XLSI

Not_Sure_68

I grappled with this last year as I perceived the end of the easy money in equities approaching due to rising bond yields. The solution I arrived at was to create two accounts at two separate brokers. Now these are taxable accounts aside from my roth. What I use them for is one is purely income and the other is purely growth. The dividend account is currently about 25% the size of the growth account, because I want to build wealth as liquidity drains from financially (over)engineered equities and bleeds into the real economy...eventually causing cost push inflation. In the growth account I'm currently all equity derivatives(various option constructs) with a mix of spreads and ZEBRAs. The call to put bias is currently about 60% call, 20% put, 10% straddle, and 10% "cash". That combination killed it in the hectic market last week. I'm basically short information technology and long materials and material producers. In the dividend account I currently favor state street's high yielding covered call sector funds. They've low net fees of .35% and nice tight asset allocation. XLEI(energy has killed it all year), XLBI(again with the materials), and XLSI(consumer staples...cuz duh). Current yields are 17.95%, 15.58%, and 12.36% respectively. As things slow down with the growth account, I intend to move funds to the income account and rotate amongst the sector funds and/or individual stocks with attractive yields...like Annaly capital mgt(16.28%).

Not_Sure_68

100%. I've been tempted at times to overweight XLE just because it's so obviously going to outperform, but I do want to save some dry powder. Perhaps when I re-deploy my tech short positions. XLBI, XLUI, XLSI, and XLVI materials, utilities, consumer staples, and health care should all do well after a correction. I will likely go right on disliking XLK, XLC, and XLY(tech, communication, and consumer discretionary).

Not_Sure_68

Yep. Basically what you're seeing is an equity market with two main drivers...information technology(XLK), and oil services/production/refining(XLE). The other 9 of 11 sectors of the S & P 500 began diverging from those two in mid August and have been negative ever since. When I began warning people about this a couple weeks ago, I was told to not talk about it any more...and typically not in a very nice way. I've even provided concrete evidence by charting the sectors, but people just get mad about it. I've personally been in income sector funds and commodity producers for months. XLEI all year and XLBI(materials) for the past few weeks. I have bear put spreads on ORCL and APLD and if things get ugly, I intend to add some XLSI(consumer staples).