Hello all fellow investors,
I’ve decided to share my thoughts on my portfolio allocation and strategy moving forward.
Portfolio allocation
•30% in alternative investments I cannot discuss here
•30% TSLA/growth stocks
At these levels Tesla could 10x again just by revisiting ATH. They are in a good position, growth wise and I’m a long term believer in the company. There are also other growth stocks I may want to add as well and I would group LEAPS into this category as well. Growth stocks offer lots of volatility and thus the option premiums are higher. I will sell covered calls on parts of my position and if I’m called away I’ll revert to selling cash secured puts. If I’m unable to get back in then I’m fine with that because I’ll always keep my other position naked.
•0-10% cash
I’ve never kept cash on the side and mainly got mines from my paycheck or selling other investments. However I think it’s good to keep some dry powder. During bear markets I can use this cash on T-Bills, BIL, or leaving it in a money market account. During bull markets I can dump it into spy, use it to sell puts, or invest it into growth stocks or safer assets. I say 0-10% because I would want to be fully invested once the fed pivots.
•30% safe assets
In this bucket I keep assets that are widely considered safe. Here is where I’ll hold real estate, spy, value stocks, etc. Investing into these types of assets is a good idea because they don’t drop as much during bear markets and they steadily climb. Additionally, the very best investment one could make is in the spy. If one invests into the spy, then by definition they’re going to trail the market.
I have to be honest with myself and note that I don’t always beat the market and when I do it sometimes isn’t by a wide margin. We’re all here to make money and sometimes that means doing the most layman thing of holding index funds. By having some allocation into spy I’ll have peace of mind when it comes to not falling behind the markets own rate of return.
Basic portfolio strategy going forward
Furthermore, right now my strategy is to hoard cash and wait for a fed pivot once either inflation stays down at 2% and/or unemployment spikes. Until either of those things happen, I’m not expecting a fed pivot anytime soon. I have been averaging down into some positions like alternative investments and Tesla, but nothing too crazy. The lion share of my positions are just cash.
I have learned that you do not want to fight the fed under any circumstances. They control the money and thus control the investing world. For instance, the Singaporean stock market has gone nowhere because Singapore does not have QE. Same goes for other international indexes. Liquidity drives markets first and foremost. No liquidity, no capital appreciation.
-When they pivot to a hawkish stance I will sell out of all of my investments and go into short term government bonds until they pivot. Synthetic shorts, covered calls, go into effect here. No DCA
-When they pivot to a dovish stance, use 90% of cash to buy growth and other high alpha names and then slowly stop buying growth and begin adding value. This is because growth will outperform value when the fed first pivots so I don’t want to have much value stocks. I will DCA throughout the expansion.
This strategy isn’t perfect but all booms and bust in the most recent decades have been because of the fed inducing them. A fed pivot means a change in trend. And you reduce a lot of risk if you invest accordingly.
In closing, I hope this sub can stand to benefit from my opinions. I’m open to criticism. DYOR and invest safe.
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