December 8, 2020
We continue to look forward to 2021 and work to sync up with the markets for January during this unusual time in our history. The markets are always changing but election uncertainty and coronavirus are outliers.
The latest results for the Top 51 are shown in the video. This setup is down about 10k this month and in a normal drawdown. The drawdown curve for this setup is one of the most “regular” and “uniform” portfolio drawdown curves I have seen.
The conservative approach is to wait and see how well it performs out of sample. Waiting to see if this “bounces and makes new equity peaks and then entering on another drawdown would provide us with more confidence.
The aggressive approach is to jump in here at the current drawdown levels.
Either approach can work but when looking at a new setup for the first time, watching a cycle of drawdown to equity peaks after it has been developed (out of sample) is one approach. Considering the fact that the 51 strategies were already in the All Strategy Access Portfolio can provide some confidence as well for a more aggressive approach of starting during a drawdown.
There is never any absolute certainties in trading though – so managing risk is key.
Additionally, we look at how 7 of the new strategies work in a portfolio of 51 existing strategies.
From Last Week December 1, 2020
A few days agao, I went into “the zone”, (research mode) and opened up the Portfolio Calculator for All Strategy Access Portfolio. I wanted to create a short list based on the strategies we have used, without including any of the new strategies.
It is easy to be skeptical of brand new strategies.
I quickly cut the strategies I like the least for 2021 and kept the strategies I liked the most. Some of the strategies I kept haven’t performed that well in 2020 but I still like them for 2021 based on anticipated market conditions.
The list was narrowed to the Top 51. The drawdown curve is very uniform and cyclical with quick recoveries with a max drawdown of only 17k.
The return over drawdown is 12:1
The first day of December, shows a loss of around 5k. If you paused trading and are waiting for a low risk entry, one of the best ways is to start again is to wait for a portfolio like this and start on a drawdown. Stopping on a drawdown and starting a new portfolio at an equity peak will increase your risk.
This portfolio has rapid drawdowns with quick recoveries.
We continue to research the strategies in December and the conservative approach that is recommended is to wait to see positive performance in December and then start a new portfolio on a drawdown.