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Tales of a Technician: Election Positioning

November 2, 2020

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One day and counting until the most important election of our … blah, bleh, yuck. Can’t even finish the sentence. I’m pretty sure I’ve heard that phrase ahead of EVERY election in my lifetime.

I have zero insight or guesses on who will win and how the market will react. But this I do know. The world will keep on turning. Stocks will continue to be the place to be if you want the best chance at generating inflation-beating returns. If the market crashes in the wake of the election it will be temporary and ultimately a great buying opportunity.

It always is.

But since it’s in vogue right now to pontificate on how one is positioning into the main event, I’ll throw my hat into the ring. Context matters for discussions like this, so here’s mine. I have both a passive, long-term account and a slightly more active, long-term account. Here are my thoughts on both heading into tomorrow’s brawl.

Passive

Do I like my asset allocation? Yes. Am I comfortable with risk exposure and how it will react if Armageddon comes to town? Yes. I have some stocks, U.S. and Foreign, large-cap and small. And then there’s REITs and gold. Sprinkle in a condor or two for good measure and voila! I’ve got a well-diversified portfolio poised to profit over time regardless of whatever short-term turmoil we witness over the coming days.

Game Plan: Sit tight, grab the popcorn, and watch the media collectively implode if Trump pulls out a victory.

Active

This one is a little more interesting. The recent market swoon stopped me out of any bull swing trades, and I haven’t loaded up on any bear plays in light of the looming uncertainty.

I have a far OTM bull put on Disney, but am comfortable buying shares if the Mouse House plunges, so I’m letting it ride.

I have a few core covered call positions in SLV, EEM and IWM. I’m happy with the premium remaining in the current short calls, and see no reason why any further adjustments are needed. If the market pukes after Tuesday then so be it. I’ll continue selling calls and wait for the inevitable recovery. If we’re lucky enough, a big bear market will emerge like March where I can snatch up more shares on the cheap.

Looking skyward, there are a few RUT condors flocking around but with their wide wings and comfortable distance out-of-the-money, there’s no reason to modify.

Finally, I scooped up some shares of KO and VZ this year for long-term cash flow positions. No chance on bailing on those. I’m comfortable with the size and willing to add more into weakness.

In summary, I’m doing zero, zip, zilch. I’ve assessed my risk and found it reasonable. Your move, Mr. Market.

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One Reply to “Tales of a Technician: Election Positioning”

  1. AlainSilva Ruiz AlainSilva Ruiz says:

    Calmness of mind n_n

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