Learn the Discipline

Learn the Discipline Model Portfolio Summary – Week Fourteen All the positions opened since March 10 are listed in the table below. Positions prior to March 10 are listed in prior posts which can be accessed under Key Topics; Learn the Discipline in the left hand menu. Those new to the blog can find a description in the February 7 post that gives an overview of how the Model Portfolio is being run. You can read it by clicking here: http://chartsignals.blogspot.com/2009/02/coming-next-week_07.html As of Friday May 8 the portfolio is 69.05% invested in stocks. The balance is in cash. This is just below last weeks invested level. The portfolio was stopped out of two positions this week: GME and ALGT. We did not enter any new stock positions this week. The total value of open stock positions is $120,879.28. The portfolio value increased this week while the SPX rose 51 points. There are now 32 positions that have been open at least four weeks ranging in returns from +1.05 to +139.77%. The longer intermediate term trend in the market is still neutral or sideways. These 32 positions indicate that this intermediate term strategy is working. Since February 2 the portfolio has increased 15.16% while the SPX has risen 12.57%. This is 20% better than the SPX. During that time the SPX has been fully invested while the Model Portfolio has mostly been less than 50% invested until the past two weeks. Because the Model Portfolio has been less than fully invested it has been exposed to less market risk than the SPX. On a risk adjusted basis the portfolio is outperforming the SPX by more than 100%. Originally we stated that we would start the portfolio on using stocks and the One Green Arrow Strategy as the core concept behind decisions. We also indicated that we would make modifications. See last week’s comment regarding futures trading. Moving forward we will look to take similar short term futures positions when appropriate. Many funds employ this type of strategy when they have large cash balances and use the futures as a temporary but quick way to raise their investment levels to participate in market moves. Futures could also be used to hedge a stock portfolio against temporary declines. Intermediate term stock positions will continue to be our primary strategy. (click image to enlarge)