Joseph Greenwood @Ukjoehk: "Strategy update: After accumulating a lot..."

United Kingdom

Strategy update: After accumulating a lot of oversold stocks in February and March, I briefly became 100% invested in stocks, many of which were more volatile than the market. This happened close to the bottom of the market. Then, April saw an extreme rise. In April, I trimmed or closed a lot of positions (Over 100 positions, mostly taking 20-50% of profits for each, some closed due to changing fundamentals) during the most aggressive uptrend, and put this money into bonds. By May my stocks exposure had dropped from 100% to 55%. May saw the market continues to rise steadily, and so I made moderate returns of less than 4% profit, while others who stayed fully invested, especially in tech stocks, saw stronger growth. Now, in June, we have seen a pullback. This is where I reap the rewards of having taken so many profits. While $NSDQ100 dropped 5%, and $SPX500 over 3% in one day, our losses were limited to less than 1.5% As well as this, we are now well placed to buy more stocks should we fall further. What this demonstrates is that my strategy is less volatile than a strategy of remaining fully invested. Rather than just trying to beat the market by aggressively buying stocks that I feel will get superior returns, I try to take profits appropriately and reduce risk before bounces down. This has worked well since I employed this strategy in mid 2024, and I am confident that I'll continue to lose less than the market in downtrends, while seeing explosive returns when we bounce strongly from these downtrends. This is reflected in my bullaware stats for the last 1-2 years, whereby we see the most notable differences between me and typical buy and hold strategies are lower risk, lower volatility and strong risk adjusted returns. In fact there is a relatively low correlation between my portfolio and the broader market due to this strategy. I am excited to see how the next 3 years go, at which point I'll have 5 years of returns with this exact strategy. My expectation is that I will beat the market during this time, especially if we see a red year. It is in a red year that I am all but guaranteed to beat the market due to this method of taking profits during uptrends, reallocating them into bonds, and accumulating during downtrends, meaning I never see the full extent of a drop. I only ever become fully invested when the drop is already underway, and when I think it is close to the extent of its potential to fall. So, it is a rather relaxing position to be in, knowing that a green year most likely brings steady profits (albeit potentially slightly less than the most aggressive portfolios), while a red year all but guarantees significantly beating market returns. Good luck all, Joe

Not investment advice. The author may have financial interests in the mentioned instruments.

2 Mentioned

NSDQ100

NASDAQ100 Index (Non Expiry)

SPX500

SPX500 Index (Non Expiry)

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