2016-09-01 Performance and thoughts about it
The first day of the month, with the aid of a new adaptive trading strategy for the All Cap Growth accounts and the substantial rebound in the Goldminer benchmarks, resulted in excellent performance for all my accounts.
Of course, I’m still ticked by the recent algo-generated traps in the Goldminers, and now even that problem has been exaggerated by a proliferation of short-selling syndicates attacking individual miners, like Asanko (AKG) and First Majestic Silver (AG/FR.TO). In any case, we are here to win, not lose, so we have to fine-tune our trading approach.
On September 1, my entire account group managed an average gain on the day of +2.95%, which was comprised of gains of +1.06% for the All Cap Growth, +2.41% for the All Cap International and +3.65% for the Goldminers.
The Goldminers managed to equal the gain of +3.65% in the GDX benchmark, but fall short of the GDXJ gain of +4.77%. In any case, I sold my entire positions in two of the Goldminers during the day and added a small percentage holding to one of the others, which in retrospect turned out to be a mistake perhaps due to the appearance of a short-selling group in that stock.
My day had been focused on the new adaptive trading strategy in the All Cap Growth and All Cap International accounts, and with those gains of +1.06% and +2.41% respectively, which handily beat the benchmark S&P 500 (absolutely flat on the day), I’m pleased.
The key account for this newly employed strategy, which exceeds $100,000, was up +1.20% on the day. This is the account I will be reporting on as the rest of the All Cap (essentially non-gold) Growth have a couple of the Big Four plus a small position in the Goldminer take-over candidate that for purposes of diversification will remain in place, at least for now.
What has changed is that the Adaptive Portfolio Strategy account is one that is and will be focused on a single company whose stock is fundamentally undervalued (i.e., over-sold) relative to an important market driver, in this case the WTI Oil price ($WTIC). So despite the drawdown in Oil reserves reported the previous day, which caused the $WTIC to get hammered for the past two days, this selected stock is actually up. The previous day, when I initiated positions, the stock price did drop a bit, which I reported, although much less so than $WTIC. That was a tell, and then yesterday with $WTIC down -3.45%, my Oil stock was up over +1.3% on the day. Satisfied in the thesis, I added about +40% to the holding. Now I’m up, marginally, over the two days. I still have some cash in that account, so yesterday I was pleased with the +1.20% gain in the account. Today, we’ll see if the Trend reversal is complete, and that taking a position earlier than the market is proven to have been a wise one for this stock.
What is happening with this strategy is that (i) I am truly investing, not guessing with the use of squiggly-line technical analysis, and (ii) I am avoiding the computer algorithms that are being used to hammer prices selectively. Regarding this latter point, my sense is that the Fed is behind the algo and they are using commodity prices, currency rates, and interest rates, to push market prices to where they want to see them.
Now that I have returned to full-time trading, I see much more detail than before. I’m observing the nonsense of the various Fed speakers – surely they can’t be such idiots to actually believe their crapola or believe that we believe their crapola – and now recognize it is part of the scam. I believe these people are doing what you and I cannot do. Even Goldman Sachs and JP Morgan cannot do what the Fed does. If we did, we’d be prosecuted for wash trading. No, the Fed is the only organization that is above the law. They are more powerful than the Congress that put them in charge of the US money. They are much more powerful than the SEC regulators who Congress has in charge of maintaining integrity in capital markets.
So, I add up all the things I see going on and have come to my conclusion that, yes, the Fed is behind the curtain, pulling all the strings. They are the people who are putting the various Fed governors in place as managers – surely it’s not the President because he doesn’t have a clue about money and neither do most of his predecessors – and these managers are only figureheads – the Talking Heads we call them. Now we are calling them Idiot Heads, but that’s another story.
Bottom line, our Job #1 (and nothing else comes close) is to get and stay on the right side of Trend. It’s hard to do that when we are highly diversified, so we need to focus on a tiny basket and watch it closely. Of course, if we are managing huge portfolios, we need to be trading more instruments than I am presently or plan to use when putting capital to work.
Regarding ETF’s, I think it’s a tragedy that so many investors believe they can win with them unless they truly know how to trade like day traders. Ask the investors in Goldminers what they think of holding GDX and GDXJ over the past couple weeks. What did diversification do for you. Your accounts were trapped and smashed, and you (and me) don’t know why. I suspect it’s because these Miners manufacture hard money, in competition with the Fed’s abstract money. The Fed can’t have that, particularly at times they need to move markets higher, and do so with a more normal yield curve so that capital markets can once again become stable.
Many years ago, the US government agreed to enact the law to allow the Fed organization to take over the money system and do whatever was needed to keep markets stable. Capital markets at the time were quite unstable. For that egregious decision by Congress, the People have been paying the piper ever since. The Financial Services industry main players (Citigroup, JP Morgan and Goldman Sachs in particular) and some politicians like Bill and Hillary Clinton, have clued in and are taking advantage of it. A few others in government, like the retired Member of the House of Representatives, Dr. Ron Paul, also got it. Very few people do. The sad fact is, none of us can do anything about it. But we still can, and must, take steps to protect and grow our wealth using capital market prices to our advantage.
Trading successfully is our sole objective, and to do it we must acknowledge that the market is simply a game that plays people, and the Fed is the overseer, the organization in charge. As long as we understand the game, and know how to trade prices, the Fed is not the enemy. The Fed will always extract their piece. The enemy is everybody else in markets who are trading prices in competition with you and I in order for them to obtain what we want, and need. To all the victors go the spoils.
