A Buy and Hold Strategy:

According to Investopedia Buy & Hold is a passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.

This is opposed to the market timers who think you can trade in and out of the market when they get signals from various fundamental of technical indicators.

The key to buy & hold is that it depends on what you buy and hold.

Back in April 2012 the Getting Technical market letter set up a Canadian Multi-Nationals Buy & Hold portfolio (GT letter April 27 2012 #GT1374) based on the assumption that most TSX listed multi-nationals would, over the long term outperform the broader stock indices. At the close November 8, 2013 the selections have returned 62% outpacing the TSX Composite and the S&P500 by a wide margin

The Dow Transports at all time highs

Charles Dow. (1851-1902) created both the Dow Jones Industrial Average and the Rail Average (now known as the Dow Transportation Average). It was his work on primary and secondary trends that proved to be the foundation of modern technical analysis.

Dow’s concepts are known to-day as Dow Theory. One concept states that the averages must confirm each other.  Dow argued that no important bull or bear market could occur unless the industrial and the rail (transport) averages gave the same signal or, confirmed the new change in market trend.  In other words both averages had to move above a previous secondary peak to generate a bull market signal. This price “confirmation” by both averages should occur approximately at the same time within a 6 month time window.

On November 4, 2013 the Dow Transports closed at an all-time high above 7100 and well above old resistance at the 6600 & 6700 level. The advance was impressive with 19 of the 20 components up on the day. Conversely the Dow Industrials have spent the last four months trading below resistance at 15700 and have not yet confirmed the “blue sky” position of the Dow Transports.

The bulls will need the Dow Industrials to print new highs over the next several weeks and the bears will need the Dow Industrials to stall here AND have the Transports reverse and drop below the 6600 level. No need to panic because these signals tend to take time to set up

Covered Call Strategies Protect What?

I have always reasoned that a covered call strategy will for a small premium; provide opportunity for an investor to give away a rising stock and to hold a losing stock.

According to Horizons Investment Management Inc. their HXT Horizons S&P/TSX 60 Index ETF seeks to replicate, to the extent possible, the performance of the S&P/TSX 60 Index (Total Return), net of expenses.

And according to Horizons Investment Management Inc. the investment objective of their HEX Horizons Enhanced Income Equity ETF is to provide unitholders with: (a) exposure to the performance of an equal weighted portfolio of large capitalization Canadian companies; (I assume the HXT) and (b) monthly distributions of dividend and call option income.

Horizons go on to state the HEX will mitigate downside risk and generate income. The HEX will generally write covered call options on 100% of its portfolio securities. Covered call options provide a partial hedge against declines in the price of the securities on which they are written to the extent of the premiums received.

In reality when the two ETFs are displayed an investor may not impressed with the capital performance of the HEX in an “up” market. I can just imagine what this turkey will do in a “down” marke