SWS Forum

Products => SPA3 Investor => Topic started by: PeterM on 19/10/2018, 05:00:45 PM

Title: ASX EW Portfolio performance
Post by: PeterM on 19/10/2018, 05:00:45 PM
We dodged a bullet today on BHP it seems.  Closed at 33.10 - but it was under 33.03 trailing stop for most of the day.  I was watching this plus others today - in particular ORG that we got a Sell signal today.  Another that got smashed and losing more money in my portfolio. Getting fairly sick of every signal that I have received since I -rejoined back in Feb/March giving me a loss.  Running out of enthusiasm and money  :frown:     
Title: Re: ASX EW Portfolio performance
Post by: Gary Stone on 21/10/2018, 01:03:01 PM
Peter,
We get tested the most when we experience drawdown. It is the one thing that tests all of us the most, despite us all having different levels of ability to handle it.

Which is why I decided to make Session 1 of the Back to Basics online coaching sessions on this very subject – DRAWDOWN. I trust that you have watched Session 1 and the other Sessions.

Nearly all the answers to what you are feeling are contained in that Course. And most of those answers are psychological in nature. https://learn.sharewealthsystems.com/ (https://learn.sharewealthsystems.com/)

However, it does dismay me when our customers don’t get the performance they expect, or achieve what the system can and does deliver.

A number of points:
1.   Looking at performance over a small sample size or a relatively short period of time does not help us when it comes to investing.
       
        a.    Perhaps you have heard me say many times that investing (of all kinds) is a 20-year plus exercise, not a 20 day, 20 week or 20 month exercise.
       
       b.   In the Back to Basics Course you will also hear me say that short-term volatility and drawdown is the BIGGEST detractor from our Long-term Plan.

2.   There is no doubt that investing on the ASX has been quite tough since Feb this year. Indeed, the SPA3 Investor ASX EW Stocks public portfolio, which I execute with real money, is down -3.68%. And all of that loss has occurred in just the last 2 weeks.
       
        a.   No system outperforms its benchmark ALL the TIME and OVER EVERY PERIOD. In backtesting or live trading.
               
                 i.   In the long-term SPA3 Investor research there are many occasions that over a few months a SPA3 Investor portfolio performs below (and above) the main benchmark – the Accum or Total return Index.
       
       b.   This is why we shouldn’t expect SPA3 Investor to outperform over any and every period that we choose to measure it? 
                 i.     Read and reread Mark Douglas’s 5 Fundamental Truths and 7 Principles of Consistency – can Google them or do the Back to Basics Course.


That said, allow me to use the real-money ASX EW Stocks Public Portfolio as an example (you can download the TradeMaster portfolio file into your TradeMaster from within TradeMaster).

Please see attachment for the equity curve vs the ASX200 Accum Index.

Since February 1st this year, here are some of the stats.

There have been 33 Closed trades; 27 Losers, 6 Winners, 9 Max Consecutive Losses with a Payoff Ratio of 2.8. Over this period there is a negative Expectancy.

So, what should I do? Give up? Re-research the SPA3 Investor Edge? Research a new Edge?

Perhaps have a bigger picture perspective on the current edge?

If I do I find that this real-money publicly executed portfolio has outperformed the ASX200 Accum Index for the last 2.75 years, that is, from the get go and still is.

Which is what it did with the researched equity curves from 2000 to the end of 2015 and then SPA3 Investor Public Portfolio starts from there...

I’m sure over the 2.75 years from 1 January 2016 you can very easily see periods with the naked eye on the equity curves when the $XJOA has done better than the SPA3 Investor equity curve and other times when the blue equity curve has done better, even much better, than the $XJOA.

To have a mindset that your approach will perform worse forevermore just because it has over a certain short-term period, is not helpful to what you are trying to achieve. Not just with investing, but EVERYTHING in life.

When we go through a tough patch with anything in life, we can choose to magnify the negatives, or we can at the very least choose to have a big picture perspective where we look at both positive and negative periods, have a neutral mindset, and look to what we need to do to improve (as per the last Session, Session 7, in the Back to Basics Course).

Best Regards,
Gary