Archive for October, 2014

New Portfolio Lineup versus SPY

Wednesday, October 29th, 2014


October  29 , 2014

This Post is further to my Post of September 27, 2014 ..” My Journey  Continues “.   It represents an effort to design an investment platform for IRA individuals  ( me ) which will squeeze more return from a mildly  uptrending market than I can from SPY.  Year to date, SPY has appreciated  7.9% and I can’t settle for that given my annual expense budget.

The new platform will represent far more ” work ” than simply monitoring SPY.    But,  the offset of this work is that it  will keep me on top of USA and International political and economic developments.  For me,  and that is a huge return  since I consider world events a fascinating giant jigsaw puzzle .  But, I should say,  I don’t know how anybody with a full time job could put in the amount of work I’ve set out for myself.


Here Goes:

# 1 – I reject the notion that my age determines the proportion of my portfolio to be invested in fixed income securities. For instance  60 bonds /40, stocks,  70 bonds /30 stocks etc. My contention is that equity allocation can be anywhere from 100% to 5%  depending on what’s happening in the market. Five %  represents my normal  ” fully invested” cash reserve for  fixed income ETFs.

#2 – I can see from a review of  my activities during  2014 that I always have a lot of money sloshing around in money market accounts because, not being  in sync with the December 30, 2011 VTI trade,  I fear getting  caught out accepting a more than reasonable loss at the point a sell signal is triggered.  I intend to address this leakage as follows…

#3 – Any money not invested ( cash in money market accounts )  will be split between writing short term, out of the money,  SPY Puts for an annual return aimed at  three times the 10 year Treasury note yield.  The balance will be invested in fixed income securities.

Here is the makeup of my planned portfolio

INDEX ETFs – 58% of available investment funds to include ( in proportions to be determined and discussed ) VTI, SPY, IWM, IWB, QQQ, and OEF.

SECTOR ETF FUNDS – Part A ENERGY  – 5%  May Include one or more  ETFs such as VDE, XOP, and OIH

SECTOR ETF FUNDS – Part B – Miscellaneous -5 %  May  Include one or more  ETFs such as  FBT, IYT, XLF, XLV and  ITA .

SMART ETFs 10% – May Include one or more ETFs such as PKW, SYLD,  VIG, MOAT and BFOR

SMART EQUITIES – 7%  – May Include one or more of TWX, DIS, DFS, VZ, CVS,  UNH, C, GLW, and SNE and others as determined by analysis.

MOMENTUM EQUITIES -5%   May Include one or more of  TSLA,FB, BIDU, AAPL, NTES,  AOL, MU, UA

INCOME ETFs  Part A  Dividends 5%  – May Include one or more of DTN, XLU, VNQ, SDY, PFF, VYM ( VIG is included under Smart ETFs )

INCOME ETFs – Part B Interest ( Cash Reserve in lieu of Cash )  5% May Include one or more of IEF, VCIT, LQD,  BND, SHYG,  HYG, JNK,  VGSH, BOND, BSV and VCSH .

TOTAL = 100 % Financial Investment Assets

To determine whether all this work can equal or beat the appreciation I can achieve with one or two  ETF holdings…SPY or VTI. following 200 day, month end rules

Distance: November 1 2014 – May 1 2015 …Buy and  Hold….unless VTI violates its 200 day moving average at a month end.

This platform is hypothetical because I don’t want the extra work of   being  accountable  ( to me or you ) for exact numbers.  This is just to give you a general idea of what I am doing.  I will advise if there is a drastic change in my thinking and always when my Put positions change..

Will indicate on October 31 portfolio makeup to be bought Monday,  November 3, 2014

Richard Maurice Gore



The Focus of this Blog

Sunday, October 26th, 2014

October 25, 2014

Anyone who reads my Posts has probably noticed I’ve veered more and more toward financial topics and have moved away from commenting on world event dynamics.

The reason for focusing more and more on markets is that I want to accomplish my original goal of designing a system to immunize me  (and you )  from the poisonous creatures the innocent can and do  encounter in the Wall Street jungle.

But, in recognition  of recent comments by Janet Yellen, Chairman,  U.S  Federal Reserve, expressing her concern about the widening gap between rich and poor, and an article in  Barron’s citing an analysis of financial data by Roll Call indicating there are 189 millionaires out of 538 members of Congress , I thought that this may be a good time to return to my Post of December 28, 2011 to enumerate the primary systemic issues which I believe exacerbate the perception among us that the system is rigged to perpetuate the status quo and result in a widening of  the wealth and influence gap  in the USA.

1-   Term Limits for Congress.  Government should not be an industry.

2-   Line item veto  for the President – Don’t throw the baby out with the bath water.

3-   Encouragement via protection and awards for whistle blowers. Example, that Ebola  nurse speaking out about he lack of leadership at her Texas hospital.

4-   Congressional staff conflicts of interest. Mainly with Lobbyists.

5-  Greater oversight of Lobbyists and increased transparency of Lobbyist activities and record keeping.

6-   Congressional ” legal” insider trading and front running based on information from  closed door Congressional meetings.

7-   Earmarks – Pork attached to important legislation .

8-   Elected officials and staff crossing the employment line between government and industrial companies  they have helped regulate.

9-   How corporate Boards are selected and audited.

10-  Investor rights .  The CEO is an employee in the employ of shareholders…He and the Board should be at  arms length not cronies.

11-  Flat Tax or Value Added Income Tax …no loopholes.

12  How Congressmen  report to constituents.


OK. So we are not perfect. But all the above can be impacted by the collective will of a democracy through the ballot box by having an electorate familiar with the issues. That’s where we need to improve…awareness / involvement via selecting candidates dedicated to improving the process via reform.

BUT,…. after all is said and done, I’d much rather be a Richard Gore, citizen of the US of A than a Richard Gorochovsky, living in Russia  and looking toward KGB Putin as my one and only beacon lighting the path toward  social justice.

Talk about hopelessness , the  New Russia vision of Gorbachev has devolved into a kind of commune run by a cabal of  cronnies who dispense their version of  justice. based on winks and nods and the corruption  they grew up with  and accept.   Take a good look at Putin’s face and ask yourself what your gut reaction would be if he entered the room as your interrogator.  And to tell the truth, I’d prefer him to someone  I imagine as one of his assistants !

No, …for all his supposed procedural  failures  I’ll take Barak Obama as my interrogator.  In his face I see idealism and compassion backed up by a Harvard Law  degree and a resolve to do the right thing..

Conclusion: We can stand some reform, but we are light years ahead of Russia and China in our quest for social justice.

Case Closed.

Richard Maurice Gore



Taking a bow….Part 2

Thursday, October 16th, 2014

October 16,2014

Taking a bow can make your back  end a better target !

To be able ( smart / lucky ) to predict what will  happen to the dollar ( 90 days in the future ) in terms of Oil, Gold, Yen, Euro and the 10 year note… is great ! Take a bow.

But, concluding that this means an instant boost to the stock market is a bit more tricky because of all the moving parts which comprise market analysis.  That is why I used the word “SHOULD”  in caps in my last post.

Also as indicated in my last post, I did buy 500 shares of SPY at $197.49 ( todays price  $183.60 – unrealized loss $6,945 ).

It would have been more prudent, and only slightly less bullish ,  to have been paid approximately $2,000 to sell 10 puts ( 1000 shares- $180,000 ) of SPY for assignment to me at $180.

Yesterday, with the Dow down 400 points I did sell for $1,080 ten ( 10 ) December 20th  SPY Puts for assignment to me at $161. And, I’ll follow the market down ,taking bites ( writing options as I go )  till my overall position is rational in terms of the future.

My basic premise remains that with the 10 year note dipping below 2%  investors would rather own the growth and profit  outlook of a JNJ selling for $ 97.62 ( 10 %  below its 52 week high and yielding 2.87% ).

So what is happening to equities ?  Well, it seems that  some investors with a lot trading capital have decided they have waited long enough for a correction.  Using EBOLA, ISIS,  the Ukraine and a weak European economy as sentiment drivers, they have shouted ” fire ” and expect to capitalize on equities being shaken out of weak hands. They are buying Puts and I am selling Puts.

So, nowhere near fully invested, I’m just battening down the  hatches until the storm passes.  Of course, if VTI ends  October below its 200 day moving average, everything goes except option positions which will allow me to be assigned shares at prices I believe hold promise.

Richard Maurice Gore

I may not be a George Soros, but I’ll take a bow anyway !

Wednesday, October 1st, 2014

September 30, 2014

For me, there isn’t  much that’s more intellectually satisfying than correctly predicting the direction of  the Euro, Gold, the Dollar, and Oil and where the stock market SHOULD  be heading.

As  I get ready to take my bow,  please access, the Archives,  my Post of July 4,2014,  almost three months ago, ” Second thoughts on Gold ” wherein I indicated  the reasons why the Dollar would strengthen against the Euro, the Yen, Gold and Oil, ultimately  to the  benefit of Equities.  As predicted,  the Dollar has significantly strengthened ! ,. … but not terribly much to the benefit of Equities……Yet! )

In my opinion, as we enter October, the case for US Equities is still compelling,.. the Swans of  Hong Kong, ISIS, and KGB Putin notwithstanding.

Bottom line, I’m convinced there is no safer place to put money than in the USA Equities Market…. .

As we close September,  my  VTI market canary is still chirping away, 3.52%%  above its 200 day moving average,  giving me the courage to invest 1/12 of my remaining liquid assets in SPY over the next few days.

Richard Maurice Gore

PS I’ll also take a small bow for having stayed the course and publishing this Post… # 100