Nothing!
That is pretty much what we did with our virtual Income Portfolio since our last major update on August 13th. Of course we made some adjustments in Member Chat – taking advantage of the top and bottom of our range but, on the whole, we ignored the 1,300-point up and down moves in the Dow because this portfolio is well-hedged for a 20% drop – so there’s nothing about a 10% drop that’s going to make us panic.
We did have a 20% drop in late July to Aug but (and see our last update) again – as we were Cashy and Cautious – all that did was make it a fine time to buy MORE stocks that were on sale – picking up stocks like WFR, SONC, IMAX, VLO, OIH, TBT and HOLI at 20% discounts to their already low prices. The volatility was expected and as I said at the time:
We stuck to our guns this week and had a lot of fun playing the wild gyrations with our short-term betting but the Income Portfolio is an exercise in managing a “low-touch” portfolio – one that does not require us to make daily adjustments. I am aware that can be frustrating for people who stare at the markets every day but that is what our short-term trade ideas are for in Member Chat. That goes for people who are retired or semi-retired too. You don’t HAVE to play every day – or any day for that matter but you do need to work one week a month and that would be this week – the week of options expirations, when we do our update (this post) and then next week we make our adjustments (if any).
I know it’s hard to take the long view of the markets, especially if you are also a short-term trader – as it can be very difficult to switch gears as you go back and forth between portfolios but you MUST learn to take that other view. On Dave’s daily chart above, we see our range was clearly broken in early October and we spent almost 48 hours below that major support level but OUR major support level was at 10,431 (10% below our must hold line) and that…
