Top Names, 5/2/2024

Continuing our core strategy and updating our performance.

May 03, 2024

In the bustling atmosphere of the New York Stock Exchange, we find two distinct anthropomorphic characters at the heart of the trading floor's energy and activity. One is a bull, standing tall and clothed in an elegant, sharp suit that speaks to its bullish outlook and unyielding confidence in the market's potential. Its horns are polished, blending seamlessly into its professional attire, symbolizing strength and optimism. Beside the bull, a bear presents a stark contrast, embodying caution and a readiness for market downturns. This bear, also dressed in a refined suit, reflects a strategic and careful approach to trading, with its fur subtly peeking out from its clothing, hinting at its inherent nature. Together, they engage in stock trading, analyzing screens filled with fluctuating market data, discussing strategies, and making calls. The scene captures their dynamic relationship against the backdrop of the NYSE, with traders bustling around, screens blinking with live updates, and the air filled with the essence of high-stakes financial decisions.

Our Core Strategy

Our core strategy is to buy equal dollar amounts of the Portfolio Armor web app’s top ten names, put trailing stops of 10%-20% on them, and replace them with names from the current week’s top ten when we get stopped out of a position.

A Top Names Performance Update

Before we get to this week’s top ten names, let’s look at the final, 6-month performance of our top ten names from November 2nd, 2023.

Top Names, 11/2/2023

Portfolio Armor

November 3, 2023

Our Core Strategy Our core strategy is to buy equal dollar amounts of the Portfolio Armor web app’s top ten names, put trailing stops of 10%-15% on them, and replace them with names from the current week’s top ten when we get stopped out of a position.

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Over the next six months, our top ten names from November 2nd were up 34.87%, on average, versus up 17.72% for the SPDR S&P 500 Trust (SPY 0.00%↑).

Here’s how all of our top ten names cohorts since we started this Substack have performed so far over the next six months.

You can click here to see an interactive version of that table, where you can click on a date and see what are top names were then and how each of them did.

This Week’s Top Names

Below are Portfolio Armor’s current top ten names as of Thursday’s close.

Screen capture via Portfolio Armor on 5/2/2024.

If you’re starting our core strategy now, you’ll want to buy equal dollar amounts of each at or near these prices, if possible, on Friday, and then enter trailing stops on each of them. Initially, I was using 10% trailing stops on all positions, but I extended that to 15% to 20%. As you get stopped out of positions, you’ll add new ones from the current top ten names then.

In my case, I got stopped out of one names this week, and I still have a top name to replace from last week, so I’m still in the market for two additions.

If you’re not buying round lots of each of these positions, it won’t be cost effective to hedge them individually, but you can hedge market risk by buying optimal puts on an index ETF such as the SPDR S&P 500 Trust (SPY 0.33%↑). As a reminder, you can use our website to scan for optimal puts (our iPhone app is currently closed to new users).

Alternatively, holding some of our bearish bets can work as a hedge against market risk too.