Channeling Wade Boggs as Market Screams for Safety
I'm staying focused on value with a couple of recent additions to my portfolio.
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2026 is only five weeks old and things are getting quite interesting.
The nation briefly experienced its second partial government shutdown in the past couple of months, which appears to be becoming to a close. Bitcoin is going through a huge drawdown that is getting close to the 40% threshold from its highs in October. Other cryptocurrencies like Ethereum have taken bigger hits. On Friday, silver had its biggest one day sell-off since Blondie was topping the charts here in the U.S.
Now, another sell-off is starting to get attention. And that is the S&P North American software index, which has seen an accelerating decline that pushed the sector down some 15% in January. This was the biggest monthly decline since 2008. SaaS concerns were among the hardest hit of the industry, on increasing fears that AI will eventually decimate a good portion of the sector.
The market is almost screaming to move to safety right now in my view, even as equities continue to trade near all-time highs and at valuation levels last seen near the end of the Internet Boom. However, as long as the music is playing, an investor has to place some bets on the market.
I continue to channel my "Wade Boggs portfolio" management techniques in that I am intently focused on hitting consistent singles while greatly lowering my odds of taking any strike outs.
The way I am doing this is by targeting the few stocks I am finding in the market with at least reasonable valuations. I am taking positions in these names by executing covered-call orders, utilizing call strike prices 5% to 10% below the current trading levels of the stock.
I just want to make my 10% to 15% over the six to eight months of the duration of the covered-call position. This strategy should nicely outperform in a flat or slightly rising market, which I view as the best-case scenario for investors in 2026. Given the downside protection of covered-call orders, the strategy will also substantially outperform in a declining market.
I highlighted one of these recent trades around Stride, Inc. (LRN) over the weekend. I last touched on my position in Neurocrine Biosciences, Inc. (NBIX) in early July 2025. That covered-call holding recently expired in the money within my portfolio. And as my late father used to quip, "if it ain’t broke, don’t fix it." So, this week, I initiated a new covered-call position in this mid-cap biopharma name.
Neurocrine is still seeing revenue growth in the low teens from its franchise drug Ingrezza, which is approved to treat tardive dyskinesia. The rollout of Crenessity, which the FDA approved in the back half of 2024, is also going well. The company has a solid earnings ramp and is trading at roughly 15 times FY2026E EPS. Add in several interesting candidates with the firm’s pipeline and a rock-solid balance sheet with just over $2 billion of net cash, Neurocrine is a solid value in an overbought market.
At the time of publication, Jensen was long LRN and NBIX.
