How about some context. How much is your portfolio up? And why up so little; both those stocks have had a good run since April 2020.
In your personal trading how much leverage do you use? This is something I think about regularly. The three constraints I come across are personal utility/time horizon for capital allocation which produces an aversion to variance, being constrained by capacity/capital intensivity, and being constrained by max loss in the worst conceivable scenario. For the past year I have been running about 40% portfolio volatility on a realized sharpe just under 2. Oftentimes hitting capacity and capital limits. Projection of forward returns on some strategies have gone down though so I will likely reduce my leverage, but I am still thinking about this. Of course this all assumes we are already taking good care to operate below the ceiling where additional volatility drag from more leverage vs. additional returns becomes marginal or negative. Interested to hear any thoughts on how you approach this consideration.
Quick economics quiz using real-world examples: Solo-Swan was an early economics model that explained economic growth as being driven by labor force growth, productivity, and capital flows. Contemporary models build off those key concepts. Using that approach, look at the following charts and then answer the subsequent questions. Population GDP Per Capita (proxy of productivity) Questions: 1. Which region/country is experiencing the fastest population growth? 2. Which region/country is experiencing the lowest per capita GDP? 3. Which region/country has the greatest output gap based upon potential?
Generally, I manage leverage as a function of beta (get leverage up to where portfolio beta = ~1), which puts me between 4-6x levered. I no longer have fancy risk management software, so I will dynamically adjust based upon vols. My strategy is long/short which makes managing leverage a little easier. If you are long only or use other asset classes then there may additional factors to consider. Do you stress test?
This current portfolio im working on is up about 25%+ for the quarter overall. Maybe a little more or a little less. I started slowly putting money in around March or so - Id have to double check for the exact date. Only 10 stocks total. Mix between Tech,ETFs, Innovation, Consumer. I have 1 small cap that will probably blow eventually - high growth potential. And no, im not some moron who thinks some biotech company is gonna blow cuz it can solve my ass herpes. The small cap is an ecommerce business having to do with parts. I only do stocks long term. I do futures short term. ES/MES is all algos so why "do something different" its pretty obvious how the ES/MES moves - meaning, there are only so many outcomes at any given moment. Trading is about possible outcomes and contingencies based upon each outcome. Market is predictable in that - it needs constant reassurance about any good price movement and it usually moves 2 legs.
Buy and hold - so every year I will rebalance the portfolio if it needs it, ya know, taxes, so I wait a yr. I dont mind using that money to sit on stocks for 5+ years. However, as I make more money I will have a YOLO fund. I think everyone should have a little (relative) YOLO acct. So i have stocks and BTC/ADA as long term. Good tax outcomes for both markets if you stay long term. Plus, stocks are more susceptible to a news outcome even though they do use algos 95% of the time. Futures, good tax short term as you know, and not too susceptible to even big news events barring Fed announcements and things of the sort. So about 99% algo trading. You are following a wave not carving your own path. And since you are dealing with algos - LITERALLY every tick matters or certain algos wont buy/sell to continue the trend.
Don't trade futures. No edge I can ascertain. Canadian tax laws a little different. Doesn't matter what holding period for stocks (except day trading which is considered a business). I buy stocks that are rising in price and continue to hold until the trend changes. Don't hold losers in the portfolio. Don't see the downside in holding cash. #1 priority is protecting capital.