Sometimes The Best Trade Is No Trade

No new positions this week.

music selection: “Can’t Find My Way Home” — Blind Faith

weigh-in:  212.0 +0.8

COVID-19 has really rollicked the markets. Even my low Beta large caps saw significant moves last week. Three are threatened: FISV, LLY, and BMY. I searched high and low over the weekend for low Beta large caps that had attractive charts after the recent market turmoil. I found none. Thus, I will not be initiating new trades this week.

This is a feature not a bug. A key part of my strategy is to be income centric. About two thirds of the main trading portfolio that I live off of is in distribution paying names. These are mostly closed-end funds invested in bonds. There is also a significant allocation to income REITs. This approach covers my annual spending and allows me to “coast” when the markets are not cooperating.  Most of the time, I will initiate two new positions each Monday. But I never want to be in a position where I compelled to make a trade. That is a scenario where you must accept risk/reward ratios that are unattractive and likely ends in trading losses.

I did have some action over the weekend as 4 contracts of EIX (out of 14) were assigned early. I opted to exercise my hedge on those 400 shares and take my profit. I earned 105 dollars on 895 in capital at risk. That was good for 12% over 5 days or a gonzo annualized return that I won’t even post for fear of angering the trading gods.

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