I sold out of PAH and reduced the size of nearly all of my positions to raise cash that will be designated towards a totally different approach to this market during 2016.
Gone are the days when you could depend on the Fed to jolt markets higher. The paradigm has shifted and the central banks favor european equities. Since 2009, I speculated in the market with confidence, knowing stock prices would always be supported and dips would be bought. Over the past two years, extreme oversold conditions were supported; but the momentum that we’ve enjoyed in previous years was absent.
It is my belief that 2016 will represent more of the same, with some potential pitfalls in the mix that might pose as a significant problem for aggressive investors. Because of this belief, coupled with the untenable facts that the Exodus Market Intelligence Platform crushed 2015 with seamless ease, I’ve come to the realization that bold change is needed in my investment approach, one that relies upon my propietary strengths, withdrawing from non-systematic risk and attempting to avoid market risk whenever possible.
What the fuck am I talking about?
I’m selling shit and will be exclusively trading the oversold signals in Exodus.
During 2015, Exodus won 81% (21 out of 26) of the time in overall market oversold mean reversion trades. In a study recently done, an investor with 100k, allocating a tranche of 33k into each OS signal would’ve yielded a 19% return for the year. The holding period for this system is 10 trading days. Risk is mitigated by holding period. Maximum drawdown for the system was 4%, trading SPY. Those gains could’ve been much higher if trading leveraged ETFs or QQQ, naturally.
People have asked me for years “why bother with all of the market noise when you have something that works so great?”
The truth is, I enjoy the daily grind and like picking stocks. But I’m not having fun anymore, dealing with the emotional mine field of a market dealing with economic uncertainty. Therefore, going forward, Le Fly will exclusively trade the OS/OB signals from Exodus, using ETFs or in some cases individual stocks. Trading will become much more disciplined and regimented, with clear lines in the sand defined by holding periods. There will be times when trading will be non-existent, sometimes for months at a time. But it will all be for the better, especially for members of our hallowed halls.
If you enjoy the content at iBankCoin, please follow us on Twitter
“But I’m not having fun anymore, dealing with the emotional mine field of a market dealing with economic uncertainty. ”
No shit…me too. It’s no wonder so many are telling the markets to shove off.
Thank god – some of us have only been advising this for years (extra snark)
will position size be orbital space cannon like when firing at OS signals?
Shorting hot pizza slices here.
Lets see how long this will last… like 2 weeks?
I think 2016 will be the year of the central limit theorem. Abraham de Moivre will be posthumously named Time magazine person of the year.
I believe this is a wise move, Sir Fly. Leverage up and compound at 38% or so annually so Mrs. Fly can put those coffered ceilings in the pantry for no god damned reason.
are we able to get into Exodus if we have a criminal record?
I’ll be signing up in 2016
Selling out of $PAH right before the “Year of William Albert”? I assume the sale is due to your whole-scale portfolio model change rather than anything related to the company itself, correct?
Just locking in prices. An up 200 day is a good time to do it.
Also, is that 19% assuming holding until the end of the 10-day period and selling EOD each time, or does that assume that the investor top-ticks the high point during that 10-day period? Assume the former but hey, this is a buyer’s question.
10 day hold
End of day pricing, which means that slippage works both ways for this study. The execution timing will sway the returns.
would it be dicky to ask for a Exodus annual deal before the end of the year? :-))
very much so (EXTRA DICK-y)
Over bought , over sold signals being followed is the best if you’re serious about banking coins.
I agree and follow it closely.Safe bets = less headaches
Regards
Chuck bennett
Hiya, Lucifer. Always good to see you.
RSI trading has worked just as well as using Exodus (without the costs.) However, Exodus provides a plethora of data that the RSI will never provide. It is quite an impressive program, but for common plebs like me the cost is too high to bare. Using the 9 day RSI has been golden for quite some time now. Of course that is what one would expect in a choppy market (consolidation.) If the market thrusts higher or breaks lower (an actual real move) you will be left holding a bag of shit or missing out on gains. Do you feel like buying this market at even higher prices? Do you feel like getting stuck holding the bag while the fed raises and China going through a hard landing with a debt bubble that is filled with landmines? If oil goes lower, how much geopolitical instability will there be? How much more debt will blow up in our own energy markets? So that is the real question, do you feel lucky punk?
I have been torn between trading the RSI and investing. It would appear as if Le Fly and I have come to the same conclusion. This year has been challenging to say the least with frustration building each month. And I am up big this year. I am going into 2016 with a new system of holding core longs and shorts along with trading the RSI. My beta has fluctuated from -.2 this year to .6 when the market has an oversold signal. My average beta for the year is about .15. Annual return this year of 35%, largest drawdown of 3%, all while not dealing with the fuckery that is this market. Take solace in the fact that no one knows when or how this grand monetary experiment will end, but I have a feeling it will end with fireworks. Get accustomed to slow GDP growth because of the mountain of debt we have taken on. This is no time to be greedy in my opinion. The time for that was 6 years ago when the world was ending.
Next year I will be looking at holding CEF’s, ag shorts again (I have been short this entire year,) writing naked puts and calls, holding core long positions in what I believe to be undervalued companies, maybe dabble in some MLP’s, and trading the 9 day RSI. In regards to RSI trading, it is much easier to trade etf’s than individual companies and it has the added benefit of being safer. I learned this the hard way unfortunately so hopefully no one else has to beat their heads against the wall to learn what I have. I devote .3 beta to each RSI buy and sell signal. Just don’t fool yourself, the RSI or Exodus in no panacea, but it is the closest thing we traders have to perfect. Fear and greed our powerful emotions and that’s all we are really trading.
bless up my nigga
good post
If 459 per annum is a cost “too high to bare”, perhaps you shouldn’t be trading yet.
And your RSI horseshit is nothing compared to our algos, so shut it.
Corrected to – the bulk of Fly’s trading portfolio will be done strictly with exodus. You can’t really expect us to believe you’re not going to be tempted into pinless hand grenades or chinese burritos.