Monday, February 23, 2009

Alpha-D Portfolio Update

Last Friday was an options expiration day, which gave me the opportunity to review my portfolio allocation. I don't make my returns publicly available, but I'm satisfied that my multi-strat approach will pay off over the long term. Ask me about my returns 30 years from now and I'll be happy to show off my performance history. :-)

I am very pleased with the recent performance of gold. The market price of IAU went through the strike price of my covered calls, so I had to buy those shares back today. I'm thankful for the IRS's wash sale rule. I have also added to my holdings of GDX and refreshed the covered calls that expired. Finally, I have sold out-of-the-money puts (covered with cash) at least 15% below today's opening prices for IAU and GDX because I believe that gold has finally begun its long climb into the stratosphere. I keep IAU and GDX in both my taxable account and IRA to protect my wealth from inflation.

I have added to my holdings of FXI. I've been hinting at doing this for a while in previous postings. Despite threats to China's extraordinary growth from declining consumer spending in the U.S. and other export markets, I see no reason why China cannot weather this global crisis and come out a long term winner. I have also refreshed my covered calls on FXI.

I continue to hold short calls on SPY, IWM, EFA, VWO, and XLF. The U.S. economy will IMHO continue to remain weak throughout all of 2009. I am skeptical of reports like this that claim the U.S. will rebound in 2010:


A survey of leading economists finds them now forecasting a far deeper and more painful recession ahead in the first half of the year, but a modest pickup in the second half of 2009, followed by a solid recovery in 2010.

Folks, any nominal economic growth we experience is going to be masked by heavy inflation! The Fed has its money-creation fire hoses turned on at full blast and continues to hook up new ones.

My laptop is still knocked out, so don't expect to see a published PDF of the latest Alpha-D holdings for at least another month.