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Monday, July 1, 2019

Leveraged Portfolio - Results half-way into 2019

With another good quarter we have arrived at the half of the year mark and the Leveraged Portfolio has been a nice surprise, up +34.4% so far. If last year all three components in the portfolio didn't seem to find a way to go up, this year it has been the other way around and all three vehicles have gone up nicely.

Even during the May sell-off the portfolio as a whole didn't suffer as much since the leveraged Bonds position (TMF) was acting well as a hedge. For you to have an idea, TMF went up +21% during the month of May alone. Now, last year the bonds hedge didn't work very well as bonds went down with the markets. So, this continues to be a risky approach and I will continue allocating a small amount to it. Only a $5,000 per year fresh capital addition as the movements are wild.

When back-tested, the triple leveraged portfolio's best year was +52.7%. The Avg annual return was +25.15% with a Standard Deviation of 19.45. This means that there is a 68% chance that the return in any given year will be between +5.7% and +44.6%  and a 95% chance that the annual return will be between -13.75% and +64.05% (These numbers change as the years go by and need to be re-calculated). Obviously these are very wide ranges. Not many people can live with such uncertainty in the final outcome. But even though the ranges are wide, they point more favorably to the upside. There is a very small chance to end the year above that upper statistical boundary of 64.05% but who knows. In any case there is not much we can do: markets will be markets. All that was on our hands: the research, the tests, the studies, all that hard work has been done. Now, now it is the toughest part: patience and discipline to follow the approach for the years to come.


For more information on the Leveraged Portfolio Approach read the Volatility and Leveraged Instruments to Lazily beat the markets series

For the results page after going live with this idea, consult the Leveraged Portfolio Results page.

Go to the bottom of this page in order to see the Legal Stuff

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