Our personal portfolios, 04/09/19

Do you know of any advisers or market Gurus beside Warren Buffett who publish their personal portfolios?

Every Tuesday, I publish with comments, Rosi’s and my core portfolios and my fun portfolio holdings and the activity which took place on Monday. Rosi has her fun skiing, cycling in the skiing off-season, making muffins, walking our dog, reading, making our travel arrangements and spending time with our grandchildren. She does not have a fun portfolio.

Core portfolios (all are tax-advantaged)

Following Paul Samuelson’s advice (Samuelson is an economics Nobel laureate) that investing should be like watching paint dry or grass grow, we maintain a 50/50 asset allocation with 50% in a US money market fund (TDB166, now paying 2.24% annually, down from 2.25% last week) and 50% in the Guggenheim S&P 500 Equal Weight ETF (Symbol RSP) with no changes from the previous week. That 50/50 asset allocation equals the market over the course of a market cycle (peak to trough to peak) with half the volatility, that is, half the risk.

Fun Portfolio

I sold ABBV cash-secured uncovered puts at a strike price of $US83.00, expiry date March 19 and received $US1,200.00 per contract — the most that cash-secured, uncovered puts on ABBV, written on a Monday at a just-in-the-money strike price, expiry date on the Friday of the same week, have paid over the last few months.

Very nice but since my fun portfolio makes up only 5% of Rosi’s and my market holdings, it cannot have a major impact overall.  It could, however, come up with an unusually good opportunity which we could apply to our core portfolios.

This particular example could be such an opportunity but investors cannot write puts in tax-advantaged accounts. Writing (selling) covered calls is permitted, however, so I checked the bid/ask range on ABBV for just-out-of-the-money calls, expiry date next Friday and at .60/.68 thought it to be disappointing.

The risk in writing covered calls, if you can call it risk, is missing out on a rise in the underlying price above the strike price should it go that way. Investors keep the premium income, of course, but it is less than the price appreciation.

 

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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