How did you do in July?
Corona Del Mar, CA
Howdy Friend,
Every month, I ask how 100% Club members did. They send me their actual brokerage statements so I can see if everyone is on track, or if I need to be a sheepdog and get folks back on track.
Here are a couple I just received: |
I'm still constructing an average gain statistic for members, but for the most part, things are running very smoothly. These particular folks are making more trading than most 9-5ers. It's a beautiful sight.
Where I see things go south (and maybe this will help you out) is when members either:
1) Add a bunch of rules to their strategies
2) Keep running the AI over and over and over again.
I once had a student run The Boss SuperAi over 100x looking for the perfect bond strategy. This is how you end up fooling yourself with a great backtest that performs horribly in the real world.
I'm sure you've heard of KISS: Keep It Simple Stupid.
Simple is what works in trading. Gathering 50 different pieces of evidence and spitting out a forecast is how the ding dongs on Twitter do it. It's also how money managers do it...and we all know most money managers can't even beat the index.
For example, the S&P Indices Versus Active (SPIVA) scorecards show:
- Over a five-year period, 78% of domestic U.S. equity funds underperformed.
- Over a 15-year period, 89% of domestic U.S. equity funds underperformed.
What more proof do you need? I also provide 100% Club members with a benchmark of 100 strategies. That way they can get a feel for how all the strategies are doing.
I'll show that to you now:
Trading 100 strategies at once is overkill for most, but it shows a nice benchmark that members should outperform.
It's amazing how consistent you can get when you accept that there isn't a holy grail strategy...rather, the holy grail is to trade a bunch of them at the same time that are in their "Goldilocks Zones." We are the only company that has developed AI to determine just that.
Let me finish today's letter with a lesson you may find valuable...On rare occasion, and only after being paid an ungodly amount of money, I take on 1-on-1 clients. I enjoy those calls the most because I get into the really advanced stuff. It's more challenging. On this particular call, we talked about all these new 2x and 3x leveraged ETFs. He didn't like their volatility, which is smart on the surface. But I was telling him how I only share about 10% of the research we do. It's like an iceberg...90% is hidden.
We did a study that showed these new ETF products are highly predictable and are showing the best alpha by far. The evidence being that their profit factor is extremely high. Profit factor normalizes volatility, and is a good measure of a strategy. You might say it's a universal measure. So what he (and you) can do is trade these products with less money.
I earned my trading chops in the futures market with one of the OG Turtle Traders, so my brain just works that way. In the futures market, you can be leveraged to the gills, so it was ALWAYS about dialing things back or you would blow up. So if you're using Portfolio Boss, you can use weights to reduce your allocation to each Meta strategy...like this: |
Now since I'm all about automation, we're going to add a button that you push that calculates the volatility of every strategy and adjusts the weights accordingly.
Remember: K.I.S.S.
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Disclaimer: The results listed herein are based on hypothetical trades. Plainly speaking, these trades were not actually executed. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under (or over) compensated for the impact, if any, of certain market factors such as lack of liquidity. You may have done better or worse than the results portrayed.
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