6/28/2016 Mouse Whipsaw

The Mouse is barely into an XLE call before the close.

6/27/2016 Mouse Trade

The Mouse sold XLE and bought XLU before the close.

I should change "Mouse" to "Chicken"....

6/24/2016 Hit and Miss

I had a paired trade on the Rabbit toward the close.  ORA hit the sell and the other half of the trade failed on the buy.

I've kept a limit order good till cancelled for Monday.  If it doesn't hit I'll find an alternative.  For the weekend, the ORA position is inadvertently in cash.

Brexit is the first set of dominoes on a nationalistic period in world history.  With the exit of Britain, greater pressure will be put on the European Union, threatening its collapse.  Paradoxically, the Trump to market feedback loop will be similar to the feedback loop we experienced eight years ago with Obama and the market:

The better Obama did in the polls, the worse the market performed.
The worse the market performed, the better Obama did in the polls.

The paradox now has to do with the economic effects of the coming trade war, with Brexit being the first shot.  The nationalistic move shook the markets, which strengthens the likelihood of an American nationalistic move in November to elect Trump.

We live in interesting times...

6/19/2016 The Long Game is the Only Game

Mouse	XLE	-0.83%
Rabbit	Date	Return	Days
DY	10/30/2015	13.97%	233
TMK	11/23/2015	-0.24%	209
NVR	12/16/2015	2.79%	186
ORA	3/14/2016	4.42%	97
AMWD	4/27/2016	-15.06%	53
CASY	5/12/2016	2.41%	38
LEG	5/17/2016	2.69%	33
AVB	5/24/2016	-3.72%	26
AEM	6/7/2016	-0.08%	12
AMED	6/16/2016	-4.53%	3
Turtle	Date	Return	Days
BT	8/11/2015	-17.33%	313
DY	10/30/2015	13.97%	233
TMK	11/23/2015	-0.24%	209
UPLMQ	12/1/2015	-61.35%	201
OKE	1/20/2016	128.98%	151
CMP	2/19/2016	16.43%	121
NVR	2/22/2016	7.12%	118
ENOC	3/15/2016	-8.74%	96
AMWD	3/17/2016	-6.19%	94
ESRX	6/13/2016	-1.75%	6
	Since 5/31/2011	Annualized
S&P	53.97%	8.91%
Mouse	123.46%	17.24%
Rabbit	56.90%	9.32%
Turtle	85.26%	12.98%
	Previous	YTD
S&P	51.94%	1.33%
Mouse	77.79%	25.69%
Rabbit	57.21%	-0.20%
Turtle	58.35%	16.99%

The Mouse continues to outpace the full models, but the Turtle is showing surprising recovery this year.  Still not the performance I want, but weeding out the corrupted database has revealed a set of initial conditions that work well with the model on a long term hold:

The model is targeting small companies with poor current earnings, a low P/E, and low Dividends – with good long term prospects for earnings growth in the next 3-5 years.  The target holding period is now longer than a year, which makes the model infinitely scalable and usable in a taxable account.

In other words, the Turtle is the goal for these experiments, and the corrected dataset is working quite well.

There is another element involved, which is NOT included in the reported scores: my actual returns for UPL are +75% instead of -61%, because I load up on stocks when they contract and peel off profits when they expand.  That would be impossible for anyone to follow on a blog.

But that leaves the last aspect of the Turtle which makes it perfect for a public model: long term holding periods and infrequent trading make following such a model extremely easy.

The Mouse is fun.  The Rabbit is disappointing.  The Turtle is the goal I’ve been striving for all this time, and like the Tortoise in the fable it is showing its strength.

As for the broad market, we are still in a defensive market:

And, as always, I don’t use this to time.  The Mouse is behaving perfectly normally:

In raw numbers, these are the last few years’ returns in the Mouse:

	2013	2014	2015	2016	Total
S&P	29.60%	11.39%	-0.73%	1.33%	45.23%
Sector	42.36%	36.12%	-27.55%	24.83%	75.25%

Last year was a disaster, but an expected one.  After 2013 and 2014 it had to mean revert, and it did.  No model goes straight up.  The goal is to outperform in multi-year periods.

In stocks, the long game is the only game.

Tim

6/15/2016 Rabbit Trade

The Rabbit sold BT and bought AMED before the close.

6/10/2016 Double Trade

The Mouse sold XLB and bought XLE before the close.

The Turtle sold TM and bought ESRX.

Have a great weekend!

6/7/2016 Mouse Trade

The Sector Model sold XLE on the open and bought XLB -- with a favorable gap.

6/6/2016 Rabbit Trade

The Rabbit sold TM and bought AEM before the close.

The Turtle continues to hold TM.

6/3/2016 Mouse Trade

And again, the Mouse whipsawed from XLB back into XLE before the close.

6/2/2016 Mouse Trade

The Mouse whipsawed again: selling XLE and buying XLB before the close.

6/1/2016 Mouse Trade

The Mouse whipsawed out of XLB and back into XLE before the close.