Mouse
|
XLB
|
-2.33%
|
|
Rabbit
|
Date
|
Return
|
Days
|
NVR
|
12/16/2015
|
-8.09%
|
319
|
CASY
|
5/12/2016
|
0.99%
|
171
|
AVB
|
5/24/2016
|
-5.65%
|
159
|
AEM
|
6/7/2016
|
-1.53%
|
145
|
AMED
|
6/16/2016
|
-15.54%
|
136
|
FRO
|
6/27/2016
|
-4.63%
|
125
|
ASTE
|
7/12/2016
|
-7.55%
|
110
|
BSET
|
8/3/2016
|
-7.12%
|
88
|
MFC
|
9/1/2016
|
6.01%
|
59
|
CFFN
|
9/12/2016
|
3.52%
|
48
|
Turtle
|
Date
|
Return
|
Days
|
BT
|
8/11/2015
|
-33.79%
|
446
|
DY
|
10/30/2015
|
-1.04%
|
366
|
TMK
|
11/23/2015
|
5.69%
|
342
|
UPLMQ
|
12/1/2015
|
56.36%
|
334
|
CMP
|
2/19/2016
|
6.26%
|
254
|
NVR
|
2/22/2016
|
-4.22%
|
251
|
ENOC
|
3/15/2016
|
-25.82%
|
229
|
AMWD
|
3/17/2016
|
9.29%
|
227
|
ESRX
|
6/13/2016
|
-14.25%
|
139
|
SFM
|
9/8/2016
|
12.60%
|
52
|
Since 5/31/2011
|
Annualized
|
||
S&P
|
58.07%
|
8.82%
|
|
Mouse
|
114.98%
|
15.17%
|
|
Rabbit
|
54.62%
|
8.38%
|
|
Turtle
|
103.50%
|
14.01%
|
|
Previous
|
YTD
|
||
S&P
|
51.94%
|
4.03%
|
|
Mouse
|
77.79%
|
20.92%
|
|
Rabbit
|
57.21%
|
-1.65%
|
|
Turtle
|
58.35%
|
28.51%
|
So, where are we? As
I mentioned some weeks ago, the Turtle is pulling further away from the
Rabbit. To make matters more complicated,
the metrics for the Rabbit are now calling for the same holding period as the
Turtle.
The Rabbit was designed for a tax-free IRA account, while
the Turtle calculates holding periods based on after tax returns. The longer the holding period, the less the
effect of taxes on an annualized basis, so the two lines will move closer the
longer the holding period. At a five and a half year holding period, the
difference is less than 1%.
The convergence of returns at longer periods works in the
Turtle’s favor, but the improved predictability of returns on fundamental
features over longer periods ALSO works in the Turtle’s favor. That is, flipping stocks once a quarter
offers no benefit from fundamentals, but holding for a full business cycle
does. As Benjamin Graham put it, in the
short term the market is a voting machine, but in the long term it is a
weighing machine.
And so, after hundreds of trades over five and a half years,
I can metrically demonstrate that I would have done better to have just bought those
first 20 stocks and held them the entire time.
Accordingly, the Rabbit has wandered off for a nap. The sudden standstill in my trading is by
design, and come January 1st I’ll recombine the two models into a
single model of 20 stocks that will look like this:
Sector Model
|
XLB
|
-2.33%
|
|
Full Model
|
Date
|
Return
|
Days
|
BT
|
8/11/2015
|
-33.79%
|
446
|
DY
|
10/30/2015
|
-1.04%
|
366
|
TMK
|
11/23/2015
|
5.69%
|
342
|
UPLMQ
|
12/1/2015
|
55.86%
|
334
|
NVR
|
12/16/2015
|
-8.09%
|
319
|
CMP
|
2/19/2016
|
6.26%
|
254
|
NVR
|
2/22/2016
|
-4.22%
|
251
|
ENOC
|
3/15/2016
|
-25.82%
|
229
|
AMWD
|
3/17/2016
|
9.29%
|
227
|
CASY
|
5/12/2016
|
0.99%
|
171
|
AVB
|
5/24/2016
|
-5.65%
|
159
|
AEM
|
6/7/2016
|
-1.53%
|
145
|
ESRX
|
6/13/2016
|
-14.25%
|
139
|
AMED
|
6/16/2016
|
-15.54%
|
136
|
FRO
|
6/27/2016
|
-4.63%
|
125
|
ASTE
|
7/12/2016
|
-7.55%
|
110
|
BSET
|
8/3/2016
|
-7.12%
|
88
|
MFC
|
9/1/2016
|
6.01%
|
59
|
SFM
|
9/8/2016
|
12.60%
|
52
|
CFFN
|
9/12/2016
|
3.52%
|
48
|
(Since 5/31/2011)
|
|||
S&P
|
Annualized
|
8.82%
|
|
Sector Model
|
Annualized
|
15.17%
|
|
Full Model
|
Annualized
|
11.17%
|
|
S&P
|
Total
|
58.07%
|
|
Sector Model
|
Total
|
114.98%
|
|
Full Model
|
Total
|
77.46%
|
|
Sector Model
|
Advantage
|
6.35%
|
|
Full Model
|
Advantage
|
2.35%
|
|
Previous
|
2016
|
||
S&P
|
51.94%
|
4.03%
|
|
Sector Model
|
77.79%
|
20.92%
|
|
Full Model
|
57.78%
|
12.47%
|
The doubled NVR position is an artifact that I’ll let roll over
naturally when the time comes.
This blog began with 10 stocks that I would roll completely
over once a quarter. It will become 20
stocks that will only average ONE trade during a quarter. It will be fully scalable to accounts of any
size, no matter how small or large, and no matter whether they are taxable or
safely in an IRA account. The blog will
be a lot less “interesting” but infinitely more useful because it will be easy
to follow.
Good trading.
Or should I say instead – good investing.
Tim
