Our personal portfolios, June 9, 2020

Rocking chair investing

Paul Samuelson, the Economics Nobel laureate has stated: “Investing should be dull. It shouldn’t be exciting. Investing should be more like watching paint dry or grass grow.”

We recently sent out a post about selling derivatives  and another about the effect of volatility on derivatives pricing.

Exciting stuff! Nothing like watching paint dry or grass grow. However, as we can see on the chart below, it is worthwhile only occasionally.

The high volatility which makes selling covered calls and cash-secured puts interesting, is now gone.

Last Friday, June 5, we were assigned in all portfolios. On Monday, June 8, we took a 50/50 position in all of them with half of them in an index exchange-traded fund (SPY) and the other half in a money market fund (TDB166). From here on, it is rocking chair investing for us until rebalancing time.

Based on history, this arrangement will outperform over 95% of portfolios over the course of the next decade. I frequently mention my $100,000 bet payable by the loser to the winner’s favourite charity challenging any investor/advisor to outperform the S&P 500 over the next decade.

Any takers?

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

 

 

 

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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