eToro-ing the world's largest Hedge Fund: Part 0.5 - My intentions

1:14 AM


For those of you who prefer videos, i have done a series on my YouTube channel here (insert Link)
This is not supposed to be detailed instructional into All-Weather, it is too complex for me to describe here and my YouTube videos but i hope it is general enough for my copiers so you do not need a finance degree to understand.

I will likely do a Udemy course to help describe the methods in more details, but this is a general overview.
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First to my copiers and followers: Thank you for following me on my journey.
As much as i have enjoyed being a "full-time" trader, returns have been lumpy, (December lost 1+%, mid-January +0.05%) and given the period we have entered, I think we will be entering a period of extended consolidation.
This likely mean i will not be able to trade 1) responsibly and 2) in good conscious.

Why this system?
Only 2 schools of thought have consistently returned good amount of profits
- Global Macro (Soros, Dalio, Druckenmiller, Rogers)
- Micro/Value investing (Buffet, Munger, Pabrai)

As much as people say they have been profitable, a study of the wider universe will show this to be mostly true.

My chosen field has been Macro and I have studied the above-mentioned traders.
This is an application of Dalio's methods

http://news.efinancialcareers.com/wp-content/uploads/Global-macro-trading_djvstock_iStock_Thinkstock.jpg

So why have i not employed this earlier?

Two reasons

1) I have enjoyed employing/studying the reflexive process as this is a more exciting way to look at the world. It is also more lucrative but extremely lumpy.

2) Instruments available now are different from one year ago. The All-Weather system requires certain expression via certain instruments, one year ago before ETFs on eToro, this was impossible. Now we have a not ideal but workable system.

Am i giving up?
Please do not mistaken this as a means of giving up on the 1-year journey. There are ways of trading which i can make about ~30% a year in most trading conditions but lose everything once every 7-8 years.
I have used methods like this before and is VERY VERY common on eToro. I used to earn an average of 7% a month for about 2 years.

But my experience shortly after was similar to a pattern that i saw when i was doing my Masters thesis, you will lose a significant portion of your account (30-80%) after if you keep going down that road.
I have long decided that this is irresponsible and if copiers do not understand this process, you expose them to a chance of earning 30% with the possibility of losing 30%-80%. And most copiers who do not trade themselves will not understand these risk nor want to accept these risks.

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Conclusion

I am not making excuses with my one year challenge, I knew that there will be periods where i would not make money and that returns might be lumpy in maybe 10% of conditions. I was hoping the market would play out in the 90% area. But as the world would have it, we are in the 10%.
You can quantify this but the extended ranginess we are in.

One objective that i have is to be around on eToro for a very long time but given my current circumstances, it is better for both myself and my copiers if i spend 4 hours a day employing this system and work some hours instead of stressing every moment waiting for the next trade.
This is a better way to show my trading "abilities".

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