New Portfolio Lineup versus SPY
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