Hedge in May and go away: Beachman's 2025 hedging plan - Part 3
Portfolio: Beachman's portfolio tactics based on his read of the markets
Since the beginning of the year, I have been writing about the upcoming potholes in the markets’ landscape. We have been warning and preparing for these craters. We have not gone unscathed…no one wins in a correction…no one. But we were prepared and were able to navigate through the first pothole…the recent tariff tantrums…with minimal damage.
But now what about the future? What could happen to markets over the next 3 months? …over the next 6-12 months?
I have been keeping my 2025 market roadmap up to date as we get regular clues from macro developments, monetary policies and fiscal actions. I am expecting more turmoil in the second half of 2025, before the US economy is likely to recover by the Summer of 2026. We could experience deeper macroeconomic pain with an opportunity to come out stronger, as the US administration stimulates the economy leading into the 2026 mid-term elections.
Given what’s coming at us, I decided to adequately hedge my portfolio by the beginning of the Summer.
And we are there now…
Summer is upon us. My travel plans kick off in full swing this week.
I am happy with the YTD performance of the portfolio and how it is now positioned to handle market volatility while I am away in the mountains of South America or on the high seas of the Mediterranean or even lounging on the white sands of my favorite island, Puerto Rico.
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Table of contents
Beachman’s portfolio framework
Low beta hedges
High beta hedges
Tweaks needed
Monitoring performance of the hedges
Hedging instruments that I did not choose
Next steps
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Beachman’s portfolio framework
As mentioned before…my portfolio management framework is rather simple and flexible:
Themes → Picks → Risks → Hedges → Speculation
Since the beginning of the year, we have been fleshing out portions of this framework.
Themes - In early Jan, we discussed my preferred 2025 themes here. Every year has a certain investing character and a handful of dominant themes that are aligned with that particular year’s personality.
Picks - Then, I shared my stock picks for the year pinned here. For each theme, I identified my best picks…based on the information we have today. My picks change throughout the year based on new company and sector developments, earnings reports and macroeconomic shifts. I recently eliminated three of them and added two new picks.
Risks - Following this, we laid out some of the biggest risks for 2025.
Roadmap - We then mapped out how markets could perform over the next 12 months. As I mentioned above, this roadmap is often updated as new information becomes available.
Hedges - After that, we started crafting our hedging approach and started putting it in place as laid out in an update here.
Speculation - In a future post, we will dive in to smart speculation i.e. how along the way I place short term trades and earn options based income.