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.
We'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.