Due for a Fall

Our portfolios are more the set and forget rather than active management. We make a strategic decision and rarely a tactical one. This past week we hedged 50% of our portfolios by shorting the VOO against our SPY position. This action allows us to maintain our capital gains and achieves the objective of a hedge

1) market is up over 10% year to date

2 ) no certainty on inflation (Tariffs) or employment

3) stagflation is imminent and the Fed has few if any tools to fight this

The market metrics are astoundingly high and will eventually return to the mean as in previous market downturns.

For us the best investment is municipal bonds where Aaa housing is being priced at a 5.15. That’s a 7.92% pre tax return at 30% tax rate or 9.15% at a 40% rate. Haven’t seen this high a return since 2015

We are accumulating cash to put to use later. I will buy structured notes if they are on the standard market indexes, offer protection down 30% and yield over 10.5%