Monday, April 20, 2015

MSR annual performance review

I make it a point to record the performance of the Momentum Strategies Report on a weekly basis.  I believe this is important for providing subscribers (and potential subscribers) with an accurate representation of how my recommendations have performed in the recent past.  Instead of posting the performance in the form of percentage gains/losses (as most newsletter do), the cumulative results are presented in the form of a simple line graph.  The old saying “charts don’t lie” applies in this case.

Below is the performance graph of the last 12 months.  It shows the cumulative performance of the stock and ETF recommendations made in the “Trading Positions” section of the Momentum Strategies Report.

The above graph is an unvarnished reflection of how the recommendations made in MSR have performed since April 2014.  This performance was achieved, throughout most of the last year, by holding only a single stock or ETF position in the model portfolio.  While I’m not averse to recommending multiple trading positions, I felt that the market environment of the past year didn’t warrant the undue risk of holding several stocks or ETFs simultaneously due to the volatility risk inherent within a trading range market.

The upside to using a technical trading discipline is that your drawdown and relative volatility will be much lower than that of the broad market.  Moreover, in bear markets a technical trading system such as this one will invariably outperform the broad market, even without resorting to short sales.

In summary, the trading system employed in the MSR newsletter is one of the most conservative, yet consistently reliable systems you will find in any stock market newsletter when it comes to delivering long-term gains without exposure to extreme volatility.  It’s based on the principle of making market commitments only when the odds are decisively in your favor.  Otherwise, a cash position is warranted in the name of capital preservation – the first commandment of the financial markets.  

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