Early today I received an email saying basically, you must feel bad being long today and how do your readers know if you are going off the deep end? The answer to the first question is that we didn’t feel good but we didn’t have any trouble keeping breakfast down.
The second question deserves an answer as you as readers need to know what we are using for benchmarks. Here are internal performance measures that we use. We look at how we compare to the raw market (S&P 500) within market swings of eight percent or more. Why eight percent, mainly because we have found that this period analysis works with our trading style, it is a lot more definitive than twenty percent swings that some use, yet doesn’t get us trapped in the noise of smaller five percent swings.
A little bit of history may be in order. We started keeping our Portfolio tracking numbers in Marketocracy in June 2002. For much of 2003 through 2007 we were biased to long gold positions , mainly because of the destablizing aspect of the Iraq war. In November 2004 we added a short Fund to the portfolio because we were concerned at the kinds of things that we saw as bearish that were entering the marketplace. We were early on this factor, but we got our feet wet in that side of the market and it has served us well the past 18 months.
Up until January 2008 we sent trading / investing info through emails to a private list of friends, family and former clients from our active managemnet days. In January 2008 we started this website. Reader numbers slowly built and then in August and September reader numbers increased at least four fold from the earlier reader average. No doubt this was due primarily to things that were going on in markets and politics and maybe our advice to some extent.
In order to get you new readers acquainted with our style, please take some time to review the performance table below:
Eureka Portfolio Benchmarks
(based on Minimum Eight Percent Swings in the market )
Marketocaracy Tracking Funds
Swing Mkt S&P 500 % CHG Eureka % Chg Diff
end date Direction Portfolio vs mkt
6/3/2002 1041 1000
7/23/2002 down 798 (0.23) 772 (0.23) 0.01
7/31/2002 up 912 0.14 890 0.15 0.01
8/5/2002 down 834 (0.09) 811 (0.09) (0.00)
8/22/2002 up 963 0.15 964 0.19 0.03
10/9/2002 down 777 (0.19) 767 (0.20) (0.01)
11/27/2002 up 939 0.21 902 0.18 (0.03)
3/11/2003 down 801 (0.15) 807 (0.11) 0.04
2/11/2004 up 1158 0.45 1192 0.48 0.03
8/12/2004 down 1063 (0.08) 1177 (0.01) 0.07
7/19/2007 up 1553 0.46 1567 0.33 (0.13)
8/15/2007 down 1407 (0.09) 1822 0.16 0.26
10/9/2007 up 1565 0.11 1590 (0.13) (0.24)
2/29/2008 down 1273 (0.19) 2000 0.26 0.44
5/19/2008 up 1427 0.12 2048 0.02 (0.10)
9/17/2008 down 1156 (0.19) 2084 0.02 0.21
9/19/2008 up 1255 0.09 2398 0.15 0.07
10/6/2008 down 1057 (0.16) 2253 (0.06) 0.10 ( open swing)
17 Market swing periods
Average percent Eureka differential in mkt up periods (0.04)
Average percent Eureka differential in mkt down periods 0.12
As you have seen in our materials we believe that we are in a Macro Bear Market that will continue in general for a couple of years from here. On the other hand we believe there will be rallys of monumental volatility for no particular fundamental reason other than almost free Fed cash. We focus on the swings, using technical indicators as crutches to surround the overall patterns. The fact that we have performed better in relative terms to the market declines is part of the strategy.
Have a good night.
4:46 PM CDT