Perception Is Everything

It’s a quote my first Lieutenant told me once. At the time I didn’t pay much attention to what he was saying, but eventually it always stuck in my mind.

What he tried to say was that it doesn’t matter how you really are, if people have another perception of you. Their perception becomes a reality. It’s not important if you are a hard worker or not, as long as people believe you’re a hard worker. Of course you do give some hints in your behaviour to allow other people to perceive you.

However, perception is often not fail-proof. I like this point. Even my friends don’t have the same perception of me. Most of them know I’m active on the stock market, but their perception of my life style can be completely different. To some I’m frugal, to others I’m more of a big spender. I like these different perceptions.


Truth is, both perceptions are right. The perception they create is mostly based on my reaction to their behaviour. Their behaviour is a trigger in the way I will let them perceive me. When I go out with friends at home, I don’t mind giving a round or paying for a hamburger. It feels good. These friends are still studying and don’t have an income, but more important, they return the favor as well. This ‘returning the favor’ thing is of major importance to me, as it is not a one-way street. It’s not really about the money, but about the gesture. So at the end of the night, if I paid a couple of euro’s more, that’s fine by me. I won’t reach out for a calculator to ask for a refund.

At the other hand, when I do go out with my employed friends, things change. I realized that when people start to earn money, they become more greedy. They want more. This ‘returning the favor’ gesture starts disappearing, however they are fully capable of doing it. I’m no saint either, but I will adapt to the situation and then decide to pay separately. It’s a bit sad and unpractical in my opinion, as the difference might be a matter of just a couple of cents.



Theoretically I could pay cash for this badass Maserati Ghibli and shiny golden Rolex Daytona and still have €50k in the bank.

Add a suit to this combo and I’d sure as hell look like a rich, succesful guy. Yes, look like it. I rather am in the situation I am in today because switching my precious assets for liabilities doesn’t make much sense. In fact, I don’t have the need to look rich now. Attracting people for the wrong reasons and always worrying about the appearance, no thank you.

Last week I’ve been watching golddiggers being caught on video on YouTube. It was really funny but sad to see how girls first say ‘no’ to a guy but then suddenly change their mind when he pulls up in a Lambo.

Do you have a different behaviour towards different friends? Would you make a personal choice solely based on money?



A €1,62 life lesson

A couple of weeks ago I started using a different investing strategy. I focused more on selling at-the-money put options to realize gains. This meant I was actually using money that I didn’t have available. This requires quite a lot of follow-up, possible rolling and manual work.

However the gains on these options can be very decent because you are working on margin and thus realizing profits on money you don’t have, I realized it was not my kind of investing strategy.

These options on a margin implied that my cash was blocked for a possible execution and I couldn’t buy much. I had plenty of cash but little room for buys of my own.


I bought between 10-15 options and hold onto them for a couple of days/weeks. With the recent panicking due to Trump I didn’t feel comfortable being on margin AND having my cash blocked.

However I could still handle the margin thing, the blocked cash is a killer. This meant I would not be able to buy into a stock if a real opportunity represented itself.

“There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” – Warren Buffett


This quote is most applicable to my situation. I like to buy big into a stock when I think the market is too pessimistic about it. This can be very profitable. Working on margin would yield an additional 0,8% YoY (around $900), but for me the opportunity cost is bigger of not having cash available when opportunities represent themselves. By buying at a good moment, the amount of cash that would be blocked by options, could turn out to bear bigger fruits than the $900.

However the option strategy is certainly not a bad one, it’s not my core business. I really like dividends and passive income without lifting a finger. This gives me more peace at mind and doesn’t require me to check on every stock every day.

Regarding the pros/cons, I decided to close 75% of the options. I had some winners and some losers. Eventually I ended up with a €1,62 loss. I’m glad I tried the strategy and that it didn’t cost me a leg. It was a valuable lesson.

I still do have options in my portfolio, but I will be more careful and decisive about which ones I sell in the future. The expiry date should be in the near future for me. I prefer having plenty of cash available.

Other than this €1,62 loss, I realized €1050 YTD with other option plays. Most of this money is thanks to my bold AB Inbev put. These kind of options are the ones I will focus on in the future, instead of selling plenty ATM options and hoping they don’t decrease until my strike price.

A beer to that!


Your FIRE or your house?

What if it was a decision you had to make?

Let me tell you a little story about John and Jack.


Both guys are 21, single and in the same class. Their net worth is approximately the same, a nice €100k. However, both have a very different view on their life. While John is testing his luck in the stock market and trying to build assets, Jack is watching movies and doesn’t care all that much about financial literacy. John believes he can make returns of approximately 8% the coming years and decides to work towards FIRE. Jack, however, puts his money on a savings account so he can buy a house in the near future. Both seem feasible options.


Start of life

The 2 guys undertake actions to reach their goal once they graduate. John decides to rent a modest 1-bedroom apartment for a couple of years to grow his stash and net worth. Rent is estimated at around €600 (yes, cheap rent in Belgium). The portfolio keeps on accumulating.

Jack decides to go house hunting and finds a decent place, fitting his needs and those of a possible family. There is no big luxury, consider it a very normal house.
Total cost: €300,000. (Yes, Belgium is expensive considering real estate). Jack uses his €100,000 savings to pay up front and signs for a €200,000 mortgage. This results in monthly payments of €1,000 at a 2% intrest rate for a 20-year period.

Financial implications

John’s cash flow: €2,100 (paycheck) – €600 (rent) – €750 (food, utilities, others) + €500 (bonus) = €1,250/month (+ dividends but those are immediately reinvested)

John owns assets and keeps buying them. Let’s look at the next 5 years.


So, John has a net worth of around €232,000 after 5 years.

Notice John’s new annual dividend income as well, almost hitting €6,000 of passive income!

Jack’s cash flow: €2,100 (paycheck) – €1,000 (mortgage) – €750 (food, utilities, others) + €500 (bonus) – €200 (costs because of ownership, big repairs…) = €650/month

Jack owns a liability. Let’s look at his future.


The above mentioned number is the estimated price appreciation of his house. We should adjust this number by adding his earnings over the last years. I won’t take into account capital appreciation as savings intrest is fixed at 0,11% and thus negligible.

So, Jack’s total net worth stands at €149,500 (= €110,500 + 5x €7,800)

This makes a difference of more than €80,000 in only 5 years!!!

Imagine this for a 10-year period… Spoiler: John has more than twice Jack’s net worth.

However both have above average Belgian saving rates, the end difference in net worth is huge.

So far for the story, now reality.

As I’m in a perfect position to observe behaviour of young people, something is very remarkable. When people start to have a (small) sum of capital, they buy a house, apartment… whatever. They drain their own funds and start paying off their mortgage. Around 50% of my class has already bought real estate to live in. Most of them still stay at work though. We don’t receive a fat corporate paycheck but we can’t complain either. After graduation, we will earn around €2,100/month without bonuses. In Belgium, this is a very nice amount considered our age range. This amount was used as a parameter in the calculations above by the way.

However John is the winner by miles, almost all people tend to walk Jack’s path. By now I hope it’s pretty clear that I’m more a John-type of guy. The opportunity cost is huge. Nonetheless there might be personal reasons as why to prefer buying.

In my opinion, one should grow his net worth until it’s big enough to take care for itself and then start considering buying something as probably family is going to need shelter and stability in the longer run.

With your current knowledge, would you do things differently at age 21? Would you prefer to be a John or a Jack?


April Income Report


Time for the monthly numbers! 2017’s divies are marked in green.

Before the European companies drop their yearly dividend bomb real soon, let’s have a look at what April brought in dividends.

Vanguard S&P500 ETF: €9,87
HSBC Holdings PLC: €86,41
Nestlé SA: €19,48

Wal-Mart: $11,53
Altria Group: $5,44

Total april dividend income: €131,40.

Not bad. It’s a good warm-up for May’s dividends. As you can see in the graph above, last year there was a big bump in income for May. I expect it to be even higher this year. I guess it to be a little under €500.

I’m really looking forward to make May’s income report, as a couple of options are set to expire and I’m curious about the movements.

I’m mostly poised about the sold put option on AB Inbev.

Small recap: in the beginning of March I sold 1 put option on AB Inbev, strike 110, expiry date May. I received €1,158 for this action. Due to the recent jump in stock price, the stock is trading near the strike. Actually I do want to be assigned the stocks, so I’m hoping they just trade a little under 110 when the option expires. On the other hand, netting €1,158 in 2,5 months is pretty decent too (almost 12% ROIC).

Yesterday I noticed a very high activity in call option trading on AB Inbev stock. Strike price was $130 (around €118) for September ’17. In case I’m not assigned, I will probably try to sell another put option with a higher strike (preferably 115 or maybe 120 euro), expiring in September.

Now it’s just sitting back and waiting for the end of May. The French elections might still be a bummer but we’ll see how it evolves this weekend.