SHARPE INCOME … Our Little Project Is Taking It’s First Steps

Posted on Mar 14 2016 - 2:14pm 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 …

Sharpe Income Balance: $2,001.69
Sharpe Income YTD Return: – 1.20 %
Sharpe Income YTD Yield: +0.30 %
Sharpe Income YTD Maximum Draw-down: – 6.84 %
iShares Barclay’s IEF Return: +3.00 %
S&P 500 Index YTD Return: – 1.06 %

We have a bit of ‘project house-keeping’ to take care of …

House-Keeping / Maintenance
For our Income Assets, we received our IBM dividend.  That has been posted, and recorded as you will note on the spreadsheet and the PDF.   Remember that there is concept referred to as “Yield on Cost”.  You paid $X for a stock.  The dividends, to that cost, stands at $Y.  $Y to $X, is your “Yield on Cost”.  Our International Business Machine (IBM) yield on the cost now stands at 3.80%.  Not too bad, for an macro-economic environment where your average 5 year CD is paying 1.70% at the extreme end.  

For our Capital Gains Assets … we liquidated everything last week.  The QQQ commissions bit into us just a bit.  But that’s OK.  We’re still beating the Stock Market in terms of relative performance …

Total Capital Gains Performance
From July, 2015 to Date

sharpe-income-trading-free-dividend-project-03-14-16

Sharpe Income Capital Gains Performance
2016 YTD

sharpe-income-trading-free-dividend-project-03-14-16 2Weren’t there some jack-asses around somewhere stating that we couldn’t beat the Stock-Market?  Heck, we did it with next to nothing in the way of capital.  It’s only going to get easier from this time forward.

Yeah … anyways …

So even having to pay that QQQ commission in and out, we are still beating the market, ever since we started tracking this strategy within the ‘Sharpe Income‘ project.  And by the way?  We did it using slight exposure to JNK, an instrument we ourselves were bearish on.  So please … stop demonizing asset classes!!  We simply adjusted our weighting.  Oh … and we also collected a JNK dividend last week.  That has been recorded as well.

So now we have ‘re-balanced’ this ‘Capital Gains‘ strategy, by going straight to cash.

When you look at this weeks capital contribution … our JNK dividend … our IBM dividend, and the sales of all of the Capital Gains Assets?  Our cash on hand is reserved thusly

sharpe-income-trading-free-dividend-project-03-14-16 3

Moving Forward
For our Capital Gains strategy, we will focus on entering our assets, and trying to time those well according to our processes.   We have completed our ‘first cycle’ of buying these ETF’s, and then ‘re-balancing’ them; beating stock-indices in the process.  Keep your eyes peeled on future Sharpe Income entries regarding purchases.

For our Income Assets, we will continue to focus on contributing capital, and purchases that will only increase our capital over time.

Briefly put, our little project is just beginning to rock and roll …. 

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 68 can be found here (numbers computed off of Friday’s close) …

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