Monday, 6 May 2019

Recovering from my 2018 MTM Losses

As a write this, there was a brief 1 day panic on 6 May regarding the US-China trade war. It seems to have subsided somewhat the next day. Anyway, I was reviewing my interactive brokers portfolio and noted that if dividends were counted, my portfolio in 2019 had basically recovered all of the Mark-to-Market (MTM) losses in calendar year 2018. The MTM loss was $95k+, so it was a sizeable drop in portfolio value. (for IBKR only, as my local stocks there's no function in FSMOne/SCB/CDP for reporting annual MTM p/l)

To give an example of MTM losses, one of my biggest holdings is the ETF VDPX. Coming into 2018, I had a sizeable position bought at an average price of US$19.87 (plus the 4% dividends collected).

Start Jan 2018 price: US$27.715
End Dec 2018 price: US$22.93

Based on these prices, MTM accounting says that I suffered a 5-digit US$ loss in my VDPX even though one could say that I have not 'lost' since the current price never dropped below my average buying price. However, I think its better to adopt a consistent method of calculating portfolio return rather than to pick whatever measure is most flattering. 

So similarly, for 2019, I will take the US$22.93 price and look at what the price is (about US$25.50 now) to see what is the return for VDPX this year on an MTM basis.

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