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J.D. DURKIN: Good morning, subscribers. Chris Versace and I are now back to answer some of your biggest questions of the week. Chris, thank you for being here, as always. Let's dive right in. And let's start with ExxonMobil. We've talked a lot about the planned acquisition, Chris, of Pioneer. Do you expect that to have any potential impact on the club's position in XLE, I wonder.
CHRIS VERSACE: No. So XLE is a representative of the overall energy industry. We like having that, given it's a play on the oil industry in particular. But when it comes to the acquisition of Pioneer by ExxonMobil, is that going to change the reason for us to own XLE? No.
But we do need to understand that XOM is the largest holding in the XLE ETF, clocking in around 22%. Pioneer's about 4.1, 4.2%. So what we'll want to take note of is when the transaction closes and XLE rebalances its holdings, we might see the overall ExxonMobil position shift a little bit. But from a fundamental perspective, does that change the reason why we own the XLE ETF in the portfolio? No, not at all.
J.D. DURKIN: All right. Good context there. Let's talk about panic points once again, Chris. This is something that you and I have discussed a little bit at length as of late. Chris, does a stock's rating in the portfolio play into your calculation of a panic point?
CHRIS VERSACE: Now, that's a great question, J.D. , because obviously our one rated stocks are very high conviction, buy now, and we have our other ratings. But let's remember the reason why we implemented the panic points. It's to reestablish a sense of risk management and discipline with the portfolio. So we want to have that irrespective of the rating because, as we know, things happen in the market, things change, and we always want to have that level of protection with each of our positions.
J.D. DURKIN: Let's talk a little bit more about panic points. For viewers who might be wondering, Chris, how are panic points different than, let's say, traditional stop losses? Let's do a little compare and contrast. This versus that. What are we looking at?
CHRIS VERSACE: Sure. So in concept, they're similar in the sense that if a position is moving lower, we have to assess, OK, at what point do we want to cut our losses? With a stop loss, it's a very hard set rule that you establish when you take on a position or you add to it. And it's an automatic trigger. If it falls below a certain price point, you will be taken out of a position.
The panic points that we have established give us a little bit of flexibility so we can decide, was this an overreaction? Is there a reasons that we should continue to hang on to this position irrespective of what could have been a outsized move that might only be lasting in a very brief period of time? What we're trying to offset is market volatility taking us out of a position that we otherwise want to keep just because, again, a sharp fluctuation on any one particular day snaps a stock price below the trigger point with a stop loss.
J.D. DURKIN: Now, Chris, I love this ongoing conversation about treasuries as a potential safe haven. So let's talk about bonds. Taking a look here at the game plan. We have one member wondering if the portfolio would ever consider adding bonds as a safety measure. What say you?
CHRIS VERSACE: So we've done a lot of different things over the last two years with the AAP portfolio. We've introduced a lot of additional features. But we've also, as members know, moved into the world of exchange-traded funds, or ETFs. But we've kept to an equity perspective. That's really what the Action Alerts Plus portfolio is designed around, helping educate club members and recommend positions that we're in regarding stocks, equities.
So bonds are a little bit outside the wheelhouse, to be candid. If we were to do it though-- again, not saying we never would. But if we were to, it would most likely be in the form of an ETF, again, giving us easy exposure just from a concept perspective. A little hard for individuals to trade bonds. That would be asking quite a bit of the members.
J.D. DURKIN: Yeah, of course. And we do follow the movement in that bond market very closely. Finally, Chris, we do have a member who missed your recent AXON trade. That person is wondering, where is the best place to see your latest moves for anyone who may have missed it?
CHRIS VERSACE: So whenever we make a trade, whether we're adding a stock or adding to an existing position, trimming back or closing out a position, we always send Alerts to members via their email inboxes. We also post those trades on the AAP website. But if you want to get the nitty gritty on each particular trade once it's completed, march on over to the portfolio section on the website. And you can find positions that have been trimmed or sold under the closed position button. Or just move right over one and you can see view trades. That will show all the additions that we're making to the portfolio.
J.D. DURKIN: All right, folks. That's our ace in the hole Mr. Chris Versace. Chris, thank you, as always.
CHRIS VERSACE: Thank you, J.D. .
J.D. DURKIN: All right, folks. That is going to do it for today. As always, members, please continue sending us your questions. You can do so by sending those questions on over to aapclub@thestreet.com. Thank you for watching, as always. And we will see you again soon.