SWS Equal Weighted USA Public Portfolio reaches new All-time High

[149050 (David McCulloch)]

Good morning members,

The Share Wealth Systems USA Equal Weighted Public Portfolio has now reached a new all-time high after 1125 days in drawdown.

This can now be seen on the daily plotted equity curve within Beyond Charts.

Tomorrow, in recognition of this Gary will be running an impromptu Connect & Grow Webinar to discuss evergreen lifelong trading lessons for all of us.

Keep an eye out for your invitation in your email.

The 4 Week Process & Mindset Intensive includes an important session on the Skills Acquisition Plan (SAP) that all members are strongly encouraged to download and complete.

A Key Skills Objective of the SAP is to execute the chosen mechanical investing process to actively manage a stocks Portfolio through two portfolio drawdown periods of at least -10%, but preferably -15% if such market conditions prevail.

Each drawdown period will end when the SAP portfolio equity curve achieves a new all-time high portfolio value after a -10% drawdown period has occurred.

This is a highly measurable and accountable objective that is reasonable for anybody to achieve and the public portfolio is just one example of this.

When you truly accept the risk on each and every trade and think with a probabilistic mindset, you’re well on the way to becoming a peaceful and active investor regardless of market conditions.

That’s freedom.

Regards,
David.

[200360 (Wakefield Sykes)]

Hi David et al, I was able to push away any negativity from the market and various commentators this year and continue to execute the system and my US CFD portfolio has continued to climb (last week very dramatically, 8.5% on Friday alone and 18% for the week), just further entrenching the wisdom behind objective mechanical trading as per the SWS systems!

[149050 (David McCulloch)]

Hi Wakefield,

Congratulations…once again!

You’re a calm, peaceful active investor in all market conditions. No matter what.

Members, this is what we want you all to be able to do.

This isn’t luck. Wakefield has been trading the US market for quite a number of years and has had to transform his mindset in order to remain disciplined, calm and consistent regardless of what happens in the market.

The previous post in this thread occurred just as the SWS USA public portfolio (a real money live portfolio) had just come out of drawdown making a new All-time High.

Then only a couple of weeks later the portfolio dipped back into drawdown once more. For some this might represent pain or frustration.

For a skilled investor, this is just a normal and expected occurrence…particularly when you understand that the market as a whole spends over 90% of its time in drawdown. That means it’s only making new highs less than 10% of the time.

So, whilst some stop trading and give up, others dig in and create massive change in their beliefs, actions and habits.

Wakefield also experienced the 37% drawdown between May 2021 and March 2024. That’s nearly 3 years in drawdown, while he continued to trade just like every other day.

In doing so, he also remained in the flow and in the game, subsequently riding a 92% run up from his 37% drawdown.

The deep period of draw down resulted in extensive research being done to find ways to help reduce that into the future. As a result the system parameters were re-researched and fine tuned accordingly. (Those new parameters were released in 2023)

Keep in mind that Wakefield is using CFD’s to trade his portfolio and this significantly increases the volatility of his portfolio equity curve. This is one sure fire way to test your mental skills.

It does take some time to reach these levels, but the opportunity is there for all.

[Gary_Stone]

To expand on David’s and Wakefield’s comments about using CFDs to trade SPA3 Investor, this is one of the main reasons that I have been managing a SPA3 Investor Leveraged Public Portfolio (PP) on the US markets.

For most of the life of the Leveraged PP it has been managed using 20% margin with a Leverage Factor of 1.6:1. (Initially it was at 10% Margin but ASIC changed the rules in 2019ish off the top of my head - which was a good thing.)

Trading at 20% Margin means that less cash is required to be injected into such a portfolio, i.e. 20% of whatever the 1 is in absolute dollars in the 1.6:1, plus a buffer to support the Leverage Factor and any immediate drawdown that may occur if the market falls straight after starting a portfolio.

For example, double the margin. In round numbers, 20% Margin = $20,000 on $100,000 = $40,000 cash injection (20% Margin + 20% (i.e. double the margin), $100,000 Nominal Portfolio Value, $160,000 exposure. If trading 15 open positions then 160,000 / 15 = $10,667 per position with $2,133 margin per position using CFDs.

All drawdown and profits are based on the $40,000 cash injection.

Over the last 2 years this real money Public Portfolio on the US market has done extremely well, growing by nearly 400%, or 111% annualized.

However, it did suffer significant drawdown in 2021/22. Since then, as Dave mentioned above, SWS has conducted research and modified the system parameters, which has greatly reduced the DD when running Simulations. Also, research continues with implementing a ‘market risk’ filter to cease taking Buy signals during ‘high market risk’ periods. Also to assist in reducing the probability of such a large drawdown in the future.

Here’s the equity curve over the last 5 years, including the 2021/22 drawdown.

I look forward to this portfolio making a new all-time at some stage in the future.
Which can only be done by approaching trading as an “infinite game”. And this can only be done by traders who have attained the mindset skills of objectivity and consistency, as taught by Mark Douglas and unpacked by Dave and I in The 4-Week PROCESS + MINDSET Training Intensive and the hands-on live trading course Learn To Trade Properly that Dave is currently running.

All systematic trading is a Work in Progress (WIP). There is no doubt different tactics have to applied using a Leveraged approach to an Unleveraged approach for any given mechanical system. IMO, with the tactical changes made over the last 3 or so years to this SPA3 Investor Leveraged Portfolio, mainly to Risk and Money Management, and the ‘market risk’ additions to be made, I will be ready to apply more of my capital to this Leveraged portfolio.

Questions, comments and discussion welcome…