I finally caught COVID-19 this week, after beginning to almost consider myself bulletproof after evading it for so long, so I’ve been slow of thought and weak of body for a few days, my excuse for a week without many new articles… but I’m starting to really bounce back now, thankfully, so you’re stuck with my pent-up blather after another nutty week in the markets. And in case I’m in a COVID fog still and just can’t see it in myself, I’m going to overwhelm you with charts today, in hopes that some pictures will make me seem smart.

So… what’s going on?

It’s been a year when hedging (finally) started to work a bit, and some of those hedges rolled off the portfolio this week — including my put options on the Nasdaq 100 ETF (QQQ) and on the iShares 7-10 year treasury ETF (IEF), both of which were designed to offer some protection against a crashing Nasdaq or a rapid rise in interest rates. The theory worked, but my timing was not so helpful — I cut my costs for the hedge by only going out to June, which was six months at the time, and if I had committed more to the hedge to go out a few more months the protection would have been better-timed. No way around that, I’m never going to really pinpoint the perfect time to hedge, and I am not willing to commit enough capital to hedging to consistently roll over hedge positions on a shorter timeframe, so the hedge did what it was supposed to, protect my portfolio from what would happen if the Nasdaq fell more than 25% from when I opened the hedge… it’s just that the Nasdaq fell almost exactly 25% during that particular time period, so I end up pretty close to even on the hedges. I haven’t replaced them yet, but will look to do so if the prices get appealing enough… the other “natural hedges”, diversification, relatively high cash levels, precious metals, will have to do the job for now.

I do occasionally add stock-specific hedges, but it usually takes a pretty big mismatch between my long-term intent and my short-term fears. I really like the management and strategy at Dream Finders Homes (DFH), and am willing to hold on and invest in them through the ups and downs of the ...