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Jrinne
75% portfolio moves

All,

I stipulate that there are some people better at investing than others. And that some people have nothing to worry about long-term. Also if I did not believe in what P123 was doing I wouldn't be here. I use P123 and have made money with P123. But less so as I near retirement.

A smart person at P123 pointed out that after a 50% decline, one has to double-up to get back to where they were. I think Marco may have made a similar comment, if I am not mistaken. I paraphrase and Marco can correct me or share his present beliefs if that is not correct math. I think it is just a fact no matter who said it.

Even holding QQQ has caused severe declines that took over a decade (closer to two decades with inflation adjustment) to get back from in the dot.com bubble.

One can look at the designer models to see that being down 75% is about as likely as being up 75% for the average member.

One has to double-up and double-up again to get back to even after a 75% decline.

I wonder if Hem or Rikki could begin a reasonable discussion of risk control for the average member. There are a limited number of gambling addicts that P123 could hope to attract. Or expect to last long at P123 with that type of volatility.

Best,

Jim

Great theory, "and yet it moves."
-Quote attributed to Galileo Galilei (1564-1642) gets my personal award for the best real-world use of an indirect proof or reductio ad absurdum.
`

Jan 4, 2022 10:56:25 AM       
Edit 14 times, last edit by Jrinne at Jan 4, 2022 11:38:07 AM
ustonapc
Re: 75% portfolio moves

A smart person at P123 pointed out that after a 50% decline, one has to double-up to get back to where they were.


Jim,

I think you have made a very important point here (risk control).

Out of curiosity, I make a quick check on the designer model database. Below are two examples with an almost 50% drawdown despite a relatively short (2-3 years) since the launch of the model. (i.e. you may lose up to half of your capital within 3 years).

Regards
James

Attachment 1st! 3# QuantStrike 25 Stocks Revised no market timing!.png (24189 bytes) (Download count: 121)


Attachment 1st! 3# QuantStrike 25 Stocks Revised no market timing! 1.png (23356 bytes) (Download count: 119)


Attachment crazy returns microcap model.png (17745 bytes) (Download count: 118)


Attachment crazy returns microcap model 2.png (25367 bytes) (Download count: 122)


Jan 4, 2022 11:37:19 AM       
Edit 1 times, last edit by ustonapc at Jan 4, 2022 11:40:35 AM
marco
Re: 75% portfolio moves

The P123 model "Small Cap Quality" by Yuval was down 50% and came roaring back.

Is Risk Control another phrase for Market Timing? I gave up on both

I'm fully invested now and trying to be more and more systematic (still doing too many emotional decisions bc I love tech). I use a bit of leverage too since money is cheap.

Portfolio123 Staff.

Jan 4, 2022 12:14:59 PM       
Jrinne
Re: 75% portfolio moves

Marco,

I stipulated that some have no worries and I have no problem with looking at those cherry-picked models.

But some are down 50% or more and will never recover here at P123 if they did not get out of their models. We can see some of those models. Designers--and probably P123 members in general --underperform their benchmark. Many dramatically so over long periods. They could use something--if not risk control.

A few should be encouraged to join gambler's anonymous: not encouraged to try the same thing again.

Let me just say that I think what Zacks does as far as rotating cherry-picked models that happened to have done well recently to advertise is probably not illegal. I question the ethics of Zacks' advertising, however.

For sure Zacks site for retail investors does not look very professional. I don't think it attracts many true professionals. Zacks has other offerings for that.

I think Hem and Rikki probably studied risk control in school if they want to share.

Best,

Jim

Great theory, "and yet it moves."
-Quote attributed to Galileo Galilei (1564-1642) gets my personal award for the best real-world use of an indirect proof or reductio ad absurdum.
`

Jan 4, 2022 12:18:59 PM       
Edit 19 times, last edit by Jrinne at Jan 4, 2022 12:57:06 PM
ustonapc
Re: 75% portfolio moves

Jim,

I just come across this from this book.

The Coming Inflation Crisis and the 4 Step Action Plan for Retirees
By Dan Casey


Regards
James

Attachment Page 7 The Coming Inflation Crisis and the 4 Step Action Plan for Retirees.png (148411 bytes) (Download count: 93)


Attachment Double or Nothing.png (92042 bytes) (Download count: 96)


Jan 6, 2022 3:58:23 AM       
Edit 1 times, last edit by ustonapc at Jan 6, 2022 4:00:07 AM
Jrinne
Re: 75% portfolio moves

James,

Thank you. It is not available in Kindle edition (that I can see) so I have not read it: The Coming Inflation Crisis and the 4 Step Action Plan for Retirees

I wonder what specific ideas Chris (ETFOptimize) or other professionals are recommending as far as ETF strategies to reduce overall risk in their client's portfolios. I assume some of his ETF strategies can be mixed with ports.

Best,

Jim

Great theory, "and yet it moves."
-Quote attributed to Galileo Galilei (1564-1642) gets my personal award for the best real-world use of an indirect proof or reductio ad absurdum.
`

Jan 6, 2022 4:18:43 AM       
Edit 2 times, last edit by Jrinne at Jan 6, 2022 4:47:31 AM
Chipper6
Re: 75% portfolio moves

One can look at the designer models to see that being down 75% is about as likely as being up 75% for the average member.

One has to double-up and double-up again to get back to even after a 75% decline.

The trick is to diversify among models. Then, if you are up 75% in one and down 75% in another, you have all your money back for another round.

Of course, it's better to be up 25% in each model.

Jan 6, 2022 4:38:03 PM       
mv388158
Re: 75% portfolio moves

Jim that's the game with real money on the line.

I think you need to have a hypothesis (Macro view) of what will work in the future. It will only be 51% correct. Let us not forget that professional money managers over a 10 year period have a 5% chance of beating SPY. Which means designer models have the same and it looks that way. If I put everything I had in QQQ in 1999 versus 2009 the payoff is drastically different. If I used risk parity in 1999 I am brilliant. Timing is everything but no one can tell you when. So what do you do? You create a highly diversified portfolio of uncorrelated assets that are acceptable to your risk tolerance (Volatility/age). Or you concentrate based on your macro view. I do both. I concentrated on tech last year did well. Used options to protective myself. It cost me half of my returns to hedge. Everything I read this year is that it's 2018 all over again so I will probably lose 20%. Does that mean I have given up on tech no. The world is all about tech but I cannot predict when the big 8 will climb. I just manage my losses and suck it up. My uncorrelated asset portfolio has a everything I'm targeting 12% returns with 10% vol. It did really well in 2018. Will let you know how 2022 goes. P123 is very different than what I do but I love the community and thank you.

Cheers,
MV

Jan 6, 2022 8:37:56 PM