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Realistic Strategies, Realistic Returns

COI Fundamentals Issue: May 15, 2023

Click here to register for the subscriber-exclusive event tomorrow, Tuesday, May 16 at noon Eastern Time (ET).

Current Positions

Click here to access the “Portfolios” section to view each portfolio’s respective positions.

Portfolio Discussion

All-Weather Portfolio

After the recent pullback, the All-Weather portfolio is now up 8.2%, with the Vanguard Total Stock Market ETF (VTI) and SPDR GLD Shares ETF (GLD) doing the heavy lifting, up 11.5% and 14.2%, respectively.

All of our positions, other than the Invesco DB Commodity Index Tracking Fund (DBC), have been rolled in the June 16 expiration cycle. I will most likely allow our DBC position to carry through expiration, depending on the price Friday, and sell more premium, most likely in July, early next week.

Yale Endowment Portfolio

Our Yale Endowment portfolio is up 6.2% after being down more than 4% just two expiration cycles ago.

Like our All-Weather Portfolio we have one position, SPDR S&P 500 ETF (SPY), to roll this week. Otherwise, all of our positions are collecting nice premium in June. My intent is to roll our SPY position into June, possibly July early this week.

Dogs (and Small Dogs) of the Dow

Well, just last expiration cycle we mentioned the fact that our Dogs approach was the tale of two portfolios. Our Small Dogs portfolio was up a healthy 19.10%, while our Dogs of the Dow portfolio was down 7.58% since the onset of 2023. Now with the market, particularly the Dow, pulling back recently due to a variety of ongoing issues, the performance has pulled back. Our Small Dogs portfolio is treading water up 1%, while our overall Dogs portfolio is down just over 14%.

All of our short premium positions are up comfortably in June, but with the down draft the last few weeks much of our premium has been sucked out leaving several positions with little to no premium. As a result, I intend on buying back those short positions and immediately selling more premium this week.

Warren Buffett’s Patient Investor Portfolio

Nothing has changed here. I’ve decided to keep our positions to a minimum due to the ongoing volatility in the market, but hopefully that could be changing soon. At the moment, we only have one position (AAPL) but intend to add several more in the coming weeks. Our AAPL position is now up close to 10% 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 two expiration cycles, and remember, because this is an active portfolio we will be rebalancing every month around expiration.

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 over a month ago and now my hope is to add at least two to three positions over the next expiration cycle. Of course, we’ve been planning this approach for months, but our indicators have kept us on the sidelines and for good reason.

And like our Patient Investor portfolio, I will be rebalancing every month around expiration. This simply means that we could have a position for just one expiration or, at least in theory, in perpetuity.

Next Live Analyst Briefing with Q&A

Our next Live Analyst Briefing with Q&A is scheduled for tomorrow, May 16, 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 June 12, 2023.