Monday, October 21, 2013

Updating the Alpha-D for 10/21/13

It's the weekend after options expiration so that means it's time for me to review my liquid portfolio.  My covered calls expired on FXF and I renewed them for another month.  I also noticed that my GDX holdings are still trading near their 52-week low with a P/E of 13.  I want to get rid of them eventually but not at this price.  I took an unusual risk by selling cash-covered puts under the GDX holdings in my IRA.  I wanted to generate a little cash while accepting the risk that more GDX shares could be put to me in the event of a broad market correction.  I would not do this with the GDX I hold in my taxable account; my time horizon in my IRA is much longer and thus allows for a longer recovery time from a downturn.

I made no changes to my holdings of FXA and FXC.  I'm still holding my long put position against FXE.  The Canadian and Australian dollars are my hedges against US dollar devaluation, as is the Swiss franc.  The bet against FXE is a bet against the long-term viability of the euro.  The market thinks the euro will hold together.  I'm betting my own money that the market is wrong.  

I am hanging on to a lot of cash, much more than a conventional asset allocation would determine for someone of my age and risk tolerance.  These are not conventional market conditions.  Janet Yellen's Fed will keep the monetary stimulus flowing and lay more kindling under a hyperinflationary fire.  All that her woodpile needs is a spark to set it off.  I'm still watching the valuations of RYN, PSA, and other hard asset hedges.  

I feel like I have to remind my readers that what I do with my own money does not at all constitute advice or recommendations.  I just love showing off my intellect.  Other people can do whatever they like with their money and I couldn't care at all about their results.