March Madness

Crazy;  spring came a month early. There's a bar fight going on at the highest level of politics, the presidential election. The pundits calling for the sky to fall amongst the world's economies. There's a super-regional disaster continuing to evolve in the middle east. The Arab spring has turned into a nightmare. What is it about those tribal peoples that makes them want to gouge each other's eyes out and worse?

I'm trying to keep my equilibrium in the midst of instability at work, a desire to make big changes in our financial footprint at home, a serious process of re-evaluating priorities about work and life in general. In the middle of that, I'm continuing to attempt to make progress for our long term income security with retirement investments.

My wife has about 12% of our liquid assets in company retirement vehicles. These are tax deferred, invested in mutual funds. We don't have a lot of choice in choosing funds, so they are deployed to broad market index funds. I think they are loaded up with fees, because they haven't performed particularly well, but perhaps better than a savings account. That means 88% of the liquid assets are in my IRAs and 401K accounts. I am as deeply into Roth vehicles as I can get at the moment. I am not converting pre-tax to post-tax, but I did roll 401ks  to IRAs when my business merged and changed it's tax ID.

I have written about the dividend production and it's growth. That continues. At the moment, values have recovered to a point that we are about 2% off the all-time high for the portfolio.  Dividends are also near their high point. A couple of melt-downs in the energy sector have produced a temporary setback, but I think it will be temporary, as most of my companies are continuing to raise dividends and I am reinvesting dividends. Nothing new there.

So, what IS new?  Well, I'm thinking of doing some "asset swapping".  My 401k account is a self directed account, but it has some restrictions. The plan policy prevents me from using options or a margin account. I don't have any desire to trade on the margin. I would like some "overdraft protection" in case I make a market rate purchase and the price rises beyond my cash position between the order and the execution.  I don't have much desire to trade options, but I wouldn't mind creating some additional cash returns on my assets.  If I purchase shares in the 401ks and sell the same shares out of the IRAs, I'll create some cash in a place where I can use it differently.

There are companies I'd like to own at lower prices. I could collect put premiums while waiting for my price. There are companies whose price doesn't move all that much. I could consider selling some calls. I'd need a new strategy for selling calls, as I don't own companies at the moment that I'd like to have called away.  It's never a good strategy to make a decision you'll regret if things don't go exactly as you desire. If you sell a call, it should be ok to have the call exercised. If you sell a put, you should want the shares at the strike price. So, it's easier to use options to buy shares that you don't own, since the price at which you'll receive them should always be better than the alternative; buying them outright, at the time you deploy the cash one way or the other.

It may be that what's really happening is that I am getting itchy fingers. I know one thing; As I deploy new contributions, I have a very hard time simply holding cash. I tend to invest it in the best opportunity I can identify, then wish I had some cash when prices drop.  Selling cash covered puts would play directly to the problem and the desired strategy; put cash to work AND get shares at lower prices.

I'm going to think about this one a little more...