Hedging an income portfolio with growth stocks

Rachel Joi
4 min readJul 10, 2021

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My portfolio has taken a bit of a burn lately. I’m primarily an income investor, focusing on stable companies that either pay dividend or have stable profits and free cash flow. I use options to either enhance this income or hedge my positions, depending on the situation. As of late, income stocks have taken a bit of a hit from what is supposed to be prolonged periods of low interest rates and quantitative easing, so I think companies sitting on cash are underperforming and those with higher growth potential are outperforming. But I could be wrong (check me on this one).

I’m looking to diversify my holdings to growth areas in the S&P 500, so my options are either QQQ, XLK, or one of the ARK funds like ARKK or AWKW.

Which one do you suggest, or do you have any other choices am not seeing?

I would put everything in portfolio visualizer and then run an analysis. Works much better on funds w longer history. Check the asset tab for correlations. You want the best performing fund with the lowest correlation to your portfolio in order to achieve diversification of performance and improve risk/reward metrics.

At a glance using DGRO as your assumed portfolio. Both QQQ (or VUG) and IJS correlate to around 0.8, but also differ from each other significantly, 0.6 over the time period.

Maybe, If it fits your strategy. Lots of ways to play.

Sell long-dated ATM puts and collect premiums and buy shares with said premiums.

Pmcc to capture premiums using leveraged shares

Buy leaps and take advantage of leverage.

Jade 🦎 that bad boi.

Buy hold and forget.

Or any other play that fits your strategy. Just stay disciplined and follow your guidance of when to stop losses, manage gains reliably, and finding other plays if your investment isn’t following you expectations.

I am in a somewhat similar situation, overweight dividend and dividend growth stocks. I recently added some QQQ and was thinking of buying some VUG. I have a little bit of ARKK but not sure if I am going to add to it or not. All are probably good choices. Good luck!

Is there such thing as an “After hours” ETF?

Forgive me for the possibly ignorant question.. I find the possibility of making money while markets are closed very interesting. I would like a thing similar to crypto where it’s 24/7, but because I really don’t want to dabble in crypto, I wonder if there’s such a thing as an after hours ETF which consists of stocks/ETFs that are, on average, traded a lot more during after hours or pre market. For example, let’s say on average, AAPL, MSFT, and SPCE are traded a lot more during after hours/pre market. Let’s say there’s also a lot of stocks in this ETF just like AAPL, MSFT, and SPCE, that are also traded a lot more during those times on average, compared to other stocks which don’t get much trading during these times. I suppose you could, then, add an ETF in there too, which might be the one case where adding multiple ETF’s in an ETF would make sense too, if that’s even possible, which I’ve never heard of before.

On top of that, would it make sense for that, to just instead buy the entire world stock market then? Something like VT? Since if you can’t do that, then simply holding literally everything will guarantee some movement?

Wouldn’t that mean, then, you could mimic the effects of crypto being 24/7 with traditional stocks with an after hours ETF? Sure it won’t be 24/7 and still as volatile, but it would be a lot better than just having my portfolio go up and down a few cents every 17 hours after the market closes.

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https://medium.com/@avaangel/imf-chief-sees-risk-of-sustained-rise-in-u-s-inflation-4372910a712a

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Rachel Joi

A girl who wants to improve the world through her writing.