IB Net Payout Yields Model

Hedged Growth Outperforms by 17% in 1st 10 days

What a time to start this new portfolio. In its first 10 days of existence, the market is down 22.8% (thats a Bear market all by its self - wow!) while the Hedged Growth portfolio was only down 5.6%. Thats a whopping 17% outperformance. Considering the bearish tone of the market the portfolio stayed mostly neutral besides the 1/3 invested in the Net Payout Yield stocks. The Ultrashort Com'l Real Estate position (SRS) is up 41% so that helped as well. That was offset by the position in Morgan Stanley (MS) that hasn't paid off down 60%. Also helping was the 5% position buys in APPL and NYX close to the lows of the day on 10/10. Both ended the day with over 5% gains. Having $435K or 45% of the original value in cash or SHV (short term treasuries) helped keep the portfolio loss to a minimum though a much larger short position would've kept the portfolio closer to breakeven.

Next weeks outlook favors a market bounce after any initial drops on Mon or Tues due to fund redemptions. The world Governments have come to the rescue in full force so it's getting to the point that further downside is limited. Therefore, the portfolio is tilted towards a up market with the APPL, NYX, and WFC purchases on Friday. With any strong bounce, I'll likely look to add further shorts to keep the hedge going. On any weakness that holds the prior lows, I'll look to add more growth stocks. That portion of the portfolio is still roughly $200K low and I'm pretty bullish once we get out of this weak period.

Hold on because next week could be bumpy but we're already off to a strong start. I'm still intrigued to see how the portfolio does on an up day. Amazingly that hasn't happened since I started it on 10/1. Historical times to be investing for sure.


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