Paul’s Journal

[PaulBailey]

Quiet month – didn’t activate ETF strategy as it turned out – spent the month watching.

Which turned out OK because the strategy was -5.0% for the month.

About to dive in though.

[PaulBailey]

Just to note I turned my US ETF strategy on at the start of November.

[PaulBailey]

OK,
so it’s two years since I embarked on this journey and I feel like I’ve had a significant month.

Been following the discussion here – and following Nick on Twitter – there are often a lot of interesting little tidbits that come up there. Have spent a lot of time thinking further about what I want to get out of trading.

I’ve traded my own system that Nick assisted with during the course – in Amibroker; and also Nick’s WTT. But it’s been a consistently difficult market for that type of system in the Australian market. So I decided to think for a few months……

For me the goal relates to building up an investment account outside of superannuation and real estate investments.

Nick’s commentary on various flavour variations of all weather ETF strategies lead to me creating my own. I have aimed to have a similar level of drawdowns to the broader market whilst focusing on a greater rate of return.

I have landed on a 6 ETF US based strategy consisting of the following:

TLT – a long dated US Treasury Bond ETF
VIG – Vanguard dividend appreciation ETF
VNQ – Vanguard real estate index ETF
PDBC – Invesco optimum yield diversified commodity ETF
GLD – SPDR Gold trust
QLD – Proshares ultra QQQ 2x leveraged ETF

In backtesting, my strategy has had one negative year in the last 10 (2022) with months ranging from -16.5% to +19.9% although the vast majority of months are single digits.

The worst single trade is QLD in 2020 which lost 17% in one day (!). In 10 years of backtesting that is the only double digit loss on a single trade.

The best single trade is also QLD not long after – from April 2020 to Jan 2022 – + 180%

I have spent some time thinking about how to scale into the system too – my plan is to add a set dollar amount each month over time.

So I turned it on at the start of November:

November
US ETF Strategy: +15.5%

Mainly thanks to QLD which was just over +21% for the month.

[ScottMcNab]

boom…what did u decide re currency hedge Paul ?

[PaulBailey]

I’m unhedged for the time being Scott – a relatively modest sized account. Will become important over time if things go according to plan.

Have you been down this path as well and if so what is your view?

I’m keen to understand where others have landed.

[ScottMcNab]

I have not traded a long term system for many years Paul. Not purely for any philosophical reason…just the ones I came up with were not great and I couldn’t bring myself to stick with them. I have hedged my short term MRV systems with futures at times. I am paper trading a longish term ETF system but I selected aus domociled etf’s so I wouldn’t have to deal with the hedging issue (and the CHESS makes me feel better….which may or may not be true ?). I imagine if I was trading a long term US ETF system I would hedge it using futures with a basic filter similar to what Nick has discussed in the forum (assuming you have access to futures trading acct)

[PaulBailey]

Noting I have added BITO to my strategy today with the same entry and exit criteria.

MTD the strategy is +1.5%

[PaulBailey]

First of all I’d like to send my greetings to everyone in this community. Not sure about the rest of you, but I learn so much from checking in on everyone’s posts here – Glen, Julian, Len, Terry, Kate and the gang. You’re posts are worth more than you will ever understand.

Next, I have spent a lot of time looking through Nick’s Twitter feed, books and various postings around the place.

A few things have resonated:

“Good trading is effortless”, don’t think I’m there yet but it is improving.

There was also a comment somewhere about new traders chopping and changing systems a bit – and I’ve definitely been guilty of that – to the point where I sometimes wonder if those posts are specifically directed at me! (But they can’t be….. surely!)

On reflection, I started this process at perhaps one of the most difficult times in the Aussie market – just over 2y ago, and over that time I’ve traded my own system in AB, the Radge WTT and Swing systems, and I have more recently landed on my own version of an ETF strategy which takes a little bit of work each day.

My current thoughts on my ETF strategy are as follows:
* it seems that real life reflects the back tested version of the strategy – ie fill prices are similar (identical) and because I’m a small player my position sizing is no problem
* it’s easy to keep tinkering – I added BITO about half way through the month, but overall I’m happy with where the system sits.
* I’m using this system to build up some $ outside of super, and overall it’s pretty aggressive with max DD matching the broader market for a better return.

Following on an excellent December (+15.5%)

December 2023 US ETF strategy + 10.4%

Because I’ve been cautious with position sizing as I scale into my system, the absolute dollar figures have been small.  

I have also had a net negative year.

2023 all systems results: -6.8%

Looking ahead, I think I’m just going to persist with this US based ETF strategy and see where it takes me.

Thanks once again to everyone involved.
 

[ScottBilton]

Keep going Paul, we have a new year in front of us. 

[PaulBailey]

OK here we go:

Jan 2023 PB ETF strategy:
Capital gain: 1.58%
Income: 0%
Currency gain: 2.91%
Total return 4.49%

Just for my records. Not planning on currency gain being the way to win.

So overall +1.58% – Was doing so well until the last two trading sessions.

[PaulBailey]

Feb report:

Capital gain +8.97%
Income +0.08%
Currency gain +1.14%
Total +10.19%

YTD

Capital +10.61%
Income +0.08%
Currency +3.42%
Total +14.11%

[PaulBailey]

March report:

Capital gain: +1.20%
Income: +.34%
Currency: +.36%
Total: +1.9%

YTD:
Capital gain: +10.98%
Income: +.46%
Currency: +2.93%
Total return: +14.37%

Whilst I’m pleased with another positive month, this one felt like “hard work” compared to the last few. This system is designed to run hard with high returns / high volatility. Pondering putting 50% of it into Nick’s US All Weather approach to temper the volatility.

[PaulBailey]

April report:

Capital gain: -3.37%
Income: +.14%
Currency: -.45%
Total: -3.67%

Had to withdraw some money from my trading account to pay for last year’s tax debt, consequently makes YTD stats seem very weird. I’m sticking with my policy of just putting the numbers down that my tracking system gives me – but it’s calculating on current balance which makes things seem worse than they are.

YTD:
Capital gain: +3.95%
Income: +.46%
Currency: +.84%
Total return: +5.25%

ALSO

Have been running a minor flavour variation of Nick’s AUS All weather account in my personal super.

PB Super AUS All Weather variation
April report:
Capital gain -0.23%
Income return 0%
Currency gain 0%
Total return -.23%

YTD
Capital gain +6.11%
Income return +.42%
Currency gain 0%
Total return +6.53%

[PaulBailey]

May report:
PB ETF System
Capital gain: +1.61%
Income: +.01%
Currency: -1.15%
Total: +.46%

YTD:
Capital gain: +5.21%
Income: +.48%
Currency: +.33%
Total return: +6.02%

PB Super AUS All Weather variation

May report:
Capital gain +0.26%
Income return 0%
Currency gain 0%
Total return +0.26%

YTD
Capital gain +7.29%
Income return +.42%
Currency gain 0%
Total return +7.71%

Summary:
– overall I’m happy with how my Super account is going, so nice to actually have a good year (FY24 YTD is +13.06%)
– got a bit distracted on running my ETF system (personal account) and it was a bit of a bland month
– am pondering what it would take to run a fully automated system of systems, might cut down on months like May that should have been great……

[PaulBailey]

Just finished night shift, and pretty happy with the year to date and the month so thought I’d throw this out there prior to going to sleep:

Jun 2024
PB ETF System
Capital gain: +9.71%
Income: +.38%
Currency: +.04%
Total: +10.13%

YTD:
Capital gain: +19%
Income: +1.3%
Currency: +.0.9%
Total return: +21%

** My YTD calculation for this account was incorrect in May **

– several milestones in this account reached during the month, most notably biggest monthly percentage gain and my account crossed $100k

PB Super AUS All Weather variation

June report:
Capital gain +3.53%
Income return 0%
Currency gain 0%
Total return +3.53%

YTD
Capital gain +10.98%
Income return +.42%
Currency gain 0%
Total return +11.39%

– this account is based on Nick’s Aus All weather system and has a single high conviction stock pick within it too
– when I look at the monthly portfolio returns, it is largely displaying the lower volatility associated with Nick’s approach

Gratitude
– it’s been a long journey for me – starting the course during a prolonged market downturn, big thanks to Nick and his team for giving me some tools for success and all associated with this forum for sharing their own journey

Very aware that in a rising market most stocks will rise, nevertheless very happy to have my first double digit month.

[Author]

Posts