PhilStockWorld December Portfolio Review – Million Dollar Edition!

Still One Million Dollars!  

$1,004,162.60 to be exact and that is UP $2,018 since our last Portfolio Review, back on 11/23 (right before Thanksgiving).  As I said at the time, +66% was our 3-year goal for our primary, paired portfolios (we began with $600,000).  Since we hit that target before the end of year two and into what we thought would be a tumultuous holiday period - locking ourselves into a protective, neutral position seemed prudent – especially as, on the whole, I'd rather be in CASH!!!  

Unfortunately, CASH!!! is not a very popular position and I bowed to the will of our Members and kept the virtual portfolios running, rather than cashing in in August.  Frankly, I don't think I would have done any better from a cash position since August anyway as I've been too gung-ho bullish on Natural Gas (NG) and too bearish on the FANG stocks – or at least Amazone (AMZN) and Netflix (NFLX) – both of which are bearish plays in our STP and LTP that are hurting us.  

So there's certainly something to be said for having a well-diversified and well-hedged portfolio strategy and we do have PLENTY of cash in our portfolios (almost 90%, in fact) but, more importantly, we're using quite a bit of margin now – so we're not as flexible as it seems (using ordinary margin – not portfolio margin, which would have tons of room).  That's because, especially in the LTP, we rely on short put sales to generate a steady supply of cash but, when the whole market goes down at once – the margins can get stretched and we lose some flexibility.  

SPX DAILYWe're prepared to see 1,850 tested on the S&P but much lower than that and we're going to have to start covering some positions.  That money, if needed, would come out of the Short-Term Portfolio (STP) which gained $31,742 in the past few weeks while the Long-Term Portfolio (LTP) lost $32,031 – as it's amost entirely full of bullish positions.  

So, denied the opportunity to go to cash (and circumstances do sometimes prevent this when you are trading), we have opted to balance ourselves to the point of neutrality…
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