- SP 500 : $SPY (Risk ON) OVERRIDE
- MSCI EAFE (The Most Famous International Index) : $DEM (Risk off)
- U.S. 10-Year Government Bonds : $TLT (Risk ON)
- NAREIT (U.S. Real Estate Index) : $VNQ (Risk ON)
- SP GSCI (Goldman Sachs Commodity Index) : $DBC (Risk off) / $GLD (Risk off)
- US Dollars: $UUP (Risk ON)
Over
Overall, the LMP returns about 22% over the last 14 months. In the charts below, the lighter color Moving Average is 200 Day, which is very close to the IVY Portfolio setup.
HOWEVER, I want to override the signal this month. As a derivative strategist I believe it is time to hedge portfolio.
This is a market making me uncomfortable. I made the following trades.
- I closed out $SPY Friday. I will discuss this in another post.
- I park all my $SPY proceeds into $TLT. I also created a collar on my $TLT holding, that is to buy a put to cover the downside and financing it by selling a higher strike call. That is a hedge to the downside.
- $VNQ options are not active, so I decide to switch to IYR which is iShares Dow Jones US Real Estate Index Fund. I still like Real Estate investment. It provided close to 35% return last year. I will closely monitor it in 2015.
- $UUP is doing well. The actual % holding drop to 38%. It is still very close to my 40% target rate. I don't feel I need to do rebalancing. There could be small fluctuation. Since options are cheap, I can buy 1 side at any time.
