- "There will be good years and there will be bad years, but the compounding will continue on unabated." - Pietros Maneos.
- "If compound interest is indeed the 8th wonder of the world, then leveraged compounding is certainly the 9th, 10th and 11th." - Pietros Maneos.
- "A penny saved is just a penny earned, unless of course you double that penny every day for 30 days, which is then $5,368,709.12." - Pietros Maneos.
It was another glorious month within The Maneos Compounding Machine, as capital increased from $830,433.65 to $882,871.95, an increase of $52,438.30 or 6.3%. However, in the early part of the month, I received word from Folio Investing that they are closing their retail investments and transferring all assets to Interactive Brokers effective January 13th, 2021. I felt like a 'capitalist vagabond' upon receiving the email, as I had to deal with this once before when Motif transferred all of its assets to Folio, but hopefully this time it won't be as stressful as the last transition, most especially since I already have an active account with Interactive Brokers. Initially, I was crestfallen, since I won't be able to do the fund creation/1 click rebalances for my leveraged ETF funds, but as I read the formal letter from Folio it stated: 'Interactive Brokers expects to offer a similar “folio” feature in Q1 2021.' Hopefully this is truly the case, and not a false promise.
I did reach out to M1 Finance since they seem to be the only game in town with the closure of Motif and Folio for fund creation/1 click rebalances, but unfortunately they do not accept LLC accounts. If M1 did accept LLCs, then I would probably transfer all or most of the assets from Folio to M1. Yet, the one advantage that Interactive Brokers has over the other brokerages, and why I will allow the funds to transfer there on January 13th is the stock yield enhancement program. I believe it was Logan Kane who turned me onto this program a year ago or so. Basically, Interactive Brokers lends out your shares to short-sellers and they split the interest with you. I have a small account with Interactive Brokers as part of The Maneos Compounding Machine, and often times, I might make $5 a day in interest income, which may not seem like a lot, but think about holding an account with a broker for 20 to 30 years and either earning that interest or not. Over time that can add up to thousands of dollars, if not hundreds of thousands of dollars.
Now with the Folio assets being transferred, maybe that $5 a day is $20 a day, or $50 a day, etc. As my readers know, I am definitely a Robert Kiyosaki/Grant Cardone cash-flow guy, which is why I love things like dividend income, option premium and securities lending, as all three just add passive capital to the SNOWBALL. So, my sincere hope is that Interactive Brokers actually adds the folio/motif/pie feature that Folio, Motif and M1 offer/offered and I get the added advantage of securities lending. This would be the ideal situation as I try to march from $830k to 1 million as if I were Napoleon at Austerlitz.
On Tuesday, December 22nd, I executed a call option whereby I collected $1,353.30 on $21,600 of exposure, which is an annualized return of 75.18%. As always, I immediately set about allocating capital. I purchased a Russian nickel miner - Norilsk Nickel (OTC:NILSY) - run by the Russian oligarch, Vladimir Potanin, and the largest Russian gold miner - Polyus (OTC:OPYGY) - run by Pavel Grachev. Can one get any more contrarian than that, as everyone seems to be flocking to the Cathie Wood style of super-growth investing? I did this, not only to be a contrarian for the sake of being a contrarian, but also since American markets are certainly rich from pretty much any valuation standard; and with all of this central-planning/nanny-state/money-printing occurring within the US, it does leave the door open for hyper-inflation. Never forget the aphorism 'those in the free seats hiss the loudest.' Once this stimulus is passed and instituted, will there be a demand for a third, a fourth, a fifth? 'A $600 check isn't enough! We need $2,000! $2,000 isn't enough to save me! I demand $5,000!' Will hyper-inflation happen? I do not know, but it is certainly a possibility. In an inflationary environment real assets such as gold, silver, nickel, real estate, bitcoin and others appreciate tremendously.
12.22.20 - 32 shares of (OTC:NILSY) at $31.42 = $1,012.39
12.22.20 - 3 shares of (OTC:OPYGY) at $102.00 = $312.95
On December 24th, I felt a bit like Scrooge McDuck above, since most of the world was relaxing with their families on Christmas Eve, while I was hunched over my computer screen executing my put contracts and counting my gold. But for my persistence and Bah-Humbug-esque, I was rewarded handsomely. I was able to collect $5,257.89 on $69,000 of exposure, an annualized return of 91.44%. And so over-all for the month, the premium collected was $6,611.19 on an exposure of $90,600.00, an annualized return of 87.56%. I was able to allocate the $5,257.89 before the market closed early as illustrated below.
12.24.20 - 135 shares of (OTCPK:CSUAY) at $7.60 = $1,032.95
12.24.20 - 10 shares of (BTI) at $37.08 = $370.80
12.24.20 - 20 shares of (TFC) at $46.9599 = $939.20
12.24.20 - 5 shares of (BABA) at 221.57 = $1,107.85
12.24.20 - 30 shares of (REM) at $31.56 = $946.80
12.24.20 - 8 shares of (OTC:OPYGY) at 105.00 = $846.95
On Monday, December 28th, I was able to rebalance my leveraged ETF funds through Folio, which will be the final one before the upcoming transfer to Interactive Brokers. I truly hope that they do release the motif/folio/pie feature within the first quarter of 2021, so that I am not having to manually rebalance on March 26th or so.
December 31st Update
Money Inputted into 'The Maneos Compounding Machine' = $585,080.00
Present Value of 'The Maneos Compounding Machine' = $882,871.95
Total Return = 50.89%
CAGR = 25.44%
Monthly Income = $10,916.72
Year-To-Date Income = Unavailable due to Motif-Folio Transfer
Money Inputted Back into The Machine = $0.00 + $4,305.53 + $6,611.19 = $10,916.72 (Dollar Cost Averaging + Dividend Reinvestment + Option Premium)
Leveraged ETF Funds:
Balanced Alpha 3x Leverage = $129,723.13
YTD Return % = 36.04%
All Weather Alpha 3x Leverage = $96,291.86
YTD Return % = 21.60%
Balanced Alpha - Risk Optimized - = $12,595.02
YTD Return % = 7.18%
Balanced China Alpha 3x Leverage = $12,467.68
YTD Return % = 40.73%
Super Alpha 3x Leverage = $17,155.22
YTD Return % = 83.10%
Five Leveraged Funds Total = $268,232.91
Increase/Decrease % from the Previous Month = 7.78% ($268,232.91/$248,848.60 -1 = 7.78%)
Percentage of Entire Portfolio = 30.38% ($268,232.91/$882,871.95 =30.38%)
Analyst's Disclosure: I am/we are long UPRO.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.