Retire In Peace (RIP) Portfolio Update

This is another post in a continuing series as I evolve towards Bruce Miller’s Income-Only portfolio.  The strategy was adapted in an attempt to control trading induced by frequent trading posts here & elsewhere.  The RIP portfolio (actually 4 accounts) is part of a larger strategy which includes real estate (the physical kind) and a separate account dedicated to TAA (not discussed in this post).

This post covers our 4 accounts following Miller’s strategy (for the most part).  Separate posts cover Miller’s screening methodology and results:

See my last post to pick up the Bruce Miller thread: (https://www.valueforum.com/forums/show.mpl?keywords=1470265998.83.56&so=201608).
Go to this link (https://www.valueforum.com/forums/show.mpl?keywords=1462315789.9.686&so=201605) to see a summary of Miller’s methodology.

The RIP screening spreadsheet is essentially done except for cosmetic changes and bug fixes. I have played with Income Risk Group classifications a lot and finally have things where I think they belong.  Although SFL could be considered an MLPMid, it seems more appropriately an Industrial/Transport holding.  Some stuff defies classification, such as DIV, SDIV, GDV-PG, SHAIX and THQ - so they end up in the “Other” group. I lumped all the Hybrid mREITS into the REITProperty group. Exact categorization isn’t all that important.

This table shows exactly where current positions lie within Miller’s Income Groups (top portion of the table) and also shows legacy, speculative and trading positions (bottom portion) which are in the accounts, but not part of Miller’s strategy.  Holdings are spread between 2 taxable and 2 Roth accounts which explains why you may see a ticker more than once. Green Potential tickers are stocks I am thinking about.

Changes since my last Miller post:

Sold AMZA, a relatively new midstream MLP/Infrastructure managed ETF discussed quite a bit here.  Then changed my mind & bought it back again, accidentally getting the newer shares at a much lower price.  I still have mixed feelings about it & prefer FPL and MLPDX in this sector.  

Established an SFL covered straddle with $10 short Puts and $17.50 short Calls around a long $14.50 position.  The chances of either option being assigned seems pretty small. I hope to repeat this 3-4 times a year.

Sold SDIV Puts which were assigned, giving me a lower cost basis on this position. Unfortunately, premiums are minimal. I would do the same thing with DIV, but options are not available.

Added CMOpE and TGPpA below par with plans to hold long term

Closed out all NAT and FRO puts at a profit. I got nervous.

Dumped AFSIpF after lots of negative comments from insurance experts here. It seems OK now & looks good on the RIP spreadsheet, but seemed risky long term, so it did not fit with my lowered risk tolerance.

Sold more TSLA puts in hopes of eventually getting assigned below $170/share. This is not part of Miller’s strategy. I do this every 3-4 months & so far all contracts have expired worthless.

We remain overweight in the MLPMid Group because I expect this sector to gradually grow as energy markets stabilize.  Most holdings were purchased long ago and would not meet Miller’s inclusion criteria, but I plan to hold them because they continue to pay distributions and are reasonably healthy, albeit not very profitable. (In other words, I overpaid and timed purchases badly)

Trades are exactly that. These 4 accounts are not 100% into Miller’s strategy.  I continue to write deep OTM puts and occasional covered calls to generate cash or to get rid of stuff I don’t like so much (GLOP).  

In short, Miller’s strategy has given us some much needed structure and discipline, and it shows in the results. Here’s a growth of 10k chart for my wife’s Roth, which switched over to a pure Miller strategy in March of this year. Charts for my own Roth and her taxable account are similar, and the performance metrics are much improved. Of course, that could just be luck or a sampling error, but we are happy. We continue to like preferreds below par a lot and actively seek them out when possible.

We have 18.5% cash and are adding as opportunities arise, which isn’t very often. The brief market dump on Friday after Comey’s letter was leaked/published said a lot about what is likely to happen if DT wins the election (a big correction?), so we are trying to be flexible in coming weeks.