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Fabulous Friday Finish

$95,615! 

That’s how much our Long-Term Portfolio has gained since our March 18th review and it’s only April 9th!  We only had $634,785 worth of positions on the 18th and now they are $730,400 (the rest is over $1M in CASH!!!) so that is a completely insane gain of 15% in 3 weeks.  That’s an annulized return rate of 260% – do you really think this is sustainable?  

I know we keep trying to cash in the LTP but then we keep deciding the positions are perfect and we certainly can’t argue with the results but the whole thing simply has to collapse at some point.  It’s the market that is causing this idiocy – our strategies just eggagerate the gains as we use options to leverage the upside momentum and, since the broad market never goes down and we tend to make sensible value picks – we make outized gains in our virtual portfolios.   

Gains are, of course, lovely on paper but you have to make sure you keep them and that’s the trick as the Fear of Missing Out on a contiued rally tends to keep us from sensibly cashing in our gains.  We’re 2/3 CASH!!! in the LTP and most of our portfolios so imagine what we’d be making if we were gung-ho bullish but we learned our lesson in 2000 and 2008 that rallies can end in a snap and you can’t simply unwind your positions at the first hint of trouble – that’s just not the way it works.  

So we hedge using our Short-Term Portfolio (STP) and, as I mentioned on Wednesday, that $200,000 portfolio was down 3.1% and now, with the extended rally, it’s down 15.2%, with the rally knocking us down by about $26,000 so the net gain of our paired portfolios is “only” about $70,000 for the month.  

What that means though, is that the hedges are on sales and, since we just make net $70,000, we should certainly be putting a portion of that money to work buying more hedges.  The STP positions we have at the moment gave us about $500,000 worth of downside protection but now we have $95,615 in additional positions to protect,
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