SHARPE INCOME …. Re-Balancing Capital Gains Assets

Posted on Sep 30 2015 - 9:49am by Sharpe Trade

The original Sharpe Income post that explains this project can be found here.

The Sharpe Income category be found by clicking on that red ‘Sharpe Income’ tag next to this post title, or by clicking here.

We continue the discussion from the last entry.  

So within this project, we have a basket of assets, we use for capital gains.   Instruments that we buy from time to time with the intent of selling those assets off for a profit.  At the moment, year to date, this strategy is beating the stock market via the S&P 500 Index …

Sharpe Income Capital Gains 09_30_15

But I think we could do better.

Sometimes when you are dealing with capital gains, there is a bit of a loss, and you have to accept that fact.   And at the moment, though we have received good yield from JNK, it’s in a clear downtrend, and hampering the performance of this strategy.  At times, you need to make some adjustments.

So here’s what I am going to do.

We’re going to raise a bit of cash.

We’re going to sell much of the JNK position, but we are keeping a portion of it (more on that later).  I will be doing this later today.  For the purposes of this project, we will sell off 4 shares of JNK later today, during market hours. Which means that we will keep 3 shares for the project. So this means we are reducing our JNK exposure by about 57%. Remember that we can do this, commission free through the brokers ETF Commission free program.

Of course, we will have to decide what to do with that cash.  We take some cash from JNK, we can place it elsewhere.  We move from a heavy weighting, to a lighter weighting.

For now, we will simply keep that cash reserved within our ‘capital gains’ category.

The link to the Google Drive Spreadsheet that you can view, that we will edit, build upon and refer to over time can be found at this link.

We continue the Sharpe Income project with this next entry.

The Sharpe Income PDF breakdown for Week 44 can be found here (numbers computed off of Friday’s close) …

2 Comments so far. Feel free to join this conversation.

  1. NewLife October 2, 2015 at 12:19 am - Reply

    Are there any inverse instruments or other easy hedges for things like JNK and PCY? I like the bit of income i get from them and would prefer not to sell them, but I’ve been feeling a bit of pain holding them as they plummet.

    I bought about 1/3 of what I’d intended and could stand a much larger drop,but it would be nice to pad it for some time.

    • Dan October 2, 2015 at 8:25 am - Reply

      Not that I’m aware of off-hand.

      I just figure I can sell a portion. Keep a small amount still on, keep the cash from selling the majority in stand-by, and then buy back in when the time is right.


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