A prior post (Investing Themes link) presented a case to encourage every covered call investor to develop a written list of his/her investing ‘themes’ that would help to provide overall guidance in making stock selection decisions, and to do so during the week prior to options expiration each month. Therefore, the time to begin with a first draft of your current investing themes is NOW. Don’t expect your first draft to be a finely crafted list. Remember, it’s only a first draft (a rough draft) of those investing themes that you want to emphasize for your portfolio holdings in the near-term future. If you write your first draft sometime during this weekend (Note: you might want to plan to write your first draft during the weekend prior to options expiration Friday every month), then you can spend a few minutes from time to time during the remainder of this upcoming week thinking about, modifying, and fine tuning your themes.
To assist you in initiating the process of writing down your investing themes monthly, the current themes of the Covered Calls Advisor are presented below. You are welcome to use them as a guideline for developing your own themes. But please, whatever your themes are, write them down! Trust me – don’t take a shortcut here and simply think about your themes. Again, write them down! As the months go by, you’ll be pleasantly surprised at how much the process of committing your ideas to paper will help you to clarify your thinking when it comes to making your stock selection decisions.
The Covered Calls Advisors current investing themes are:
1. Sector Weightings:
· Overweight – Health Care; Industrials; Technology
· Marketweight – Materials; Energy; Consumer Staples; Telecom
· Underweight – Consumer Discretionary; Finance; Utilities
2. Emphasize large-cap companies.
3. Emphasize domestic companies that have a large international exposure.
4. Overweight international equities – especially big Europe (i.e. United Kingdom, Germany and France); South Korea; and Taiwan.
5. Emphasize companies whose exposure to high energy and other commodity costs is minimal.
6. Mitigate risk caused by the slowdown in the U.S. economy. Identify companies with more defensively-oriented characteristics (such as health care) and that are less dependent on increases in consumer spending.
The time is now! Get that pen and paper (or turn on your Microsoft Word program) and begin to write your first draft of your own current investing themes.
Regards and Godspeed