Building A Bulletproof Portfolio Around Verizon

David Pinsen profile picture
David Pinsen


  • Last August, I mentioned how a bulletproof, or hedged, portfolio built around an AT&T position last year generated strong performance while strictly limiting risk.
  • Here, I use the same hedged portfolio method to build a hedged portfolio around a position in Verizon.
  • I show how you can construct one of these portfolios yourself, and I explain how this one differs from the ones I present to subscribers.
  • Looking for more? I update all of my investing ideas and strategies to members of Bulletproof Investing. Get started today »

Workers in Verizon's Wireless’s National Accessibility Customer Service (NACS) Center. Photo via Verizon.

VZ And The Hedged Portfolio Method

Last August, I wrote about the performance of a bulletproof, or hedged, portfolio built around a position in AT&T (T) in 2017 and presented a new one, which recently completed (each portfolio lasts for six months). Like AT&T, Verizon (NYSE:VZ) tends to attract conservative investors, so I thought it would be interesting to try the hedged portfolio approach with Verizon this time. As we did in previous examples, we'll use the Hedged Portfolio Method to build a concentrated portfolio around VZ.

We'll start with these premises:

  • You have $500,000 to invest.
  • You are unwilling to risk a drawdown of more than 12% over the next six months, so you want to be hedged against any decline greater than that.
  • You want to invest in a handful of names, including VZ, with a goal of maximizing your expected total return net of hedging costs.

Here's a recap of the steps involved, if you want to do this manually.

Step 1: Estimate Potential Returns

The goal of this step is to find names that have the potential to generate high total returns to include alongside VZ - whether those returns come partly from dividends or not isn't relevant (tax considerations aside). My site, Portfolio Armor, calculates its own potential returns by analyzing total returns and options market sentiment, but you can derive yours from Wall Street price targets or the price targets given by Seeking Alpha contributors you follow, if you like. Your initial universe can be as big as Portfolio Armor's (the ~4,500 stocks and Exchange-Traded Products with options traded on them in the U.S.) or something smaller, such as the Dow 30.

Step 2: Calculate Hedging Costs

Since you're going

To be transparent and accountable, I post a performance update for my Bulletproof Investing service every week. Here's the latest one: Performance Update - Week 67.

This article was written by

David Pinsen profile picture
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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