Author Topic: Poor performance of Portfolio value  (Read 21781 times)

0 Members and 1 Guest are viewing this topic.

Offline Gary Stone

  • Administrator
  • *****
  • Posts: 974
  • "Anything can happen."
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 »
On the journey

Offline Richard Ash

  • Newbie
  • *
  • Posts: 5
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

  • Administrator
  • *****
  • Posts: 974
  • "Anything can happen."
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 »
On the journey

Offline Richard Ash

  • Newbie
  • *
  • Posts: 5
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. 

Offline JohnR

  • Jr. Member
  • **
  • Posts: 82
Re: Poor performance of Portfolio value
« Reply #34 on: 01/03/2020, 03:53:40 PM »
G'day posters,
Due to the largish hole I have found my self in recently (since Dec to Late Feb 2020) and due to the small 'number sample' of trades this represents, and due to my stupid ability to fall in love with stocks and thusly ignoring system signals and my own signals resulting in 3K to 6K losses when the market just took a nose dive headlong into COVID-19 panic and fear market correction.
I would like to hear back from the earlier posters as to how their portfolios have fared in the subsequent years since the posts were made (2013). And what lesson you derived from the past 6 years experiences with SPA3 Trader.

I ask because right now I feel sick in the stomach as to the situation I have found myself in, and might not get out of anytime soon unless I sell everything at large loss and just cop it on the nose, and wait for better market conditions.

The problem I have found with this system is getting set at a) Action price and b) picking the better yielding stocks.
I mostly find myself chasing price upwards after the order has sat in place for a few days, only to realise price aint coming back to fill my order, then to enter on highs to cop a loss as price retraces, this doesn't help with the systems built in lag either. The only way I seem to get the trade right is to follow intraday data feeds to charts (full time job) to watch for anything fishy going on, but this also has its pitfalls as micro-price action can whipsaw you out.

As for (b) picking better yielding stocks, I tending to think is a fruitless effort as someone with large amount of funds to draw on can move a single stock more so than your average punter can, so trying to pick the best performing stocks from the scan in the following few days is a dry well as price action can happen anytime after the signal up to 2 weeks later in other words random.

Would be very interested to hear back from you re your experiences,
Thanks.

Offline PeterM

  • Newbie
  • *
  • Posts: 12
Re: Poor performance of Portfolio value
« Reply #35 on: 09/03/2020, 01:27:49 PM »
Hi John
I can sympathise with you on that one.  Since my original post when I was only paper trading back in 2013 a lot of water has passed under the bridge.  I had since then begun trading with real money and it sure is different when your own cash in on the line.  I will admit that Ive sometimes made my own calls on buys and sells on stocks in the Sharewealth pool.  Mostly Ive been caught out doing that and I have learnt my lesson and put more trust in the system.  It is difficult when you cop a 10%+ drop in the stock value and need to sell there are a few were Ive said no way can it go down even more it will recover and then I will sell.  Well it did and was caught out. :mad:  I still have those thoughts of course but now I put the trust in the system and if it says SELL even if it is painful on the day then you SELL.  Being clobbered by the market at the moment if you are in would be painful.  The coronavirus seems to be a once in a life time event (I hope) and I think it will get worse over the next year I just hope that the people working on a vaccine get it done quickly.  The positives for all of us in this system are that the stocks are still good companies and they will recover and when the market eventually picks up we should be ready.  :thumb:
It is a journey that Im sure most of us have been through and as Gary says all the time you need to have a plan stick to it and put faith in the system.