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ustonapc
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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 
1st! 3# QuantStrike 25 Stocks Revised no market timing!.png
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1st! 3# QuantStrike 25 Stocks Revised no market timing! 1.png
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crazy returns microcap model.png
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crazy returns microcap model 2.png
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Edit 1 times,
last edit by
ustonapc
at Jan 4, 2022 11:40:35 AM
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marco
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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. |
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Jrinne
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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. ` |
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Edit 19 times,
last edit by
Jrinne
at Jan 4, 2022 12:57:06 PM
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ustonapc
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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
Page 7 The Coming Inflation Crisis and the 4 Step Action Plan for Retirees.png
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Double or Nothing.png
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Edit 1 times,
last edit by
ustonapc
at Jan 6, 2022 4:00:07 AM
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Jrinne
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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. ` |
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Edit 2 times,
last edit by
Jrinne
at Jan 6, 2022 4:47:31 AM
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Chipper6
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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. |
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mv388158
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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 |
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