PP Hedge Fund

[Cortopassi]

I think the hedge is more that these hedge funds are allowed to go short things, which neither the PP nor most any (if any) regular mutual funds do.

A perfect hedge for me, if it existed or can come close is to 100% invest in a high yield fund that has options.  If the fund typically pays dividends of say, 7%, and put protection on the amount you've invested can be, say 2%, you have 5% free and clear with no risk.  But I don't think that's allowed.

For example, SDIV, an ETF I used to be in, is paying 7.09% currently.  Protection with puts through June 2016 (7 months) will cost you 6.8% of the current share value, so you are spending about 2x per year protecting the underlying as you are getting from the dividend.  Darn

[Libertarian666]

I think the hedge is more that these hedge funds are allowed to go short things, which neither the PP nor most any (if any) regular mutual funds do.

A perfect hedge for me, if it existed or can come close is to 100% invest in a high yield fund that has options.  If the fund typically pays dividends of say, 7%, and put protection on the amount you've invested can be, say 2%, you have 5% free and clear with no risk.  But I don't think that's allowed.

For example, SDIV, an ETF I used to be in, is paying 7.09% currently.  Protection with puts through June 2016 (7 months) will cost you 6.8% of the current share value, so you are spending about 2x per year protecting the underlying as you are getting from the dividend.  Darn

Obviously that cannot work or "everyone" (at least hot shot speculators) would do it, and that would drive the option prices through the roof.

[buddtholomew]

Options are priced with dividends included.

[dutchtraffic]

I think the hedge is more that these hedge funds are allowed to go short things, which neither the PP nor most any (if any) regular mutual funds do.

A perfect hedge for me, if it existed or can come close is to 100% invest in a high yield fund that has options.  If the fund typically pays dividends of say, 7%, and put protection on the amount you've invested can be, say 2%, you have 5% free and clear with no risk.  But I don't think that's allowed.

For example, SDIV, an ETF I used to be in, is paying 7.09% currently.  Protection with puts through June 2016 (7 months) will cost you 6.8% of the current share value, so you are spending about 2x per year protecting the underlying as you are getting from the dividend.  Darn

Obviously dividends are priced into put options.
Risk free returns do not exist in this world*

*unless you are in the club and can cheat/frontrun

[rickb]

Risk free returns do not exist in this world*

*unless you are in the club and can cheat/frontrun

But then your risk is that you might go to jail. 

And if you're Too Big To Jail, then you have to spend some percentage of your profits buying politicians to keep it that way which reduces your overall return, and also risk the peasants revolting and figuratively or literally cutting off your head.

[Libertarian666]

Risk free returns do not exist in this world*

*unless you are in the club and can cheat/frontrun

But then your risk is that you might go to jail. 

And if you're Too Big To Jail, then you have to spend some percentage of your profits buying politicians to keep it that way which reduces your overall return, and also risk the peasants revolting and figuratively or literally cutting off your head.

Yes, but it is much cheaper to buy politicians than to deal with the free market.

[Cortopassi]

There are a whole bunch of closed-end funds that specialize in covered calls. I'm not sure if that is close enough for you or not.

Tried covered calls in the past too.  If you are trying to do that in a declining market, the premium (esp. now with Vix having been so low for years) only very minimally covers the loss in the underlying.  And then once the underlying is underwater, invariably(!!) you write a covered call on it at a lower strike and you screw yourself out of gains as the underlying rises up again, and you are forced to buy back your call or sell the underlying at a loss.

Happened to me time and again!  Goddamn I made every mistake in the book in the past!

Long live the PP!

[blackomen]

Bridgewater's All Weather fund is one of the closest implementations of the PP although I never seen any mention of the PP or Harry Browne in any of the literature they've publicized.