Post by Admin on Aug 23, 2021 8:50:32 GMT -5
Basically: my generic system(see link) looks for the best 5 funds with risk-adjusted performance, keep changing them about twice annually using momentum, and each fund must perform well. The idea is to be mostly in the right category + achieve similar performance of that category with lower risk/volatility
Highlights: of my investing style development. As you can see, my funds are mostly in top categories.
1) 1995-2000: Mostly(90+%) invested in US Total stock index. The rest in the SP500 growth.
2) 2000-2010: My system was born. Invested mostly in US Value, some small cap and some international. Performance about 9% annually, beating the SP500 by 10% annually.
3) 2011-2017: Preparing for retirement and changing my asset allocation gradually to more bonds. Invested mostly in large cap growth + bonds. The stocks portion was similar to the SP500 with lower volatility, the bond portion was a lot better using mostly PIMIX which grew to over 50% of my portfolio.
4) 2017-current: My system changed to only 2-3 best shorter-term risk-adjusted funds, keep changing more often using momentum+timing. Invested mostly in bond funds (OEFs), mostly in Multi sector and HY Munis funds. The results are excellent and beyond our goals.
Details:
I started investing in 1995. I followed the book Random Walk theory(link)
1995-2000 100% in US stock and more than 90% in US total stock index.
2000: The market wasn't doing well. I created my system based on 3 Buffet’s rules (read the other thread).
2000-2010: Use 5 funds at 20% each. Core(60%): I used SGENX(changed later to SGIIX), FAIRX, OAKBX) about 7-9 years. Explore(40%): I traded about twice annually, the other two. I made about 9% annually while the SPY lost about 1% annually (link) and my portfolio SD(volatility) was lower too.
You can also see how SC,EM made much more than the SP500 in years 2000-2010 for SP500(SPY) vs VSMAX(Small cap index) + VEIEX (EM index) (link).
2011-2017: Stock funds. I used mainly US large cap growth funds such as PRBLX, AMAGX and JAVLX(Janus twenty moved later to JACTX) and PRWCX(flexible allocation).
2011: I prepared for retirement and have changed my portfolio gradually to more bonds. I learned a lot more about bond funds and used PIMIX in the next 7 years. I made another important rule, I don't have to invest the same % in each fund. Furthermore, I can go as high as 50+% which is what I have done with PIMIX, starting at 10% and increasing to over 50%.
2013: Retirement looked closer. I added 2 new rules based on quicker market movements, sell any stock fund if it loses more than 6% from last top and sell any bond fund with more than 3% lose. This means, sell to cash and wait for the next entry to follow within days-weeks. My numbers show, I was in the market over 90% of the time and missed all the big meltdowns. I was a lot more interested to reach my goals and retire on time. I also started to trade more often based on what has been worked lately using momentum.
2017: The plan was to retire in 2017 but after looking at Obama healthcare disaster (private insurance premiums were 3 times more than before) I decided to postpone it by another year. I tweaked my system again. Since 2017 I have used mainly bond funds and traded risky stuff (stocks,CEFs,GLD) only for hours to days and back to bond OEFs. Momentum+timing are used much more with short-term best risk/reward funds since I deal mostly with bond OEFs. I also cut the number of funds to 2-3, after all, "diversification is a protection against ignorance" and I can't find more than 2-3 funds anyway.
Let's look at 2011-2017 and assume 60/40 portfolio. Portfolio 1: VBIAX 60/40 (SPY/BND indexes). PORTFOLIO 2(my style): 30% in each PRBLX+ AMAGX + 40% PIMIX. Portfolio 3: diversified = 30% SPY + 10% each in IWM,EEM,VXUS + 40% in excellent bonds DODIX. The results(link) show that my portfolio risk-adjusted performance was the best (SEE SHARPE).
2018: retirement after 23 years of investing. I reached my target, my portfolio was 25+ times our annual expense, not including social security. The goals are stricter (because I made it already so why take unnecessary risk): make at least 4% annually (including inflation of 2.5-3%), SD < 3, never lose 3% from any last top, be positive annually. "Secret" goal, beat VWIAX. I still want to make 6% average annually
As of 12-31-2021: my portfolio size reached 40+ times our annual expense, I started taking social security in 04/2022 and Medicare on 05/2020. The results for the 3 years (2019,2020,2021) are much better than my goals.
My portfolio annual average performance for 3 years was 14.5% and SD = 2.1 for 1,3,5 years. That means Sharpe Ratio about 5. You will not find mutual funds that have done anything close to that. The highest Sharpe mutual funds are under 3, some under 2 and many under 1.
You can see below a copy of my portfolio + SD
My portfolio beat VWIAX(40/60) too for performance, SD and Sharpe Ration
Remember, my portfolio is usually at 99+% bonds and I only trade risky stuff (stocks, ETF, CEFs) several times a year. Basically, my performance comes from 90-95% bond OEFs(not leveraged CEFs) and the rest in stocks(trading).
As of 12-31-2022: In the last 5 years, I never lost more than 1% from any last top.
Q4/2018: SP500 lost about 20%, I lost less than 1%.
03/2020: SP500 lost about 34-35%, I sold everything before and posted about it in several sites, see below what I said at the Fidelity board and kept trading very short term and made money each time until the end of March 2020 when I started buying back. I made money every week in 2020 except one week on 08/2020 where I lost -0.3%.
2022: My portfolio is positive for 2022, I made 9.7%. See the next post in this thread for details.
As a flexible investor, I kept tweaking my system and adjust it to market conditions, age and goals. I got much better at selling to cash which I do much faster than the above 3-6% max loss. It's a proprietary, I use several indicators + market analysis. I don't depend on any "expert". One of the indicators is VIX, when VIX is at 30-35 I think about selling, VIX > 40 = selling. There is more to it. Basically, I'm in the market over 90+% invested at 99+%. I'm out days to several weeks and hardly in cash. The key, for me, is the ability to be fully invested most times and be in cash only in very high-risk markets.
The key of course is to write down your system and execute it under pressure. I don't see any pressure when you have enough. Suppose I made a "mistake" and I stayed in cash 2-3 weeks too long, it had negligible effect on my portfolio. What most don't realized that missing the worse days is much better than the best days. Markets go down much faster. See below.
Other considerations: I was laid off 3 times in the last 16 years of work. I also got a major pay cut on my first laid off. Yearly salary increases were modest, at 3-4% in the middle of my career, but only 0-2% later in my career. I don't have a pension or other resource of money. I will not get inheritance. Basically, the above accomplishments started from zero investments, saving monthly thru 401K (when I worked) and achieving good risk-adjusted performance being at the right place most times.
Highlights: of my investing style development. As you can see, my funds are mostly in top categories.
1) 1995-2000: Mostly(90+%) invested in US Total stock index. The rest in the SP500 growth.
2) 2000-2010: My system was born. Invested mostly in US Value, some small cap and some international. Performance about 9% annually, beating the SP500 by 10% annually.
3) 2011-2017: Preparing for retirement and changing my asset allocation gradually to more bonds. Invested mostly in large cap growth + bonds. The stocks portion was similar to the SP500 with lower volatility, the bond portion was a lot better using mostly PIMIX which grew to over 50% of my portfolio.
4) 2017-current: My system changed to only 2-3 best shorter-term risk-adjusted funds, keep changing more often using momentum+timing. Invested mostly in bond funds (OEFs), mostly in Multi sector and HY Munis funds. The results are excellent and beyond our goals.
Details:
I started investing in 1995. I followed the book Random Walk theory(link)
1995-2000 100% in US stock and more than 90% in US total stock index.
2000: The market wasn't doing well. I created my system based on 3 Buffet’s rules (read the other thread).
2000-2010: Use 5 funds at 20% each. Core(60%): I used SGENX(changed later to SGIIX), FAIRX, OAKBX) about 7-9 years. Explore(40%): I traded about twice annually, the other two. I made about 9% annually while the SPY lost about 1% annually (link) and my portfolio SD(volatility) was lower too.
You can also see how SC,EM made much more than the SP500 in years 2000-2010 for SP500(SPY) vs VSMAX(Small cap index) + VEIEX (EM index) (link).
2011-2017: Stock funds. I used mainly US large cap growth funds such as PRBLX, AMAGX and JAVLX(Janus twenty moved later to JACTX) and PRWCX(flexible allocation).
2011: I prepared for retirement and have changed my portfolio gradually to more bonds. I learned a lot more about bond funds and used PIMIX in the next 7 years. I made another important rule, I don't have to invest the same % in each fund. Furthermore, I can go as high as 50+% which is what I have done with PIMIX, starting at 10% and increasing to over 50%.
2013: Retirement looked closer. I added 2 new rules based on quicker market movements, sell any stock fund if it loses more than 6% from last top and sell any bond fund with more than 3% lose. This means, sell to cash and wait for the next entry to follow within days-weeks. My numbers show, I was in the market over 90% of the time and missed all the big meltdowns. I was a lot more interested to reach my goals and retire on time. I also started to trade more often based on what has been worked lately using momentum.
2017: The plan was to retire in 2017 but after looking at Obama healthcare disaster (private insurance premiums were 3 times more than before) I decided to postpone it by another year. I tweaked my system again. Since 2017 I have used mainly bond funds and traded risky stuff (stocks,CEFs,GLD) only for hours to days and back to bond OEFs. Momentum+timing are used much more with short-term best risk/reward funds since I deal mostly with bond OEFs. I also cut the number of funds to 2-3, after all, "diversification is a protection against ignorance" and I can't find more than 2-3 funds anyway.
Let's look at 2011-2017 and assume 60/40 portfolio. Portfolio 1: VBIAX 60/40 (SPY/BND indexes). PORTFOLIO 2(my style): 30% in each PRBLX+ AMAGX + 40% PIMIX. Portfolio 3: diversified = 30% SPY + 10% each in IWM,EEM,VXUS + 40% in excellent bonds DODIX. The results(link) show that my portfolio risk-adjusted performance was the best (SEE SHARPE).
2018: retirement after 23 years of investing. I reached my target, my portfolio was 25+ times our annual expense, not including social security. The goals are stricter (because I made it already so why take unnecessary risk): make at least 4% annually (including inflation of 2.5-3%), SD < 3, never lose 3% from any last top, be positive annually. "Secret" goal, beat VWIAX. I still want to make 6% average annually
As of 12-31-2021: my portfolio size reached 40+ times our annual expense, I started taking social security in 04/2022 and Medicare on 05/2020. The results for the 3 years (2019,2020,2021) are much better than my goals.
My portfolio annual average performance for 3 years was 14.5% and SD = 2.1 for 1,3,5 years. That means Sharpe Ratio about 5. You will not find mutual funds that have done anything close to that. The highest Sharpe mutual funds are under 3, some under 2 and many under 1.
You can see below a copy of my portfolio + SD
My portfolio beat VWIAX(40/60) too for performance, SD and Sharpe Ration
Remember, my portfolio is usually at 99+% bonds and I only trade risky stuff (stocks, ETF, CEFs) several times a year. Basically, my performance comes from 90-95% bond OEFs(not leveraged CEFs) and the rest in stocks(trading).
As of 12-31-2022: In the last 5 years, I never lost more than 1% from any last top.
Q4/2018: SP500 lost about 20%, I lost less than 1%.
03/2020: SP500 lost about 34-35%, I sold everything before and posted about it in several sites, see below what I said at the Fidelity board and kept trading very short term and made money each time until the end of March 2020 when I started buying back. I made money every week in 2020 except one week on 08/2020 where I lost -0.3%.
2022: My portfolio is positive for 2022, I made 9.7%. See the next post in this thread for details.
As a flexible investor, I kept tweaking my system and adjust it to market conditions, age and goals. I got much better at selling to cash which I do much faster than the above 3-6% max loss. It's a proprietary, I use several indicators + market analysis. I don't depend on any "expert". One of the indicators is VIX, when VIX is at 30-35 I think about selling, VIX > 40 = selling. There is more to it. Basically, I'm in the market over 90+% invested at 99+%. I'm out days to several weeks and hardly in cash. The key, for me, is the ability to be fully invested most times and be in cash only in very high-risk markets.
The key of course is to write down your system and execute it under pressure. I don't see any pressure when you have enough. Suppose I made a "mistake" and I stayed in cash 2-3 weeks too long, it had negligible effect on my portfolio. What most don't realized that missing the worse days is much better than the best days. Markets go down much faster. See below.
Other considerations: I was laid off 3 times in the last 16 years of work. I also got a major pay cut on my first laid off. Yearly salary increases were modest, at 3-4% in the middle of my career, but only 0-2% later in my career. I don't have a pension or other resource of money. I will not get inheritance. Basically, the above accomplishments started from zero investments, saving monthly thru 401K (when I worked) and achieving good risk-adjusted performance being at the right place most times.
