SHARPE INCOME … I’m Not Convinced

Posted on May 2 2016 - 4:38pm by Dan

The original Sharpe Income post that explains this project can be found here.

The Sharpe Income category be found by clicking on that red ‘Sharpe Income’ tag next to this post title, or by clicking here.

We continue the discussion from the last entry.


We began this project with $500. All in an effort to help out the small retail investor understand the importance of growing an income account, as opposed to a trading account. The following numbers are taken from our PDF that is attached below.   Remember that the numbers are computed off of Friday’s close …

Total Sharpe Income Balance: $2,233.16
Total Sharpe Income YTD Return: + 1.69 %
Sharpe Income YTD Yield: + 1.66 %
Total Sharpe Income YTD Maximum Draw-down: – 6.84 %
iShares Barclay’s IEF Return: + 4.60 %
S&P 500 Index YTD Return: + 1.05 %

House-Keeping / Maintenance
This week the entire capital deposit is placed in our “dry powder” category.  Simply put, capital we keep on hand that we can use in any aspect of the project in the future.    So our cash on hand is reserved thusly

05-02-16-sharpe-trade-sharpe-income-project-capital-allocations

Although we did sell all of our PCY, we still qualified to receive the PCY dividend.  This has been recorded.  So our capital gains strategy, once we sold all of it, and took it to cash, looks a little something like this …

05-02-16-sharpe-trade-sharpe-income-project-capital-gains-strategy-record

As we have sold everything off, we went to cash.  We then had $971.32.  We then bought 4 shares of SHY last week, and so our new capital gains strategy looks a little something like this …

05-02-16-sharpe-trade-sharpe-income-project-capital-gains-strategy-record 001

We are thus working forward from that base of $971.32 in the embedded ‘Capital Gains Strategy’.  We will continue to monitor this, and update the spreadsheet as the weeks pass …

Moving Forward
We enjoyed a nice rally today in equities.  And I’m sure that all of the bulls enjoyed today immensely.  And we could buy IVV, or QQQ or PCY again for the ‘Capital Gains’ strategy. 

I tell you …

I’m not convinced.  I’m still bearish on equity prices and risk overall.

I’m willing to change when proven wrong.  But all I’m seeing when I look at a daily chart of equity indices for the last 15 days is a one day rally, in a downtrend.  I don’t like buying rallies, inside of larger down-trends.

I cold be wrong.   If so, I’ll change my tune.  But I have to make my own decisions with the data in hand.  And at the moment … I’m not convinced that risk is going to rally.  

So for now, I’m simply going to pile up the cash, and watch what the market delivers in the next few days …

The link to the Google Drive Spreadsheet that you can view, that we will edit, build upon and refer to over time can be found at this link.

We continue the Sharpe Income project with this next entry.

The Sharpe Income PDF breakdown for Week 74 can be found here (numbers computed off of Friday’s close) …

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