Member's Blog

The 5  Core PortfolioTypes may be customized to significantly modify their performance either by:

A.  Modifying your Core Portfolio Mix held to include various "Core Portfolio Types" for greater diversification or concentration             


                                   B.  Enhancing your Core Portfolio Type's velocity using leverage (or borrowing) and/or Short positions.  For example you might select a Core Portfolio Mix that includes:

1 part Income; 1 part Growth & Income; 2 parts GroLong; and 1 part GroPlus, to it you might add a 20% Margin position so that your Long position becomes 120% while adding a 30% Short postion (against your Long positions) as a hedge. This 120/30 Long/Short strategy can significantly enhance your return while adding a measure of downside protection.

You would implement the above 120/30 Long/Short strategy by increasing your purchase allocation at an Action Alerts© portfolio change point to simply Buy 20% more.  Your Short position is the sell short (or buy of an inverse fund) of a market index or sector that is held in your portfolio (or another position that is expected to decline). In the best case scenario, both the long and short positions work--the Long position appreciates and the Short position declines-- in which case you make a great deal of extra money. Using this kind of 120/30 Long/Short strategy is considered an Advanced Strategy. If you have not employed such a strategy previously, you should get some help from an experienced investment advisor. If you select the "we Do It option this is provided for you. More information about hedging and other strategies are illustrated below and discussed in the User Forum.

PPS Advanced Strategies:


                  100%             LONG               LONG                   LONG/

                  Long     Â°           &          Â°         with          Â°        SHORT

                  ONLY            SHORT             Margin               w/Margin

    After you have customized a Core Portfolio Mix  from among the five (5) "Core Portofolio Types" to suit your investment goal and objective, you can employ one of the above portfolio strategies. If you are going to use a Margin Strategy whereby you will borrow against your holdings (you may have to hold a position for 30 days before you can margin it), you will sign a Margin Agreement with your broker. If you intend to use a Short Strategy, you can do so either by using inverse funds that are structured to perform opposite their target indices or actually Short a, or some part of a, security position held that is expected to decline more in a market correction or just expected to decline because it is overvalued.  Note that if you Short a postion that is expected to decline you are not hedging, you are making an investment decision that could work out or not. Also know that if the Short position is not held Long, you are exposing yourself to greater risk than in the hedged 120/30 example above.  It is true that using Margin (debt) and Shorting the market can actually improve your Return and lower your Risk, but they also create greater volitility and can increase Risk if not done properly.  PPS warns investors to use caution when employing the Advanced Strategies and advises geting experience with paper trading until you understand how they work.  A better alternative is to use a professional advisor if you want to use these stategies because  results using these Advanced Strategies properly can easily justify the nominal added expense. The important point is that the Advanced Strategies increase or amplify returns, but also the Risk under certain circumstances. Finally be aware that the Action Alerts© DO NOT factor in use of Margin.  

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