Get on Base

Thursday 25th July - Daily Equity Update

Today, I included an extra chart to explain why the trend is "Neutral." In my backtest, the most volatile days occur when an asset is below that level.

It varies for different assets. Over the past few weeks, I have been highlighting the differences within a group of stocks in one index, such as QQQ and IWM.

Since 2017, the SPX has spent less than 19% of trading days below that level.

Hopefully, this provides a better representation.

I wonder how much bearish sentiment was present during all those green periods.

This realization motivated me to focus on being long. While shorting has its place, the degree of accuracy required for something that occurs only 1/5 of the time is too demanding for me.

I would rather invest that effort into improving long positions, holding them longer, and establishing rules for selling them.

That is why, despite the current sell-off, I am adding six new names to the portfolio.

The final downturn at the index level may mean these positions are short-lived. Alternatively, if stocks head to oblivion, we have stop losses in place.

Our process now is the same as when I bought FSLR on April 21st, which was the only long position in the tech sector at that time.

FSLR quickly rose by 70%, and we ultimately secured a 41% gain.

I don't know what the future holds, but I have a view of the past and track the present. Hopefully, this leads to fewer bad decisions along the way. I don't aim to make perfect decisions, just fewer poor ones.

Since we started, our average winner has gained 8%, and our average loser has lost 3%. As of last night, our win rate was 53%.

I'm sure someone has a baseball analogy that would fit here, but I'll stick to my area of expertise.