Top Names, 1/11/2024

Continuing our core strategy.

Our Core Strategy

Our core strategy is to buy equal dollar amounts of the Portfolio Armor web app’s top ten names, put trailing stops of 10%-15% on them, and replace them with names from the current week’s top ten when we get stopped out of a position.

A Top Names Performance Update

Before we get to this week’s top ten names, let’s look at the final, 6-month performance of our top ten names from July 6th.

Over the next six months, our top ten names were down 0.97% on average, versus up 7.24% for SPY.

That was the 7th top names cohort of 28 since we started this Substack that underperformed the market (PA top ten returns are on the left below; SPY returns on the right).

This Week’s Top Names

Below are Portfolio Armor’s current top ten names as of Thursday’s close.

Screen capture via Portfolio Armor on 1/11/2024.

If you’re starting our core strategy now, you’ll want to buy equal dollar amounts of each at or near these prices, if possible, on Tuesday, and then enter trailing stops on each of them. Initially, I was using 10% trailing stops on all positions, but I extended that to 15% to 20%. As you get stopped out of positions, you’ll add new ones from the current top ten names then.

In my case, I’m already running this strategy, and didn’t get stopped out of any stocks this week, so I won’t be adding any on Tuesday.

If you’re not buying round lots of each of these positions, it won’t be cost effective to hedge them individually, but you can hedge market risk by buying optimal puts on an index ETF such as the SPDR S&P 500 Trust (SPY 0.33%↑). As a reminder, you can use our website to scan for optimal puts (our iPhone app is currently closed to new users).

Alternatively, holding some of our bearish bets can work as a hedge against market risk too.