London, Paris, dull markets
A quick note to SungardenInvestment.com subscribers as we tackle Europe
As I write this, Dana and I are finishing up a week in two of the iconic cities of Europe. For me, it was the first time. And as exciting and thriving as these locations are, I cannot wait to be back in the “cockpit” with multiple screens, a daily routine and once again in a writing groove!
But what is not in a groove, still, is the stock and bond markets. They are dull, boring, non-descript, and yet hinting that something is likely to happen sooner rather than later. More on that in the coming weeks.
For now, know that on Friday I did a bit of adjusting in the YARP portfolio. As paid subscribers will see in column G of the research deck, I reduced two stocks from 3% to 1% and increased another one from 1% to 3%.
I still have 39 stocks after selling one out entirely earlier in June, so I need to find and purchase a new one next week. I am also eyeing one or two others for potential removal. As a reminder, this portfolio is 40 stocks, and the goal is to hold at least 1% in each for a long time, at least 12 months and hopefully longer. But the markets don’t cooperate as they used to, and stocks can burn out to the upside quickly, or fall out of favor so quickly that it could take years to recover. In the US we all go to Walgreens (WBA). Check out what happened to that one recently.
The portfolio is now 21% in cash. These days I never feel the urgency to put cash to work since letting it sit around still yields 5%+, more than nearly every high-quality stock.
YARP June dividend income report
My account received dividends (cash in account/payment date, not ex-dividend date) from 22 different stocks and 2 ETFs during the month. The amount received was about 0.88% of the value of the account, which annualizes to a 10.6% portfolio yield.
Now, that does not mean the YARP portfolio will yield 10%. But it could, and I am working on some ways to at least give it that potential. I’ll have a lot more to say on this in our upcoming live education sessions, which we will announce this week.
June (and every 3rd month of each calendar quarter) is when more dividends tend to be paid. The middle month of each quarter is next, and the first month of the quarter is the lightest. While this is the case for much of the stock market, my aim is to smooth it out a bit more, as roughly half the stocks I own went ex-dividend in June.
But I can say that a back of the envelope estimate based on less than 2 months of fully invested live account management, and it looks like the YARP account has a good chance of yielding between 7%-8% or more. That is accompanied by a strict “tail risk hedge” aimed at keeping losses contained, and additional “offense” measures to drive price appreciation on top of the dividend income.
Bottom line: I firmly believe YARP is a way to use the nature and behavior of modern markets to pursue a combination of high income, lower volatility and a total return that can beat the S&P 500 index over a full market cycle.
Emma and I are working up some educational content around this and my entire approach to modern investing, and the first recorded video sessions should be ready for subscribers to view starting the week of July 8.
Best regards,
Rob