Our personal portfolios, 6/24/19

As I stated previously, since January 2012, we have outperformed the market slightly in our core portfolios. It is almost a certainty that we will not be able to continue to do so. However, since we have the six habits of highly effective investors, it is an absolute certainty we will be able to equal the market minus a small transaction fee. Seasoned members on the Monday Morning Millionaire Program do so.

I will occasionally publish with comments, our core portfolio and our “fun” portfolio holdings and the activity which took place on Monday. Following holiday Mondays, we will publish this information on Tuesdays.

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.

My Fun Portfolio

Year to date Last 12 months Last 3 months Last month
Fun portfolio -5.01% -13.18 +3.07% +2.26%
S&P 500 +18.87% +9.48 +3.88% +3.20%
TSE Index +21.01% +5.08 +3.81% +2.46%

Can’t brag about that one at cocktail parties.

Please note that the only way to beat the market is to ignore one or more of the six habits of highly effective investors. We ignored two. One, the portfolio is fully invested, that is, it cannot be rebalanced to a sensible asset allocation and two, it has only one stock, that is, it is not diversified by owning the entire US market via an exchange-traded fund which mirrors the S&P 500 index.

Since inception, the portfolio is down significantly because the only security in the portfolio, AbbVie (symbol ABBV), tanked immediately after we bought it.

Since that time, we sold derivatives on ABBV at each expiry date and each time that we were assigned. (Covered calls 12 times and cash-secured uncovered puts 9 times.) We have recovered 2/3 of the loss overall but still hold a 1/3 loss position.

Yesterday, I sold covered calls on ABBV, expiry date June 28, strike price $78.00 and got a premium of $US520.00 per ten contracts.

The premium has been as low as $US500.00 and as high as $US1,200.00 per ten contracts.  Go figure!!

Since my fun portfolio makes up only 5% of our 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.

Core portfolios (all are tax-advantaged)

After withdrawing our entire annual budgeted income needs from my personal core portfolio recently, I followed Paul Samuelson’s advice (Samuelson is an economics Nobel laureate) stating 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% four weeks ago) and 50% in the RSP ETF.   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.





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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