Portfolio

We have been running this sample portfolio for three years now, sufficient time in our estimate to demonstrate the model’s attractiveness. In order to highlight other viable strategies, in particular centering around options trading, we will be discontinuing the actual placement of trades in our virtual portfolio. Of course, trading with this methodology for our real clients at Northstar, our parent company, continues unabated.

This year has produced gains, namely 4.3% on an annualized basis. While disappointing, there will be periods where the strategy lags the overall market and the results are still positive. Prior years were a phenomenal 35.31% in 2012 and a 81.23% in 2011. Overall, the average three year return has been a very respectable 49.28%. A $100,000 portfolio invested in this model would have grown to $255,766. This compares very favorably to an investment in the S&P, which grew a $100,000 portfolio from $100,000 to $189,880 over the same period (with reinvested dividends), or an average of 27%.

Because this model also performs well in a sideways or downwards trending market- with the best performance occurring in periods of sharp downturns – many investors will find it attractive as compared to a buy-and-hold strategy.

Of particular note is that the maximum draw down of this strategy as opposed to a buy-and-hold approach. (A draw down is the dip in value of a portfolio from maximum peak to maximum low.) In times of market crashes = such as the 2000 crash or the 1929 crash – buy-and-hold investors face draw downs of 40% to 90%. Our momentum strategy has incurred maximum draw downs of 18%. Knowing this makes it easier for an investor to stomach being patient in periods of poor performance.



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Disclosure:This web site discusses exchange-traded options issued by The Options Clearing Corporation. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500 Chicago, IL 60606 TradeJolt.com is not a registered investment advisor or broker-dealer. We do not make recommendations as to particular securities or derivative instruments, and do not advocate the purchase or sale of any security or investment by you or any other individual. By continuing to use this site, you agree to read and abide by the full disclaimer.