Current Positions
Click here to access the “Portfolios” section to view each portfolio’s respective positions.
Portfolio Discussion
All-Weather Portfolio
The latest market surge has left the All-Weather portfolio up a respectable 6.5%, with our poor man’s covered call in the Vanguard Total Stock Market ETF (VTI) continuing to do the heavy lifting, up 25.2%. The S&P 500 is up 5% over the same time frame.
Our SPDR Gold Shares ETF (GLD) position has been resurgent of late. After being down roughly 20%, our poor man’s covered call position in GLD now sits 8% higher.
The performance of the overall portfolio is certainly nothing to write home about, at least at the moment, but the portfolio has been far less volatile and requires far less capital (65% to 85% less) compared to a stock-based portfolio using the same underlying ETFs.
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 continue to outperform their respective ETF benchmarks, once again showing the power of using a poor man’s covered call approach.
We have several short call positions that need to be rolled this week including TLT, VTI and GLD.
Yale Endowment Portfolio
Our Yale Endowment portfolio is up 9.0%.
Not much has changed from the last expiration cycle. Our S&P 500 (SPY) position is up 17.1%, emerging markets (EEM) is up 3%, and the European Union (EFA) is up 6.2%. The three ETFs have led the way for the Yale Endowment Fund while bonds (TIP) and real estate (VNQ) have lagged.
Much like I stated above in regards to the All-Weather portfolio, the performance of the overall portfolio is certainly nothing to write home about, at least at the moment, but the portfolio has been far less volatile and requires far less capital (65% to 85% less) compared to a stock-based portfolio using the same underlying ETFs.
We have several short call positions that need to be rolled this week including SPY, VNQ and TIP.
Dogs (and Small Dogs) of the Dow
Our Dogs approach continues to be a tale of two portfolios since the beginning of 2023. Our Small Dogs portfolio continues to rise, currently up 18.2%, while our Dogs of the Dow portfolio is down 9.0% since the onset of 2023. If the market rallies into the end of the year we should see significant gains going forward. Both portfolios saw significant gains over the past several expiration cycles, but the September 15 expiration cycle and October 20 expiration cycles proved to be a bit more challenging as we saw overall returns pull back. Thankfully the November expiration cycle has us back on track.
Three out of five Small Dogs are in positive territory with Intel (INTC) leading the way, up a staggering 105.1% on the year while the stock is only up 40.5%. Cisco Systems (CSCO) has a return of 28.9% while the stock has only gained 9.8%. Dow (DOW) is slightly above break-even. Verizon (VZ) has been the big loser so far this year, down 40.1% last time we reported, but the recent surge in the market has helped push that position closer to break-even as it now only stands 9% lower.
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 continues to be JPMorgan (JPM). Our position is up 24.3%, while the stock is only up 6.6%. Unfortunately, JPM is only one of two winners among the remaining holdings in the portfolio. IBM is the other and has made a roaring comeback, currently up 18.6%. If the largest holding in the portfolio, AMGN, manages to close out the year with a nice rally, the overall portfolio should close well into positive territory.
We have several short call positions that need to be rolled this week including VZ, INTC, CVX and JPM.
Warren Buffett’s Patient Investor Portfolio
At the moment, we have three positions (AAPL, GOOGL, TXN) and intend to add several more over the coming week or so, if the market cooperates … again, a statement we’ve been making for quite some time now.
Back in late June, we added Alphabet (GOOGL). Since adding the position, we are up 31.0%, while the overall stock is up only 10.2%.
I wish we could say similar things about our position in Texas Instruments (TXN). Our position started off great, but a few sour earnings reports several cycles ago pushed the position lower and, as a result, TXN has yet to fully recover.
Our longest-standing position, AAPL, is up 15% after being down close to 25% just a few months ago. But only a month or two ago our position was up over 20%. A rally will obviously help to push our position back to recent highs, and until then we will continue to lower our cost basis by selling more and more call premium.
As I have written 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 next around the November 17 expiration cycle.
James O’Shaughnessy’s Growth/Value Portfolio
Absolutely nothing has changed since last expiration – except the returns. Like the Patient Investor portfolio, my Growth/Value portfolio continues to take a cautious approach. 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 several months, but our indicators and low options premium have kept us on the sidelines, and thankfully so.
However, we did have the good fortune to add a position in TotalEnergies (TTE) back in late June; so far, so good as our position is up 59.1%, while the underlying stock is up only 15.4%.
The market is beginning to accommodate our cautiously optimistic stance, but we’ve said this before only to have Mr. Market pull the rug out from under us. I’ve allowed the passive portfolios (All-Weather and Yale Endowment) to do a lot of the hard work. But, with the market selling off throughout much of the last month (which has led to an increase in options premium) coupled with a seasonally bullish period, well, expect to see a few positions added to the mix to hopefully contribute to the overall cause.
Next Live Analyst Briefing with Q&A
Our next Live Analyst Briefing with Q&A is scheduled for tomorrow, November 14, 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
December 11, 2023.
