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RE: The 12% Solution Strategy - fenders53 - 03-03-2021
In any event it seems to validate the general strategy is sound. The only thing I can think of that would be different than the backrest period is a FED prone to interferring in the bond markets, and the fact that all bonds have a notably lower yield. The hedge component may or may not perform as effective as historical. Only one way to find out for sure. You can't account for every unique occurrence.
And of course the obvious flaw that everyone points out. A sharp drawdown very early in the month that pushes you out of the risk on ETFs after taking the port down. 2020 offers hope that even whipsaw market action doesn't necessarily derail the strats that severely.
RE: The 12% Solution Strategy - NilesMike - 03-03-2021
Here are historical rising interest rate periods.
https://aquilafunds.com/wp-content/uploads/CO-Interest-Rates-and-NAV.pdf
Using those approximate dates I checked the convertible bonds strategy (unleveraged)
6/1999-6/2000
Strategy returned 27.48% (4 negative months)
10/2004-10/2006
Strategy returned 21.63% (5 negative months)
RE: The 12% Solution Strategy - fenders53 - 03-03-2021
I will make that one of the core strats I play. In numerous articles the past few years David repeatedly advises the aggresive to make the convertibles the core strat and add the leveraged stuff very sparingly. Some of his subscribers using a 3:1 ratio lost nothing MAR 2020. I can't say that was my DGI or put selling experience lol.
RE: The 12% Solution Strategy - fenders53 - 03-04-2021
Thanks for the chart and the back tests Mike. I'm inclined to believe data from 2001 to present is most relevant. The money printing started, and rates weren't 12% or 0%. What you posted lends confidence. I am annoyed when anybody offering services for pay offers up a 2011-present chart and implies "you just can't help but get rich".
On another note, the hedge is important. When rates were higher an investment grade LT bond might rise 10% while your stocks are dropping 15%. I'm less confident this works quite as well. Honestly, it just needs to be somewhat effective. It's not reasonable to expect short term guarantees in an investment vehicle proven capable of 12%+ returns. I'm sure you realize it's the extended black swan I am wary of. Nothing is guaranteed but I want the chance of that to be very low. And I don't want to be babysitting it waiting for a trigger that might happen today or two weeks for now. What is really causing this is I've lost confidence in buy and hold forever unless valuations are much lower than they are currently. I'm not putting all my eggs in that basket this close to retirement. Especially when it almost requires me to hold 30 stocks when I rarely have more than 10 good ideas.
RE: The 12% Solution Strategy - NilesMike - 03-04-2021
(03-04-2021, 09:22 AM)fenders53 Wrote: I'm not putting all my eggs in that basket this close to retirement. Especially when it almost requires me to hold 30 stocks when I rarely have more than 10 good ideas.
I agree and for income I trade ES futures once per week, some weeks my signal doesn't trigger. All EOD, so no babysitting or screen time.
Message if you'd like the setup (was short last night at 3812)
RE: The 12% Solution Strategy - fenders53 - 03-04-2021
(03-04-2021, 05:39 PM)NilesMike Wrote:Congrats on the short trade. I can't do that for now with my big account in Vanguard. I'm not displeased with my put selling game. I just have too much capital in play in that strat and not willing to do many contracts on one ticker. The not enough good ideas thing again. If the market gets hit hard that's another situation. I'd take a chance on owning 500 shares of JNJ or similar, but not up here. And I do enjoy babysitting the market, but I want to pick the days. Can't do that with 20 contracts to open, monitor and maybe close. Just need a strat to keep some capital busy.(03-04-2021, 09:22 AM)fenders53 Wrote: I'm not putting all my eggs in that basket this close to retirement. Especially when it almost requires me to hold 30 stocks when I rarely have more than 10 good ideas.
I agree and for income I trade ES futures once per week, some weeks my signal doesn't trigger. All EOD, so no babysitting or screen time.
Message if you'd like the setup (was short last night at 3812)
RE: The 12% Solution Strategy - fenders53 - 03-06-2021
I've made my decision after I dug in as best I could. I see guys considering tweaking their strategies due to current sentiment regarding this index or that's near-term prognosis. I am going to do a 60 day free trial on all of David's strategies. It's not too expensive to continue if I decide to. I'll be able to see if he is sticking to his plan or not in this bizarre 20/21 market. I hope you won't mind having a look at the materials I will have access to. We'll see if he still has confidence in his version of these strats. After a couple of years, I'm comfortable he won't disappear from the internet. He never stopped sending me trigger data after I purchased a $4.95 Kindle book over two years ago.
RE: The 12% Solution Strategy - fenders53 - 03-07-2021
(03-02-2021, 05:01 PM)NilesMike Wrote:After some searching around and listening to an interview, I am almost sure you are correct. He published it and was using it for a 30 stock strategy years before the rest of the others came on the scene. They are just blazing the trail on ETF usage. Even Antonacci says it works more reliably for most any index.(03-02-2021, 08:48 AM)fenders53 Wrote:I think they all may spin off Gary Antonacci's Dual Momentum strategy but I'm not sure.(03-02-2021, 08:03 AM)NilesMike Wrote:And he has a port that uses those convertible bonds with nearly identical results. I don't know who invented these strats but they are strikingly similar from one author to another. VERY similar CAGR and drawdown. I just happen to have more details because the guy wrote a book. 12%+ and sub 10% drawdown is the range without leveraging. 3X Leveraging is going to get you a 20% monthly drawdown at some point, but if the entire year isn't anything like that, then it isn't so bad. It comes with the 40% up years and one of those just happened. It all depends on ones stomach for a short term beatdown.(03-01-2021, 10:17 PM)fenders53 Wrote: Thanks, This actually looks like one of David's high flier ports with the 3X leverage. I will check them out. Will I be able to back test these from 2008 and catch the financial crisis? That's a must before I put big money in anything. Anyway I will read up on them.
Convertible bonds going back to 1998
https://www.portfoliovisualizer.com/test-market-timing-model#analysisResults
CAGR 12.9%
Drawdown <9%
1 negative year and 73% positive monthly returns
I've learned a lot in just a few days. I really don't see many significant longer term issues with any I have run across. The risk/reward is superior to most any common investing method. I'm sure I am only seeing the strats that made it out of beta test stage of course.
RE: The 12% Solution Strategy - NilesMike - 03-07-2021
You may wish to incorporate this.
https://seekingalpha.com/article/4023491-simple-tactical-defensive-bond-strategy-in-rising-rate-market
I am going to dig into it a bit later, too nice outside today for the green eyeshade.
RE: The 12% Solution Strategy - fenders53 - 03-07-2021
(03-07-2021, 11:06 AM)NilesMike Wrote: You may wish to incorporate this.Interesting article. He has one a few years newer as well. I wish some of the guys doing this for fun would check back in more regularly with an update. Some of them seem to have a very solid plan with good stats. I guess Portfolio Visualizer can tell us what happens in the interim. I've decided where this journey is going to begin, but I will be looking for improvements, or at least further diversification.
https://seekingalpha.com/article/4023491-simple-tactical-defensive-bond-strategy-in-rising-rate-market
I am going to dig into it a bit later, too nice outside today for the green eyeshade.
I am going to play outside today too.