Author Topic: Poor performance of Portfolio value  (Read 20058 times)

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Offline Gary Stone

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Re: Poor performance of Portfolio value
« Reply #30 on: 17/04/2014, 01:35:25 PM »
David and all,

Agree with all of your post. Great material. Thank you.

In summary:
1. PERSPECTIVE over a large sample (Law of Large Numbers) is required to put short term outcomes into context. Perspective helps with and is a huge part of psychology, confidence, belief etc. Perspective is gained from viewing the Simulation research in the September 2012 White Paper.

2. Use the Risk Objectives section of your Trading Plan to state your absolute and final "pain barrier" which will be the 'cease trading' or 'shut off value' level for you. But be realistic with this and set it using the September 2012 White Paper. Detailed research such as this is what helps set realistic boundaries.

Lastly, please watch the eUGM that I did last week. It will greatly assist with gaining PERSPECTIVE. http://www.sharewealthsystems.com/forum/index.php/topic,2765.msg13434.html#msg13434

Regards
Gary
« Last Edit: 17/04/2014, 01:53:09 PM by Gary Stone »
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Offline Richard Ash

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Poor performance due to random selection of stocks
« Reply #31 on: 10/08/2017, 05:51:15 AM »
My performance on SPA3 for NASDAQ during the most recent LMR period has been very subpar--returns of roughly -10% vs. the index itself returning slightly positive.  My question relates not so much to the emergence of winners vs. losers or long term performance of the SPA system, but rather to "bad luck" in the particular selection of stocks.  My portfolio has consisted of roughly 16-18 stocks during this period and virtually all of them have either suffered a loss and exited or are in an ongoing loss position now.  This wouldn't bother me so much if the NASDAQ itself was in a similar loss position, but it is not; rather, it has stayed neutral to slightly positive. 

I am very much tempted to sell my current portfolio and do a "redraw" if you will, the logic being that perhaps I have been unlucky with my original draw of securities.  In my mind, this is a different question to the one I have seen discussed frequently about being patient during periods of drawdown, waiting for the later emergence of winners vs. experiencing earlier losers, etc.  I am open to suggestions or refutations if anyone wishes to reply.  Thanks

Offline Gary Stone

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Re: Poor performance of Portfolio value
« Reply #32 on: 10/08/2017, 11:25:37 PM »
Richard,

I manage the SPA3 NASDAQ Public Portfolio, as we call it. This portfolio is executed using an account with Ally Invest (previously MB Trading and TradeKing). All 590 trades over the life of the portfolio have been executed there.

This portfolio can be downloaded into your instance of TradeMaster by clicking File, Portfolio Tools, and then selecting 'SPA3 NASDAQ Portfolio' and clicking [Download & Import Portfolio].

I will use the SPA3 NASDAQ as the basis for my answer to your question.

Firstly, I don't believe that it is your specific stock selection, with the number of open positions that you average over the most recent Low Market Risk period, that is the issue.

I will ask what % Risk you are using for your position sizing although I don't think that it is the difference in this instance.

SPA3, as do all methodologies, get out of sync with the market. That said, the period since Dec 8th 2016 to current has seen a stark divergence between the SPA3 NASDAQ public portfolio equity curve and the NASDAQ Composite index.

At times, this can be explained by SPA3 NASDAQ performance, and SPA3 ASX for that matter, being more closely aligned to small cap indices, or the $SML (S&P500 Small Cap) index. Whilst this index has also been beaten quite markedly by the NASDAQ Comp & 100, and this can possibly be part of the explanation as to why SPA3 NASDAQ has performed poorly over the period, SPA3 is out of sync with the $SML index too.

These periods of being out of sync do occur and as I place trade after trade in the SPA3 NASDAQ public portfolio I look forward to when SPA3 will again align with the market. In fact, periods also occur when being the out-of-sync occurs in favor of the SPA3 equity and out-performance occurs.

The SPA3 NASDAQ public portfolio is down 13.95% since Dec 8th 2016.

Whilst it is no consolation it does explain that you are not on your own, that it is not your specific stock selection, and that SPA3 NASDAQ is more than likely experiencing a period that is quite badly out of sync with the broader market.

It also helps explain that the rise in the NASDAQ may not have been as broadly across the whole  market as other rising periods.

I trust that this helps explain the performance that you are experiencing.

Regards
Gary
« Last Edit: 11/08/2017, 03:47:48 PM by Gary Stone »
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Offline Richard Ash

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Re: Poor performance of Portfolio value
« Reply #33 on: 10/08/2017, 11:59:44 PM »
Gary, thanks for the reply.  I understand your explanation, though as you say it is little consolation at this point, realizing the rather large hole I need to dig out of going forward.  I am using a risk of 0.8% and am confident I am applying the procedures correctly.  It is just disappointing to be at what appears to be the less desirable part of the range of possible outcomes in terms of drawdown, winning percentage, etc.  We'll see how things go for the next few months.