The 4 Tiers
Tier 1
Staying on the Path
With high conviction core securities, an investor can quickly establish and begin managing their portfolio more comprehensively. For the majority of investors, this could be enough.
A focused portfolio comprised of 20-35 visionary, risk-measured*, cash-flow positive, North American-listed compounding growth stocks with options strings bought according to QARP**, is an investing path that has historically generated, on average, 7-9%***.
Long-term core portfolio management could be reduced to periodic rebalancing as shared in the Investing Oasis Trade Reports.
Tier 3
Alpha Returns
Digging even deeper, the true alpha treasures lie in opportunistically writing cash-secured**** Put contracts on recently discounted, fundamentally sound, non-core stocks. Even if exercised into the core portfolio, these are still quality companies. In the interim, CCs can be written to generate income while waiting to unwind a non-core position.
The Investing Oasis Trade Reports provide the full details on recently written, alpha-generating contracts.
Tier 2
Additional Low-risk Income
For those willing to explore a little further, the rewards of writing tactical low-risk, out-of-the-money (OTM) Covered Calls (CCs) cannot be over-emphasized. Like tending a garden, this is where the "lowest hanging fruit" lies in most portfolios. Up to 4% more can be generated, in addition to the 1-2% in dividends from the core stocks.
The Investing Oasis Trade Reports provide all details on recently deployed CCs for easy and regular deployment.
Tier 4
Protection
Portfolio protection is key to retaining wealth during market sell-offs. While there is no perfect hedge, losing less is as important as outperformance during the good times.
Protection can be applied both passively and actively. To begin with, multiple layers of risk management can be passively pre-designed into a portfolio (high asset quality, 4 risk-measured filters, and 3 distinct layers of diversification). Then to counter potential security and market downturns more actively, learn to set Stop Loss orders and deploy partial tactical hedges, respectively.
The Investing Oasis Trade Reports share when hedge positions are added and removed. An investor can decide if and when to participate.
* All stocks are assessed on four absolute and relative risk measurement metrics:
1. 5-year Standard Deviation < 35%;
2. 5-year Sharpe Ratio > 5-year Benchmark Sharpe Ratio
3. 5-year Beta > 1.2;
4. Correlation Coefficient < 0.60% (Diversification Filter)
** Trades are deployed according to QARP discipline: Quality at Reasonable Price (buying shares on market dips).
*** According to Officialdata.org, the S&P 500 has returned on average 10.39% from inception in 1923 to Dec 2022.
**** Cash-secured refers to having adequate cash and/or margin capacity to be able to write Put contracts covering the possibility that they may eventually be exercised.