our portfolio on the right track for the start of 2018.
Thank you for your time and continued trust through 2017. We are optimistic about the future and what 2018 has in store for us. As always, I would love to setup a time to discuss your results specifically and review your financial goals. Again, thank you for your business and look forward to an even better, more prosperous 2018!
