I don’t know about you, but I got liberated from some money today! It was definitely a painful day in the markets, though it could have been much worse for me. I’m a highly aggressive investor, often leveraged roughly 3-to-1 compared to the overall market. Today, the stock market dropped about 4.75%. Had things played out slightly differently, my strategies could easily have been down around 15%. Instead, they’re down by about 2%.
It still stinks to be down—but on a day like today, it’s not a bad time to practice gratitude for the small wins as doing so can help us stay consistent and methodical. Wishing you all the best out there and remember, the market is a tool for transferring money from the impatient to the patient.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
I often critique other traders and investors on the collective2 platform. Since this is done via the interenet it rarely results in them actually listening. But I hope you listen. If you disagree show me why I’m wrong in the data below.
In that post they state the rules of the system, but do the rules work in backtests? I don’t think so.
Below are the basics quoted from the blog post they made.
Price above the 200 SMA? You only take longs, my friend. That’s your direction. If it’s below, you’re looking at shorts. No flip-flopping here — stick to your lane.
Market opens above the 9 EMA? Well, that’s your signal to go long, cowboy.
Stops and targets are determined by the ATR (14). You’ll set your stop loss at 2 ATR and aim for a profit target of 3 ATR. Not complicated math here, just risk and reward — served up plain.
My Backtesting Results
I used daily SPY data from Tradingview to run my calcs. I calculated the SMA, EMA, and ATR at the close of each day. Then at open on the next day I checked if the buy criteria were met. If so the strategy entered at the open and held until close unless the profit target or stop loss was triggered. Because I was using simple daily Open, High, Low, Close data I couldn’t determine easily if the high or the low of the day occurred first on days when both the stop and profit target were hit. So I ran the backtest with the generous though not realistic approach of assuming the profit target would have been hit first on days where both were hit.
The results….not great.
The main reason this strategy did poorly is because it doesn’t hold overnight. Take a look at this overlay of a blind buy at open and sell at close. Notice its quite similar.
Many traders don’t realize how much overnight returns tend to contribute to total returns.
Perhaps Sean knows something that I have missed, but at first glance this doesn’t look like a winning strategy to me. But I had fun fact checking it. Do you want to fact check me? Well download this excel sheet and check it.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
Today was an awful day for many of my strategies. I was long on volatility, but volatility had a big recovery today. Below is an isolated backtest of investing $10,000 in one of my main long volatility strategies. As we can see, the drop today is evident, but it looks small compared to the massive wins that sometimes occur (this is a logarithmic chart). Those massive wins happen only about 3 out of 10 times, but they compensate for losses like today’s. So today really stinks. We see an almost 40% loss in a single day with this backtest, dropping from about $745K to $441K. Ouch! None of my real strategies experienced such a large drop because this is just one of many strategies within my portfolio. As usual, patience, consistency, and sticking to the numbers are what I will continue to do, despite how much it hurts today. I will continue to take long volatility or UVIX trades when my system calls for them, but as you can see, they can result in big wins or big losses. I will stick with chasing the average.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
It’s unfortunate that the signal to buy UVIX on Friday didn’t hold until the end of the day. Once again today, we have some significant trades that will occur if the signals hold until the close. However, come Tuesday, we might regret entering UVIX or wish we had invested more. It’s impossible to predict with certainty. UVIX trades are rare for me, but my backtests show they have a significantly positive net effect overall (as do my real average results). While there’s no way to know if we’ll get good UVIX trades this week, if you want to copy my moves accurately, be prepared for some trades this week. There’s a very high likelihood of UVIX (and other) trades coming through — good or bad.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
My apologies to subscribers for the recent performance. I understand that the last month and the past few days have been challenging. There will inevitably be days like this in the world of investing. While today was a fantastic day for some of my strategies, like Best Combo, it wasn’t favorable for Easiest to Follow.
My strategy Best Combo performed better today because it is quicker to jump to safety in this particular scenario compared to Easiest to Follow. However, jumping to safety often leads to lower overall returns, as seen in the total return of Easiest to Follow versus Best Combo. In the long run, I believe both strategies are excellent. Still, they require patience and consistency to truly shine.
As much as I’d like to guarantee a quick recovery, it’s simply not possible to predict with certainty. My algorithms are actively adjusting allocations today, as they do on many days, but I am not altering my personal allocations to these strategies. I don’t recommend jumping back and forth between them (or other sound strategies) just because one had better recent performance than the other. I suggest remaining consistent and diversified since no one knows the future.
I firmly believe that patience, consistency, and a methodical investment strategy are the keys to long-term success. Times like this are when you should be sticking to your plan not chaninging – assuming you had a good plan to start with.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
It has been several months since I last updated the performance of my accounts. In short the market has a 184% return and I have a 344% return! The screenshot is from the PortfolioAnalyst tool provided by Interactive Brokers (IBKR), which remains my preferred broker.
I’ve been using IBKR since 2016. However, in 2018, I withdrew all my funds and left the brokerage firm, deciding to abandon active trading in favor of passively buying index funds. I moved to a broker that specializes in passive indexing. Despite this shift, I continued to study and test various strategies. In early 2019, I developed investment strategies that I believed would significantly outperform the market and moved my money back to Interactive Brokers. I’m pleased to report that they are surpising the markets by a wide margin. If you’re interested in following my strategies or copying my trades, the resources you need are here.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
This collective2 strategy Easiest was started to copy what I do in my HSA (Health Savings Account) and track the results publicly. You can see the C2 and Schwab screenshots below. I am fortunate now to have plenty of money I can spend on upcoming medical bills.
See the similarity with my HSA results from Schwab below.
There are some minor differences between the two partially due to laziness on my end of entering actual signals in my real account at Schwab, but the idea was the same. In a way, this strategy was always a Trades-Own-System strategy, but there was no way for Collective2 to verify that. Due to this, I have opened another Interactive Brokers Roth IRA to connect to Collective2 and set up my algorithms to automatically submit the orders to IBKR. However, I still have to manually these trades at Schwab since IBKR doesn’t have HSA accounts. Woe is me.
All that to say, soon you will see a TOS (Trades-Own-System) badge coming to Easiest. This also means that when I place a stop order at IB, you won’t see it as a subscriber until it gets triggered and will appear as a market order. The only downside I see is that you won’t see the stops. But you can always set your own stops as a secondary backup. I wouldn’t set them too close. Generally, I would keep them at about 10% for an unleveraged position and 30% for something with 3X leverage or similar. I know, I know. Those are huge, but if you want, you can use tighter stops. Price stops are not, in general, the main way I exit positions. My algorithms usually trigger before my stops are hit on any position. I know this may seem crazy, but think of it this way: If you and your neighbor bought homes at the same time for $500,000 each, but your neighbor a few months later suddenly sold for $250,000, would you want that to mean you automatically sell your house for $250,000? I wouldn’t! I always place stops, but my aim is to rarely, if ever, have them trigger.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
Focusing on methodology and investment philosophy is crucial when considering a strategy or a switch in investment. Recent performance, whether good or bad, doesn’t always reflect the long-term viability of a strategy. It is concerning when a provider claims something like they plan on consistent x% monthly return; such promises often fall short of reality in the complex world of trading.
My investment strategies, such as “Easiest” and “Patience is a Virtue,” embody a pragmatic understanding of the financial markets, grounded in the fundamental truth that in the world of investing, there are no guaranteed wins every year. Anyone promising otherwise is likely overselling or deluding themselves.
My approach acknowledges the inherent trade-off between risk and reward. Seeking higher returns inevitably involves embracing higher levels of risk. This requires the acceptance of higher drawdowns.
If you are still making the correct trades but experience drawdowns, they are not indicative of failure. Rather they are an inherent part of the investment journey. They are the price paid for the pursuit of potentially greater returns over the long term. While it’s possible to navigate and mitigate drawdowns to some extent, they cannot be entirely eliminated. They must be embraced and prepared for.
By adopting a mindset that embraces the reality of drawdowns, you’re better positioned to weather the storms of market volatility. Rather than being caught off guard or disillusioned by downturns, you’re prepared to stay the course, recognizing them as temporary setbacks within the broader context of your investment horizon.
In the pursuit of higher returns, it’s crucial to maintain a realistic perspective and remain committed to your investment philosophy, even in the face of temporary setbacks. This steadfast approach, grounded in the recognition of both the ups and downs of the market, lays the foundation for sustainable growth and long-term success.
Absolutely, believing in the investment thesis is paramount to successfully weathering drawdowns and staying committed to your strategy. Your thesis should reflect a comprehensive understanding of various asset classes and their potential for positive returns over the long term. An investment thesis should not involve the following:
XYZ went up last year/month/week. So I will buy it!
ABC went down last year/month/week. So I will sell it!
I believe there the next 20 years has great growth potential across equities, bonds, crypto, precious metals, and short volatility instruments. That is why I trade all these markets. This broad diversification allows me to capture opportunities across different sectors and asset types while managing risk through a well-rounded portfolio.
Taking it a step further down the risk rabbit hole, the best returns will likely be those that leverage their portfolios 2 or 3 times if they can remain solvent. This means using diversification, trend following, limited-loss leverage methods, and a healthy dose of patience.
Likewise, it will require rarely going against these markets. Frequently betting against the markets makes it so much harder to succeed in the long run. Your investment decisions should be rooted in a rational assessment of market dynamics, maximizing your chances of success over the long haul. Investment choices should never be made based on what went up last year and what went down.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
In the world of investment, especially in today’s dynamic markets, staying true to a long-term strategy can sometimes feel like navigating through a storm. One such day recently highlighted the challenges and the importance of staying focused on a larger plan despite short-term setbacks.
Yesterday started with a mix of holdings – 3X stocks, Bitcoin, a flat position in the volatility market, and a slightly bullish stance in the treasury market. However, as the day progressed, signals emerged, prompting a shift in strategy. The algorithm implemented the trades for Best Combo, Patience is a Virtue, and Easiest strategies, selling some Bitcoin, going short in the volatility market, exiting treasuries, and jumping into gold.
Fast forward to today, and unfortunately, it turned out to be mostly bad moves except for jumping into gold. The strategies, which typically combine elements of Best Combo, Patience is a Virtue, and Easiest, faced significant downturns today. The spike in volatility was particularly challenging, leading to losses across our positions.
Despite today’s losses, it’s crucial to note that none of the moves made yesterday were inherently wrong. Statistically, based on trusted indicators, the decisions were sound. However, as any seasoned investor knows, the market doesn’t always follow statistical probabilities in the short term.
The analogy of a casino comes to mind – even when the odds are in the casino’s favor, there are times when big payouts occur, causing temporary pain for the owners. In these moments, it’s essential not to dwell on a single trade, day, or month. Instead, maintaining focus on the broader plan spanning years is key.
Switching back and forth between positions can seem difficult right after some misses. But I believe sticking to a strategy is crucial to long-term success. Today’s losses may be tomorrow’s gains, and knee-jerk reactions can lead to missed opportunities in the long run.
Looking ahead, the plan remains steadfast. Implementing the Best Combo, Patience is a Virtue, and Easiest strategies might seem challenging during volatile times, but what matters is the statistical methodology guiding decisions for the next 5, 10, or 20 years. Short-term fluctuations are part of the journey, and staying disciplined through them is what separates successful long-term investors from the rest.
I say this as someone who is down $30,000 today personally. I know the pain. But I understand the goal and the method.
But I am also someone that has been following these basic investing methods since 2019 and it has paid off for me even with covid and 2022. Below you can see the results of my combined IBKR accounts.
The Eclipse
I did travel last week to see the total eclipse. I saw the total in 2017 and it clicked for me just how lame a partial eclipse is in comparison to a total. My phone didn’t do a great job capturing it. In person I really think a total eclipse is one of the most beautiful things to observe. I had a great time in Russellville, Arkansas with my wife and mom. Finally I think my mom is a total or nothing believer. I was a bit worried about the clouds for a bit but fortunately it was clear enough to see the total solar eclipse and two planets were bright enough to see too!
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
Clearly, we are seeing some volatility and drawdowns today and we may have to make some moves today. The obvious question is what happens next. The first thing I remind myself to do though is IGNORE THE NOISE! Good investors don’t make decisions based on what their portfolio did today.
As of writing this at 10:38 AM Eastern my personal accounts are down by over $20,000. That is about 4 times the value of my daily driver car! It is natural to have that stress me out a bit. But let me say it again, “good investors don’t make decisions based on what their portfolio did today.”
For the most part I think technical analysis alone doesn’t provide higher rates of return. This isn’t always true, but on average I believe technical analysis provides lower rates of return when you factor in costs, taxes, and missed opportunities.
Take for example the chart below. In red we can see TQQQ. In blue we can see a simple 200 day moving average model applied to TQQQ. Which one has a higher rate of return? The obvious benefit of the technical analysis system is that it has a better max drawdown. That is a big win. Likewise, a system like that could prevent an even larger drawdown that the buy and hold would likely experience in a period like the dot com bust.
Naturally some want to then trade more frequently. So, let’s look at a strategy where we follow the 50 day sma. In this we can see the drawdown is about the same, but the CAGR is much worse.
This pattern continues if we shorten the SMA to a 10-day sma.
Now there are obviously ways to better utilize the 10-day sma and rotate into other assets etc. However, in general I believe there is this sweet spot. You don’t want to be a buy and hold investor with leverage, but you also don’t want to be a day trader with leverage. The downside of this sweet spot is that you will have days where you have sudden 5% drawdowns and on rare occasions larger than 10%. That just isn’t suitable for most people and that is okay. However, it is okay for me. Fortunately, I have been doing this long enough that I am able to roll with the punches. I didn’t really start trading this way until 2019, but once I did, I started to notice huge improvements. There is no covering up of the fact that 2022 was a rough year. But, in a longer-term context I think it makes sense. Take a look at this chart below of using 50/50 stocks and bonds with 3X leverage simulated going back to the 70s (source). This isn’t a perfect simulation as this free tool only allows flat leverage costs etc. However, it is a helpful demonstration. See how much money was made using leverage vs using the S&P 500. But look at the second chart below and tell me which year was the worst year for the leveraged portfolio. It was 2022. I mentioned this in 2022 and said it doesn’t mean 2023 is going to be bad. 2023 turned out to be great.
I have a host of signals I use in my algorithms. I don’t plan to share them all, but I will show my results. Below you can see a screenshot of my portfolio analyst report. In 2019, I started investing with my current approach and it has done wonders for me. I use this approach in my IRAs, HSAs, and taxable accounts. If you want to follow along you can use the blog or my links to my C2 strategies.
So I know on days like today people get jittery. I do too. We could be at the beginning of a 20% drawdown for my strategies. Or we could be about to experience a 20% launch. It is impossible to know. After the fed meeting today we may get some buy or sell signals. I do not know the future. Either way I will be sticking with my algorithms as I think they are my best chance to make money in the long run based on my extensive backtesting and live experience. I will not be taking trades because just because there has been a drawdown or because someone that hasn’t beat the S&P 500 thinks I should have tighter stops.
This is not investment advice for you. This website is designed to talk about investments but it is not designed to give you personalized investment advice. This site contains generic information that does not have the capability of taking your personal risk tolerance, goals, assets, or other factors into account. Therefore, this site and all of its related content is for entertainment, informational, and educational purposes only.
The owner of PatienceToInvest.com is also a trade leader on Collective2.com. We may receive compensation by promoting some collective2 strategies over others. Should you decide to make or avoid any investments or use any service due to the information on this site or related information you assume full responsibility and risks and will not hold howiinvest.com it’s associated sites or its owners responsible. You also acknowledge investing is risky and can result in the loss of all your capital and even more than your original capital in some cases.
How I Invest 