Hedging Doesn't Have To Be A Drag: What We Can Learn From A Recent Run Of Extraordinary Returns
Portfolio Pulse from David Pinsen
Portfolio Armor's hedging algorithm, developed post-Global Financial Crisis, offers a simple way to hedge investments by inputting the maximum drawdown risk. The algorithm's effectiveness is highlighted by the extraordinary returns of its most aggressive hedged portfolios, which have significantly outperformed the SPDR S&P 500 Trust (SPY) over the last eight weeks. This outperformance is attributed to luck, a concentration strategy in top names like Super Micro Computer, Inc. (SMCI), and an optimized security selection method. The article also mentions other stocks and ETFs like Nvidia, Inc. (NVDA), Affirm Holdings, Inc. (AFRM), Marathon Digital Holdings, Inc. (MARA), and the ProShares Ultra Semiconductor ETF (USD) as part of its successful strategy.
March 26, 2024 | 3:50 pm
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POSITIVE IMPACT
Affirm Holdings, Inc. (AFRM) was picked by Portfolio Armor's system on August 17th, contributing to the hedged portfolios' outperformance.
AFRM's inclusion in Portfolio Armor's successful picks on August 17th indicates a positive short-term impact on its stock price, as it is recognized for its potential to generate high returns.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
Marathon Digital Holdings, Inc. (MARA) was another successful pick by Portfolio Armor's system, aiding in the portfolios' outperformance.
MARA's selection by Portfolio Armor's system and its contribution to the hedged portfolios' success suggests a positive short-term impact on its stock price, highlighting its attractiveness to investors.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
Nvidia, Inc. (NVDA) was used in Portfolio Armor's hedged portfolios to absorb leftover cash and lower overall hedging costs, contributing to the portfolios' success.
NVDA's role in efficiently managing hedging costs within Portfolio Armor's strategy suggests a positive short-term impact on its stock price, as it demonstrates the company's utility in sophisticated investment strategies.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Super Micro Computer, Inc. (SMCI) was highlighted as a big winner in Portfolio Armor's hedged portfolios, significantly contributing to their outperformance.
SMCI's mention as a significant contributor to the outperformance of Portfolio Armor's hedged portfolios suggests a positive short-term impact on its stock price, as it highlights the company's strong performance and potential for high returns.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
The ProShares Ultra Semiconductor ETF (USD) was among the picks by Portfolio Armor's system, contributing to the extraordinary performance of its hedged portfolios.
USD's inclusion in Portfolio Armor's successful picks suggests a positive short-term impact on the ETF's price, as it is recognized for its potential to contribute to high returns in hedged portfolios.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
NEGATIVE IMPACT
SPY, the SPDR S&P 500 Trust, was outperformed by Portfolio Armor's most aggressive hedged portfolios over the last eight weeks.
The SPY ETF is used as a benchmark for the average performance of the S&P 500. The article's mention of SPY's underperformance compared to Portfolio Armor's hedged portfolios suggests a negative short-term impact on SPY's attractiveness to investors looking for higher returns.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80