HuggieBear's Thread of Public Shame

Its been a couple of weeks, so here's an update.


I've stuck rigidly to the plan i set out around the end of May. Primary goals are low volatility, manage risk and protect capital, outperform the indexes, and end each year profitable.


This has been a difficult market. My strategy is not a heavily active strategy, it is partially buy and hold with some hedging and swing trading.

Nevertheless, since late May I have finished 9 out of 10 weeks profitable. There are over some pretty difficult trading periods, and especially so since mine is inherently a long biased strategy that is going to be challenged in bear markets (although risk protected).


I have one single equity position in the company i work for that is outside my strategy - I suffered a 3% portfolio loss last week due to us getting walloped after our earnings call. If not for that single loss, which is outside my system), i would have had a tremendous week last week.


Here is view of my overall performance for the year, and then a drill-down view since I changed to my new more risk focused strategy:

Here is my Weekly PnL for the year:

1280579565.jpg


And the cumulative PnL view:

1280579618.jpg



Now, here is a weekly drill down since I changed my strategy:

1280579875.jpg


and cumulative PnL since the change:

1280580274.jpg



As the above graphs demonstrate, i have been very successful in lowering my volatility and drawdowns. Also, the market is up about 1.5% since I changed strategy, and I have added around 10%. So obviously that is great outperformance but not what I expect to continue. Also, my weekly volatility has been pretty low compared to the market it general.


Even though Ive been doing pretty well, Ive left a tremendous amount of money on the table. I am cutting my winners too quickly, and I do believe I am overhedging. Frankly, I believe the damage i suffered in May has made me TOO conservative.

So, I'm going to lighten up on the hedging, and accept some larger percentage swings. We will see what happens.

Cheers,
HB
 
Its a tough market right now without a doubt. At least you are making a profit. If you are cutting winners too soon try scaling out of them. You could also use a weekly chart to predict price targets.
 
Good call....im going to try to scale more, both in and out. Should help with my impatience.



Right now "being early" is my #1 problem and has cost my probably 3x as much profit as I've managed to eke out.


I'm going to run this exact strategy till 12/31. It will be interesting to see if it pans out.


One thing I know for certain, I will not blow up following this strategy. I might underperform, but thats about it.
 
Update on progress of my strategy:


I've had a good two weeks. My overall portfolio is up 1.5% since 7/30 (two weeks ago), while the S&P 500 is down about 2%.

My performance over the two week period was actually substantially better than 1.5%. Unfortunately I hold one equity position that is outside of my overall strategy, but makes up about 20% of my total account equity. This position is stock in the company I work for, which i cannot legally hedge directly, and we dropped about 25% after earnings were announced. Net/net this cost my overall portfolio about 4%, so without that mishap my core strategy driven trading would have been up around 5%.


My gains should have been substantially greater during this period, as I continued to take profits far too quickly. I have begun scaling in and out, which I believe did help, but my key focus in my discretionary trading is to let my winners run further.

Here is the current status of my strategies:


1) DecisionMoose (25%)-- has been absolutely killing it. Put me in TLT about 3 weeks ago and has been very good to me thus far.

2) 45 Week Timing Model (50%) - All positions were exited Friday and moved to cash as I got sell signals across every open ETF position.

I've added a twist to this strategy -- while I have no signals open, rather than sitting in cash, I am going to sell naked puts on high dividend paying stocks that are near 52 week lows. I think I can generate additional income doing this when my timing model has me in cash, and i believe I can execute it in a fairly low risk way by being careful about the companies i choose to sell puts on and by diversifying these sells a bit.

Let me know if you have better ideas for cash use during these periods.

3) Discretionary trading -- has gone very well the last couple of weeks, but certainly contained mistakes. Need to continue to formalize more, trade less, be more patient, let winners run.

Currently long one contract of CL and 1000 shares of TNA. Plan to sell these on an oversold bounce and begin building long term short positions via SPY put options.

Also, if the market gets near 1110-1120, i will go heavily short with leverage (with stops around 1130)


I'm currently up 8.2% on the year, versus the indexes being negative at this point.

Not going to get rich at this pace, but my focus continues to be on finishing the year positive and outperforming the indexes.

My stretch goal is to finish the year up 20%, which is feasible but this market is kind of crazy. I'm going to make a significant directional bet that we visit 1000 or lower on the S&P before end of October, so that will probably determine whether i can hit 20%.


I also trade a bit in my 401k.....im up 6% YTD there and sitting in 100% cash until further notice. Can't wait to switch jobs and move that into an IRA where I can make more use of that cash (which is actually significantly larger than my personal trading account).
 
I'm expecting to retest 1020 or possibly a bit lower september/october.

However, if the market does move higher it won't hurt me too much.

i'm mostly trying to swing the extremes, Net long at the moment.
 
Had a good week....summary



Weekly Portfolio Change = +2.8%
S&P 500 Benchmark Performance = -0.7%
YTD Portfolio Gain = 12.4%


Should have been a +10% week, but i screwed myself. The decision moose quarter of my strategy had me in TLT, where I sold covered calls at 102 to try to boost some income off that. Who knew it was possible for TLT to SKYROCKET in such a short period. I watched nearly 2.5% of additional portfolio gains not materialize because of those covered calls.

I closed my entire DecisionMoose position on Friday and went to cash. I'll wait for the next signal it gives and get back in..

I need to do the analysis but my strategy of selling short puts seems to have backfired and cost me a little money. I sold puts with strikes that were too close and got burned. I'm not giving up on this though, i'll look to refine this and see if I can find a way to produce income through it while sitting in cash.


Technically speaking, I'm still in a 34% drawdown from the great Crude debacle of May 2010. However, that's only a sidebar mental note as I view those gains as have been lucked into rather than hard earned.

I'm happy with the way my new strategy is performing and I think 20% is certainly more achievable now. If I can achieve 20% - 30% per year with relatively low beta, I will be satisfied.

I was able to add a little cash to my account, so I'm only 14% away from the previous maximum account balance i achieved. If I can reattain that level, I'll throw myself a little party, even though I'll really still be in drawdown.


The gains are going to get tougher as 3/4's of my strategy have me in cash. That leaves just 25% discretionary trading available to try to eke out some gains.

I'm currently long crude and some 3x long ETFs expecting an oversold bounce. Portfolio is offset with some expensive SPY puts at the 105 level. Looking for an early week bounce where I'll drop my longs and see if we move lower into labor day. I plan to buy a ton of VXX just before labor day expecting volatility to increase at that point.

Cheers.
 
I now own egregious positions in H&R Block and Intel Corp as a result of my amateurish attempt to make money selling puts.


IGNANT.

Selling those two at the open, hopefully we'll gap up and i'll get out at a good price.

I think i still made money overall on selling all those puts, but i haven't calc'd it all out yet. Got burnt on a couple pretty bad.


Still, it's clear there is a winning strategy there but my approach didn't have an edge, i don't believe.
 
Short update for the week:



I lost about 0.25% this week, but i suffered an intra-week drawdown of almost 8%.


Not going to go into details, but deviations from my core strategy proved costly. It was as if each minor deviation was exploited by the market in a most explosive way. Coincidence i'm sure, as it could have just as easily benefited me. However, it has reinforced my focus on sticking to my well defined strategies through 12/31.


At the end of this coming week, I plan to post a more detailed update that covers performance YTD and within August in particular.


One point of note, I do believe I still outperformed the market this week, but I certainly incurred more volatility to do so.
 
Its been a while since I posted an update, primarily due to an onslaught of life responsibilities.

Anyway, I've had a good several weeks. Sticking firmly to my strategies, i've been pretty consistently profitable with the exception of a more or less flat week a few weeks ago.


I have had a run of incredible timing with regard to the discretionary component of my trading, but very poor execution. I've left a lot of money on the table, but done very well none-the-less.

I am now up 22% on the year, with about 10% of that coming over the last three weeks.

I have recently injected additional trading capital into my account, which has left me only 16% down from where I would be if I hadn't blown up in May (or nearly blown up).

However, on an absolute dollar basis I only have 30% of the profits I had back in may.

So, I would sum it up this way:

1) I up 22% on the year, which is a decent yield and particularly good since that all came since May
2) I'm only in a technical drawdown of 16%, which isn't insurmountable anymore (due to capital injection)
3) In pure dollar terms, my profits are still 66% below peak (so the damage I did in may is still real and significant)


Injecting significant capital during the trading year makes tracking performance quite a bit more complex. It will take quite a bit of analysis at the end of the year to understand exactly how profitable my strategies have been, as simply comparing to starting capital at the beginning of the year will give an unrealistic read. (although accurate from a P&L standpoint).


My current stand on the market is neutral to bearish. My market positioning is slightly bearish and at least 50% in cash. I don't expect to make much money over the next week or two, but we will see...
 
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