October 31, 2014

Exited $COW and $GLD, bought $UGLD $SPXL $TMF $UUPT

I'm progressing towards a permanent portfolio, as I waste time, fees, and performance picking stocks.  There are certainly better ways to do what I'm doing.  Only buy strength.  Use fewer positions of greater size.  Don't try hedging. 

However, it's a practice I can't commit to.  I can't trade in a relentless bull market.  I haven't done poorly, but there's too much maintenance, too many decisions to make on what to buy, and how to place stops.  And yet the performance isn't there.  These dips throw risk managers out, then recover without them.  The trade off is lower draw down.  And it's a very worthwhile tradeoff because a lower draw down means you can leverage higher and keep the returns buy-and-hold gets.

But there are alternatives.  Going forward, you can't say for sure how things will pan out with one system or another, but I've done enough research to say that it's worth following a permanent portfolio strategy.  It's lower volatility than just holding stocks, similar draw down as momentum and risk management, and similar gains when leveraged.

So I've let go of $COW and $GLD.  I've converted $UUP to $UUPT, $TLT to $TMF, and bought some $SPXL and $UGLD to keep the ratios correct. 

I will not be entering new individual stocks, and only exiting current positions as stops are breached. 

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