Like tastytrade, we’ve got good trades and bad trades. Our ETF bearish Motif Investing portfolio ended up in a drawdown on our closing date – Valentine’s Day: -0.65%
Our strategy was a high risk, aggressive; short term investment; covering what might have been a mean reversion – hedging our beats that market’s overall pull back would find exhaustion by Valentine’s Day, making this portfolio a profitable play. We didn’t want ETFs with high volatility. We minimized our loses if we were proven wrong.
These ETFs were our hedge among the chosen basket of ETFs: Direxon Daily Brazil (BRZS), Currency Shares Japanese (FXY), PowerShares DB Agriculture (DBA) and AdvisorShares Ranger (HDGE) . Lesson learned here is that they all were too closely correlated to our benchmark, the S&P 500.
BRZS price trend went against until the last two days, which cost us a more lucrative performance, since BRZS is known to completely move against the market. We contribute this to the lack of volatility overall until Thursday and Friday. It’s a good lesson to learn in regards to how volatility affects your portfolio – gains to losses.
If you scroll down on the Chrome ETF website, you’ll see the asset allocation breakdown. The Correlation graphic is nearly all green – meaning it’s not optimal, and the Daily Expected Return graph places most of the assets in direct correlation with the S&P 500.
If you want to see how to drill down for more information on a specific ETF that appeals to you, roll your mouse pointer over the asset’s panel. It will highlight “View” for you click on and take you to the Macroaxis website. Here you’ll find all the tools one needs to evaluate the assets viability for investment.
Sticking to our commitment, we closed taking a drawdown of about $30, overall.
However, if you read our blog about the KGC PUT Option Buy, you’ll see our strategy of offsetting portfolio loses by executing option trades. Thus, we’ve come out just a little short, about $5 with commissions.
Happy Valentine’s Day!