Nick Radge – Daily Journal

[Nick Radge]

I really have no thoughts on inflation Tim. My opinion is that it’s currently controlled but in the coming years will start to move higher again. It’s really only a major issue if it starts accelerating exponentially.

[TrentRothall]

Tim Strickland wrote:

good results for this month Nick. I noticed you brought up the Hedge tool to category 4 from a 3. I was curious of your thoughts about inflation in the US. I am a little concerned with the crazy spending we have started to do, that this will effect inflation quite a bit. Luckily we all have strategies to deal with this sort of thing but would you suggest doing anything further?

I have zero knowledge about the causes of inflation or possible ways to overcome it, what are the options if you think inflation is going to start becoming a issue? Obviously holding a lot of cash is going to be a bad thing but what else?

[TimothyStrickland]

I know enough about economics to understand some of the drivers but certainly not enough to make recommendations from a macro standpoint.

Cash is typically a bad idea to hold onto for long periods of time “in general” because inflation will dilute it. I usually keep a sizeable amount of cash on hand for emergencies but during periods of high spending from a government (which is one of the main drivers of inflation), I try to keep cash on hand low and put more money in assets.

Like Nick said, inflation isn’t a huge problem until we get to very high which I believe is in the double digits. My concern is that double digits might be possible with the US economy opening back up for business (People were holding on to cash during a pandemic which can artificially lower inflation for a time), the combination of the large amounts of proposals of spending that the current administration has planned and continued low interest rates(both of these can increase inflation). With that said, all of this needs to get by congress etc which I don’t believe will happen, but who knows. Also, we don’t know how much cash people were holding onto, so lots of unknowns. Luckily the government can combat high inflation also, via increasing interest rates as Paul Vocker did 1979.
https://www.washingtonpost.com/local/obituaries/2019/12/09/c744d596-1468-11e1-9048-1f5352187eed_story.html

[TrentRothall]

Thanks for that Tim, i’ll do some more digging for some info. Cheers

[JulianCohen]

Trent the main “safe” areas in inflationary times are physical assets, as they increase in price and are worth more than the cash it took to buy them.

Gold is a standard fallback, historically speaking. Also borrowing money to buy assets is a good idea, economic theory speaking. Although interest rates might be high, the cash you borrowed initially is worth less, and the asset you bought with it is worth more, so although it might look a bit nuts to be borrowing money at say 10% interest, if that’s what the banks are charging at that inflationary time, the house prices will accelerate more in the inflation, so that outweighs the interest costs…in theory

Don’t forget an economist is someone who will explain to you tomorrow why what they forecast yesterday didn’t happen today.

[TimothyStrickland]

lol Julian, I like your analogy about economists and it is sadly very true. I learned enough so that I could at least understand what’s going on in the world.

At one point I was working on an economics degree because I thought it would help me understand the market better. However, very early in the classes, I asked one of the top professors at my college if he trades the market or not. He said, I got no idea how that stuff works. That’s when I realized it was all theory and no practical application (I switched my degree to Computer Science shortly after).

[JulianCohen]

It should be a requisite on the school curriculum…personal finance, as in how to budget and run your personal banking, and also something about the stock market.

But then I guess what do they teach? Random walk, 60/40, value investing etc etc….

[Nick Radge]

May 2021

ASX
Growth Portfolio: -2.30%
WTT: +3.08%
ASX Momo: +2.26%

US
HFT: -5.10%
US Momo: +4.86%
MOC: +13.75%
DTVI: -0.41%

May marks the 8th consecutive profitable month for the MOC system. The change in portfolio construction and position sizing really is starting to get some legs.

The Growth Portfolio continues to disappoint so will start spending some time on it to get it back on target.

[KateMoloney]

Hi Nick,

Silly question, what are the MOC and DTVI strategies?

[Nick Radge]

MOC is my “Market On Close” strategy, also known as my Day Trade Strategy.

DTVI was the original name I gave to my Trade Long Term Premium Portfolio.

[Nick Radge]

June 2021

ASX
Growth Portfolio: +0.23%%
WTT: +2.68%
ASX Momo: +5.03%

US
HFT: +2.20%
US Momo: -3.08%
MOC: -3.92%
DTVI: +8.45%

[WENKIT LUI]

Hi Nick,
Not sure if this is the right thread, but I’ve just calculated my capital gains for FY20-21 and I’ll have to pay ATO a significant amount…which I’m not complaining about because it means my systems had performed well
I was listening to one of your old podcasts on Better System Trader about trading for a living, and one of the things you mentioned that it’s not a good idea to trade for a living, is that modelled system performance (compounded) do not account for the tax impact…which in Australia is quite significant.
So, a quick question about modelling the impact of tax on backtesting system performance, is there a function within AmiBroker that can do this or is there a back of the envelope method that you use?
Many thanks,
Kit

[Nick Radge]

Hi Kit,
I’m not aware of any Amibroker function that can model taxation.

You could export the backtest data as daily equity changes, then manually deduct tax at the prescribed intervals and recalculate system metrics.

Nick

[Nick Radge]

July 2021

ASX
Growth Portfolio: +1.22%
WTT: -0.25%
ASX Momo: +5.67%

US
HFT: +3.30%
US Momo: -4.12%
MOC: +1.26%
DTVI: +15.98%

[Nick Radge]

August 2021

ASX
Growth Portfolio: +8.64%
WTT: +3.47%
ASX Momo: -5.06%

US
HFT: -2.50%
US Momo: -0.07%
MOC: +4.62%
DTVI: +6.57%

Growth Portfolio starting to kick along now after making two small adjustments. We’ll keep tracking till year-end before introducing adjustments to clients.

US Momentum undertaking a change starting this month as well. We’re moving from a volatility adjusted position sizing to a fixed percentage allocation. This is aligned with our other portfolios and more so to simplify the workload and reduce trading frequency.

[Author]

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