You Own More Stock Than You Chose To
A long bull market changes an account quietly. Nothing gets bought. The positions you already held simply grew faster than everything sitting next to them, and the balance shifted.
Take a plain 60/40. Hold it for five years without a single trade and it drifts to roughly 76% stocks against 24% bonds. Equities appreciated. Bonds spent that stretch in the hardest interest-rate environment in decades. Same account, different animal.
Alternatives Drifted Too, Just Less
A 60% equity, 30% bond, 10% alternative mix ended the same stretch near 72% stocks, 17% bonds and 11% alternatives. That is a smaller slide than the 60/40 took, and the reason matters more than the decimals. Assets that earn their return somewhere other than the stock market slow the drift toward concentration after a long equity run. They do not stop it, and of course they carry their own risks.
This Is Not a Market Call
Stocks may keep climbing. Bonds may stay unattractive for years. Markets have never much cared what anyone expects of them, and you should be skeptical of anybody who tells you otherwise.
The useful question now is does your portfolio still carry the risk you meant to take?
Plenty of people believe they hold a balanced account because that is how it was set up. Five strong equity years later, the label may have stopped being accurate. Whether the fix is rebalancing, changing the target allocation, or asking whether alternatives still deserve a spot depends on what you need the money to do. Your objectives, your liquidity, your tolerance for a bad quarter. Nobody can answer that from the outside, and the account materials here spell out the questions worth working through first.
Where Selling Option Spreads Fits
If your equity share crept up to 76%, one answer is to sell stock. Another is to put a slice of the account to work somewhere that does not need the S&P to cooperate.
When you sell a put credit spread on a commodity, you get paid up front for agreeing to buy that commodity at a price well below where it trades now. The market can rise, sit still, or drop part of the way, and the premium can still be yours. A second option bought further out caps the loss before you ever enter. Copper answers to mine supply and power-grid construction. Corn answers to weather and acres planted. Neither one waits for an earnings call, which is the whole point when your stock exposure is already high.
These markets can and do move against a position, sometimes hard. Strike selection, position size and knowing when to close are the job, not the paperwork around it. Earlier notes on those mechanics are here.
Review the allocation you own today rather than the one you chose five years ago. That takes an afternoon, and it beats letting the next downturn make the decision for you.
— Justin
