Weekend Review: The Strategy Is Not The Issue Here, Dude!


lebowskiI’ve been sensing an interesting evolution in my trading psychology over the past few weeks.

The simple breakdown is that I have realized that any of the strategies I have been playing with have a better edge than flipping coins or throwing darts. The reason for their success or failure will have far less to do with the systems themselves than my discipline in following them.

I also realized that “the discipline to follow your system” isn’t limited to following the rules of the strategy. I’m pretty good at that. That discipline part also means showing up everyday to monitor the strategies. It means sticking to trading them for more than a month or so. It means I can get bored and move on to a newer, shinier system next spring.

All four of these systems have a decent chance of making money (minus the commission drag of them being such small accounts). All I have to do is stick with them when doing so becomes tough. At least that’s what I’m thinking this week.

Here is how those strategies are looking as of this weekend:

Weekend IBD Trend Following

The Weekend IBD Trend Following System had a great week. Most of the stocks in the portfolio are profitable positions, and the overall return has climbed its way back to just about even. The biggest winner in the portfolio so far has been DDD, which is currently up 21.91%. Some of the other big winners have been WX, URI, JAZZ, AMBA, and QIWI.

Of course, with a portfolio of 20 stocks and a mechanical system for selecting them, I haven’t really had any emotional attachment to these positions at all. This has given me a very relaxed and detached outlook on the portfolio.

Here is what that portfolio looks like this weekend:


One thing that stood out to me this week was something that Nick Radge pointed out to me when I asked his thoughts on trading his Weekend Trend Trader strategy on a universe of IBD 50 stocks. He suggested that a universe of growth stocks would likely increase the overall volatility of the strategy. That is exactly what happened as the IBD strategy switched from underperforming the S&P strategy to dramatically outperforming it over the past week.

Weekend S&P Trend Following

The S&P Portfolio fared much worse than the IBD Portfolio this week. Overall, the strategy is down 3.06% since its start date. That’s better than where it was last week, but it didn’t make the dramatic jump that the IBD Portfolio did this week. It will be very interesting to see how these portfolios compare over the next few months. I believe that the IBD Portfolio will outperform the S&P Portfolio in the long run, but it will be interesting to see if and how that actually happens.

The S&P Portfolio triggered the selling of two positions this week. The order to sell SUNE was established last weekend, and that sale went through on Monday morning. Then, FCN gave us another sell signal on Thursday night, which went through Friday morning. Those two stocks represented a large portion of the dead weight that has been holding down this portfolio.

After the great week that we had, it wasn’t surprising that there were a significant number of stocks that were eligible to fill the two newly open slots in the S&P Portfolio. The top candidate was DDD, but since it was already owned I had to move on to the next two options. That means the S&P Portfolio will be taking positions in ACXM and LSI on Monday morning.

Looking at the chart of LSI made me worry. The stock is only trading around $10, and had a huge gap up last week. Of course, my opinion means nothing to this strategy, so I should just keep it to myself. I might consider adding a minimum stock price to the strategy so that I can avoid dealing with cheap stocks.

Here is what the S&P Portfolio looks like this weekend before making its Monday morning purchases of ACXM and LSI:



Ivy Ten Portfolio

A good week for stocks means that the Ivy Portfolios, which are both heavily invested in US equities, should have performed very well. That is exactly what we saw with the Ivy Ten Portfolio. Two of its three positions climbed into positive territory for the month, and the overall portfolio is only down 0.55%.

Since the Ivy Portfolios are only adjusted at the beginning of each month, there were no transactions or signals to watch for this week. That is what makes this strategy so ideal for the part-time trader.

Here is what the Ivy Ten Portfolio looks like at the moment:


Ivy Twenty Portfolio

While the Ivy Ten Portfolio is invested in broad US equities ETFs, the Ivy Twenty Portfolio drills that down a bit further and is invested in midcap US equities ETFs. Because of the extra focus, the Ivy Twenty Portfolio did even better than the Ivy Ten portfolio this week. All three of its holdings are in positive territory, and it has climbed up to an overall return of 0.44%.

Just like the Ivy Ten Portfolio, there were no signals or transaction to be made with the Ivy Twenty Portfolio. Here is what it looks like this weekend: