Telling Tuesday – Top Tier Stocks Report Earnings

DD, EAT, FCX, JNJ, TRV and VZ. 

That's just before the bell.  We're hoping FCX misses so we can put it in our virtual Income Portfolio (see yesterday's update), which is now up so much (19.7% in 7 months) that we should really consider cashing out, because the chances of matching that performance for the next 7 months is statistically unlikely and our goal was to use a $500,000 account to make $48,000 a year in a conservative portfolio that would be low-touch and suitable for someone who is retired and looking to draw an income.  

Since $95,175 is almost 2 year's worth of our earnings goal in our first 7 months and, since we're only 50% invested so far (never had a chance to go full), we could just shut it down, take the cash and reward ourselves with a nice cruise or whatever it is old people do when they make bonus money.  

And that's what it is – bonus money.  It's not NORMAL to make money this fast – especially in our conservative portfolios and that makes me very, very nervous and should make you nervous too.  Markets go up AND they go down – where's the down?  It took us two weeks to fully review the Income Portfolio positions for Members and, since I started back on the 7th, we jumped from +$58,660 to + $95,175 and that's up $36,515 on less than $250,000 invested ($480K in margin) in just two weeks – that's 14.6% by itself and THAT'S NOT NORMAL!  Certainly not with a hedged portfolio.  

One of the reasons we're out-performing is the low VIX (Dave Fry's chart, left), which is at multi-year lows.  Since we concentrate on selling premium (being the house) and not buying it (being the sucker), a falling VIX is very much to our advantage in a portfolio where we've sold a lot of long-term volatility.  That, of course, can be a temporary situation and paper losses can disappear as fast as they appear.  

To some extent, we attempted to lock some of our gains in by selling more calls and improving our TZA hedges (and adding an SQQQ hedge as well) but it's no substitute for good, old-fashioned profit-taking and, if we can't hold our tippy-top levels (the technical term) on our Big Chart – we need to strongly consider cashing out…