Interesting. I received this link from Seeking Alpha because one of the stocks in my Alert list was mentioned. This is an honest poster, who had promised to give the six month results of his five hedged portfolios to his readers no matter how they did. As you can see below, there is a difference between our results and those of others, and so much for the wonders of hedging.
Saul
Bulletproof Investing Performance Update
It has been six months since I presented five hedged portfolios and 10 top names in week 60 of my Marketplace service (July 19). Here’s how everything did.
None of the five hedged portfolios outperformed their expected returns, as all were down, and none beat SPY this time.
The top 10 names (unhedged) underperformed SPY….
https://seekingalpha.com/article/4234982-bulletproof-investi…
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Hedging works, I am living proof of that BUT like anything, it comes down to how you do it.
Before I devised my trend following based hedging strategy, I backtested its performance (on WealthLab Developer software) on -
(a) the NASDAQ100 Index (going back to its inception in the 80s)
and
(b) the S&P500 Index (going back to the mid 50s).
The results confirmed that this simple yet effective hedging strategy drastically reduced portfolio drawdowns WITHOUT reducing performance i.e. over time, the profits and losses from the hedging cancelled each other out.
I still hedge my portfolio during stock market downtrends by shorting NASDAQ futures (NQ) against my equity longs and remove the hedges when the stock market flips to uptrend. For this purpose, I use trend following indicators which remove all emotion and guesswork. Frankly, I wouldn’t have it any other way.
To cut a long story short, my trend following based hedging strategy has paid for itself over time (it hasn’t reduced returns) and it has protected capital during stock market routs/bear-markets.
I know this subject is ‘off topic’ but if anybody would like to learn how to significantly reduce drawdowns/risk without reducing returns over the long-term, send me a direct message and I’ll be happy to help.
Best,
GM
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I saw that post and I was ready to leave a comment saying “what the heck are you buying any of those stocks? I don’t see any of them on NPI or Saul boards”.
But I didn’t.
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