Harley Bassman’s 2022 Model Portfolio
If the FED lets inflation run hot, yet interest rates remain suppressed, stocks will continue to climb. However, if short-term rates rise above 2.5% or long-term rates above 3.5%, there will be a lot of wet eyes.
Come this time every year, I publish a list of “Investments” that I think will do well over the intermediate horizon – two to five years. These are NOT meant to be nips to blips RV trades, but rather longer-term notions that capitalize upon either my strongly held themes or the t
Cash out refi with an arm for good measure… Had to double check I wasn’t on reddit.
Agree with his view on TIPS.
I think there are well reasoned arguments throughout the piece. I felt one idea was particularly compelling. Given all the uncertainty about what the next four years will bring I think the four year SX5E call at 4200 is brilliant from a risk/reward standpoint. In principle, I’d gladly put up 10% for a 4 year at the money call on the Stoxx 50 that lets me keep 90% of my funds safely in reserve. So I spent a couple of hours today attempting to learn how to make the trade should the time come that I wanted to sell the European ETFs I own and replace them with a few long dated at the money SX5E calls. But my brokerages don’t offer options based in Europe, and I wasn’t able to find one through googling that did. The one that looked most likely to offer it was IB, but when I called they said US Residents couldn’t purchase European options from them. If any readers happen to know a brokerage that allows a US based small investor can place this trade, I’d be grateful if you posted it.
SPDR EURO STOXX 50 ETF, ticker FEZ, is an ETF that tracks the Euro STOXX 50. It has options, but they appear thinly-traded (to my non-expert eye).
Some other big international ETFs, eg EFA, appear to be pretty closely correlated with FEZ, but again the options are thinly-traded.
Thanks for your replies Joey. One of the things Harley mentioned in his post is that the price of the options listed in Europe benefit from the negative interest rates there. They also offer very long terms, so you can get 2025 calls or even longer. So getting the value of the low interest rates for a very long period of time depends on being able to buy the options listed in Europe. Cheers, EC