Current Positions
Click here to access the “Portfolios” section to view each portfolio’s respective positions.
Portfolio Discussion
All-Weather Portfolio
The market rally in 2023 and recent pullback have left the All-Weather portfolio up a respectable 8.5%, with the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 27.5%.
Nothing has changed from last expiration cycle, both bond funds (TLT and IEF) and the commodity fund (DBC) continue to lag behind, but that is the yin-yang protective nature of the All-Weather portfolio just doing its job. That being said, all of our positions are outperforming their respective ETF benchmarks, once again showing the power of using a poor man’s covered call approach.
We have rolled all of our positions into the September expiration cycle. So, at the moment, there are no necessary trades during this week of expiration.
Yale Endowment Portfolio
Our Yale Endowment portfolio is up 11.0%.
The S&P 500 (SPY) up 18.9%, emerging markets (EEM) up 5%, and the European Union (EFA) up 14.2% have led the way for the Yale Endowment Fund while bonds (TIP) and real estate (VNQ) have lagged.
As we head towards the August 18 expiration cycle, we need to roll our TIP August 18, 2023, 109 calls into the September or October expiration cycle. We also have a few September 1, 2023, expiration cycle trades (EEM, EFA) that I plan on buying back and immediately selling more premium this week.
Dogs (and Small Dogs) of the Dow
Our Dogs approach continues to be the tale of two portfolios since the beginning of 2023. Our Small Dogs portfolio is up a staggering 18.2%, while our Dogs of the Dow portfolio is down 3.1% since the onset of 2023. If the market continues to rally we should see significant gains going forward. Both portfolios saw significant gains over the past expiration cycle. If all goes well, we should continue to see market-beating gains going forward.
Three out of five Small Dogs are in positive territory with Intel (INTC) leading the way, up 58.5% on the year while the stock is only up 26.2%. Cisco Systems (CSCO) is not far behind with a return of 36.1% while the stock has only made 12.3%. Dow (DOW) is up 23.7%. Verizon (VZ) has been the loser so far this year, down 27.5%.
As for the remaining higher-priced stocks that make up the rest of the Dogs of the Dow (including the Small Dogs), the hands-down winner is JPMorgan (JPM). Our position is up 37.3%, while the stock is only up 12.4%. Unfortunately, JPM is the only winner of the remaining holdings in the portfolio, although that might be quickly changing if we experience another profitable expiration cycle as several of our positions are back to breakeven levels after a prosperous August expiration.
We have one call position (INTC) that is due to expire this week. I plan on buying back our calls in INTC early in the week and immediately selling more calls.
Warren Buffett’s Patient Investor Portfolio
At the moment, we have three positions (AAPL, GOOGL, TXN) and intend to add several more in the next week or two, if the market cooperates … again, a statement we’ve been making for quite some time now.
Several weeks ago we added Alphabet (GOOGL). Since adding the position, we are up 23.7%, while the underlying stock is up 23.7%.
I wish we could say the same for our newest addition, Texas Instruments (TXN). Our position started off great, but a sour earnings report pushed the position lower and is now sitting at a decline of 14.6%.
Like our other active portfolio (James O’Shaughnessy’s Growth/Value Portfolio), I will rebalance every month around expiration. This simply means that we could have a position for just one expiration or, at least in theory, in perpetuity.
The market is beginning to accommodate our cautiously optimistic stance. I’ve allowed the passive portfolios to do a lot of the hard work, as always, but sentiment has changed recently, with the market reacting favorably to recent economic news. Our AAPL position is up close to 11% after being down close to 25% just a few months ago.
As I have stated in our last few issues, I will be building out the portfolio to a minimum of five positions over the coming expiration cycles, and remember, because this is an active portfolio, we will be rebalancing every month around expiration. Rebalance occurs around each expiration, with the most recent around the August 18 expiration cycle.
James O’Shaughnessy’s Growth/Value Portfolio
Nothing has changed here either. Like the Patient Investor portfolio, my Growth/Value portfolio continues to take a cautious approach. We locked in gains in CVX (14.4%) several months ago and now my hope is to add at least two to three positions over the next few expiration cycles. Of course, we’ve been planning this approach for months, but our indicators have kept us on the sidelines, and for good reason.
Just over a month ago, we added a position in TotalEnergies (TTE); so far, so good as the underlying position is up 28.8%, while the underlying stock is up only 10.6%.
The market is beginning to accommodate our cautiously optimistic stance. I’ve allowed the passive portfolios to do a lot of the hard work, as always, but sentiment has changed recently, with the market reacting favorably to recent economic news.
Next Live Analyst Briefing with Q&A
Our next Live Analyst Briefing with Q&A is scheduled for tomorrow, August 15, 2023, at 12 p.m. ET, where we will be discussing the options market, giving a detailed look at open positions, strategies used, and will have a follow-up with live questions and answers. Register here.
The next Cabot Options Institute – Fundamentals issue will be published on September 11, 2023.
