Reducing Return Correlation with the Broader Market

Positive value decay and proactive cash management based on implied volatility

Hi fellow subscriber,

In this webinar, we’ll talk about:

• market correlation and how we aim to reduce it over the mid to long run;

• bi-weekly update on our portfolio performance. Since our Substack’s inception, we’re up 1.62% after transaction costs. You can find our Portfolio and Transactions Sheet at the bottom of this blog;

• portfolio overwriting in practice. When is it attractive? What happens when the stock goes up sharply after we just sold the call option? We’ve used a portfolio screenshot provided by one of our premium members.

The goal of our portfolio strategy remains unchanged: 8% annual returns, with below-average volatility, drawdowns, and relatively irrespective of the type of market environment we’re in.

Unsurprisingly, the growth in our premium member count is inversely correlated with market sentiment. When markets are very buoyant with low volatility, there’s no need to be a bit more strategic. However, if markets stagnate or become more volatile, relying solely on stock ownership may not be enough to achieve attractive returns.