Tom's Rules
Tom et al,
I've been doing some back testing (all with test start: 5/2/17) on high Beta ETFs:
• LABU 3X - Beta: 5.13
• TQQQ - Beta: 3.28
• YINN (3X) - Beta: 2.34
I'm using rules that I've collect from Tom's (and others') various
posts:
1. Base transactions on price activity, not calendar activity,
with the exception of Rule #7 below.
2. $10K minimum initial commitment to stock portion. Initial
capital per position$15K. Stock/Cash split: 67%/33%.
3. Initial SAFE
A. Buy SAFE%: 10%.
B. Sell SAFE %: 0%.
4. Buy SAFE % Increment/Decrement
A. +5% on each new Buy.
B. -5% on each new Sell.
5. Minimum # of shares to trade
A. 10% of Share Value on the Sell side.
B. 12% of Share Value on the Buy side.
6. Use VEALIE when % Cash exceeds 50%.
7. Don't Buy more often than once every 30 days.
8. Don't Sell on back-to-back days. Skip one day.
The volatility of these funds have certainly provide some good returns and rules #4, #5B, #7 above have helped conserve Cash vs. the generic AIM program.
There are still times where Cash goes negative and I'm looking for additional ways to manage/mitigate. Also, with the high Beta funds it is not uncommon to see many days in a row of selling without the Cash position exceeding 50%. (If my calculations are accurate.)
Any additional thoughts or anything I'm missing?
Thanks
