Market Rollercoaster Leads to an Average Month

The first month of the ETF portfolio is complete. The market definitely had some moments where I would normally feel compelled to make a change but I held off. Usually these feelings have a negative impact on my returns because I tend to sell low and buy high. Having some rules in place helped me keep a cool head.

November didn’t give us the beginning of a Santa Clause rally that people have come to expect. Instead the QQQ was only up 2% while the SPY was down 0.8%. TQQQ was up slightly over 5% while UPRO was down just shy of 3%. Overall my portfolio slightly underperformed the QQQ: 1.97% vs 2.00%.

None of my rebalancing targets were hit during the month so no changes have been made.

November Performance

Over the course of the month, I decided on two changes that I am going to make. I am no longer going to explore a breakout/ipo strategy and I am going to look at adding an RSI oversold rebalance to my rules.

In October and November, I did some stock selection for the IPO/breakout strategy and while some of them worked, I don’t have a good handle on when to sell winners so I lost a lot of the gains that I made. I also came to the understanding that it will take a lot of work to beat a buy and hold of the Nasdaq (QQQ). The Nasdaq may underperform certain months or years but over a longer time frame, I believe the Nasdaq will still hold the leaders and innovators that will take us to the future.

I also want to add an RSI oversold trigger for overweighting the 3x ETFs. I have done some research on this in the past and it seems like a theory to explore more. I plan on posting a deep dive into this oversold theory this month. I will also post the results of a back test of this general approach to the portfolio. I will back test from the beginning of TQQQ, Feb 2010, and also September 2018 which is just before a decline of ~20% started.

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