Portfolios (Gold and Silver) Stocks and ETFs

Discussion in 'Trading' started by Duarte, Sep 20, 2012.

  1. Duarte


    Before I talk about my portfolios, I will talk about my goals.

    My first goal is to try to respond as best as possible to what the market is doing and act appropriately. I am talking about trend-following discipline.
    I determine my market posture through a careful analysis of the charts. I observe the market direction - up, down or sideways – with the Gold & Silver index – Philadelphia (XAU), Gold index, Silver index or other leader index where the stock acts. Acting in concert with the market direction, I increase my odds of success.

    I pick stocks to buy based on a careful analysis of the historical charts. I also consider other factors, such as net cash from operating activities, volume and beta.

    When I expect the market will go up, my market posture is bullish. That means, I’m buying stocks and Exchange Traded Funds (ETFs). My market posture remains bullish until my "stop" is reached.

    When i expect the market will go down, my market posture is bearish. That means, I’m buying inverse Exchange Traded Funds (ETFs). My market posture remains bearish until my "stop" is reached.

    When I don't expect anything, my market posture is neutral. That means, I’m not buying.

    My second goal is to explain in simple terms the reasons for my decisions.
  2. Duarte


    I´m going to have 7 independent portfolios, of which the first 6 are long/short trend-following with ETFs of different leverage, and the 7 is a long trend-following with Gold and Silver stocks.
    I have separate emergency stop for each ETF/stock, which is influenced by portfolio volatility/leverage and my perception of trend strength and risk.
    The ETFs of different leverage allow investors to position themselves, according to their risk profile and return.

    Two additional tips to review before investing in a leveraged ETF
    1. Decide first on the amount of leverage that is appropriate from 1x to 3x.
    2. Before placing a trade, confirm the ticker. As this products have similar ticker between long and short version, double checking will prevent errors.
  3. Duarte


    Emergency stop
    The emergency stop that I use is activated if the price moves downwards too far.
    Because of the high volatility of the stocks and 300% leveraged ETFs, the stop is placed farther away from the current price, implies that the portfolios that use these assets have higher risk.
    When my uncertainty is higher or plan to sell, the stop is closer to the current price.
  4. Duarte


    I consider 5 USD per buy and sell order.

    Broker example http://www.interactivebrokers.com

    The monetary value of each position is 4000 USD.

    I may have open positions in some of the assets referenced here in my real account.
  5. Duarte


    Portfolio 1: Gold ETF Portfolio (1x) (100% of the benchmark's daily performance)
    ... uses SPDR Gold Shares (GLD) or PowerShares DB Gold Short ETN (DGZ)

    Portfolio 2: Gold ETF Double Leveraged Portfolio (2x) (200% of the benchmark's daily performance)
    ... uses PowerShares DB Gold Double Long ETN (DGP) or PowerShares DB Gold Double Short ETN (DZZ)

    Portfolio 3: Gold ETF Triple Leveraged Portfolio (3x) (300% of the benchmark's daily performance)
    ... uses Direxion Daily Gold Miners Bull 3X Shrs (NUGT) or Direxion Daily Gold Miners Bear 3X Shrs (DUST)

    Portfolio 4: Silver ETF Portfolio (1x) (100% of the benchmark's daily performance)
    ... uses iShares Silver Trust (SLV) to go long or short*
    *I prefer Inverse ETFs but so far, I haven´t found any silver inverse ETF (1x)

    Portfolio 5: Silver ETF Double Leveraged Portfolio (2x) (200% of the benchmark's daily performance)
    ... uses ProShares Ultra Silver (AGQ) or ProShares UltraShort Silver (ZSL)

    Portfolio 6: Silver ETF Triple Leveraged Portfolio (3x) (300% of the benchmark's daily performance)
    ... uses VelocityShares 3x Long Silver ETN (USLV) or VelocityShares 3x Inverse Silver ETN (DSLV)

    Portfolio 7: Gold Silver Stock Portfolio
    ... is composed by 5 Gold Silver Stocks
  6. Duarte


    As I have described, I observe the market direction in the indexes/ETFs, determine my market posture and I act in concert with the market direction.
  7. Duarte



    All entries and emergency stops must be sent to this "thread " , with a minimum of 5 minutes before the next market opening and automatically placed on the market after the market opens.
  8. Duarte


    This means, that all trades can be done in real account.
    As all entries will be the opening price, it is possible to buy at a lower price, on many occasions, than I can get in the portfolios.
    The emergency stop, I'll inform before too.

    All entries and exists, I'll inform before they happen in the portfolios.
  9. Duarte


    The PHLX Gold/Silver Index (XAU) is up since the end of July.
    After rising considerably, a fall can happen in the short term.
    Because of this, I'm waiting for something that makes me decide to buy.
    I would prefer, since I'm out, a decline in the market, but Mr. Market says: "Prefer whatever you like. I don't care."

  10. Duarte


    Why I decided to have multiple portfolios and not one or two?

    (this response also explains the other portfolios).

    Basically, it's because I prefer not to mix different leveraged ETFs.

    If I chose, I´d buy only 2x or 3x leveraged ETFs, but I decided to have different types of leverage separately because my risk profile is not equal to all investors.

    I understand that can be a little confusing, many portfolios, but despite giving me more work, I think it is more complete and then later, it will be possible to do readings that I find interesting. I can compare the difference of return between the various types of leverage, and also between ETFs and stocks, these are also some of my goals.
    #10     Sep 25, 2012