New Year’s first month is over, and the leveraged strategy (I still call it HFEA, although it no longer is the strategy) is slowly declining but outperforming SPX; see the charts below. I expect this strategy to perform better when the market improves.
Initially, I dedicated $15,000 to this strategy. That represented approx 15% of our portfolio. When the SPXL underperforms the market and my position goes down and is below my cost basis (my position is in red), I add new shares to my portfolio. I deposit cash and buy shares. Once this bear market ends, and trust me, it will, as no bear market lasts forever, I will stop buying new shares but trim the position and save cash from selling for the next bear market. This is a standard balancing approach. Keep my position at about 15% of my main portfolio. When it moves to 20% (or more), I sell enough to bring the position back down to 15%. If it moves down to 10%, I will buy enough to bring it back to 15%, and so on.
In today’s bearish market, I am adding new cash and buying even though it hurts my short-term net-liq. However, I expect this to change soon.
| MONTH | NET-LIQ | PROFIT/ LOSS |
PROFIT/ LOSS %% |
| May 2022 | $6,923.49 | -$1,771.16 | -20.37% |
| June 2022 | $12,199.81 | $5,276.32 | 76.21% |
| July 2022 | $15,551.55 | $3,351.74 | 27.47% |
| August 2022 | $13,414.80 | -$2,136.75 | -13.74% |
| September 2022 | $10,454.70 | -$2,960.10 | -22.07% |
| October 2022 | $16,809.60 | $6,354.90 | 60.79% |
| November 2022 | $18,659.90 | $1,850.30 | 11.01% |
| December 2022 | $16,562.20 | -$2,097.70 | -11.24% |
| January 2023 | $15,010.60 | -$1,551.60 | -9.37% |
Our HFEA strategy decreased value in January 2023 by -9.37% while the entire market gained 6.08%. Overall, the HFEA portfolio is up 11.67% while the entire market is down -10.53%. I think that is still a good result.
HFEA charts
Strategy Net liquidation value
Strategy vs SPY Net liquidation value
Strategy performance vs. SPY
January 2023 was not a good month for this strategy as the SPXL still lost value (remember, the leveraged ETFs work both ways – they go up 3 times, but they also go down 3 times).
Leave a Reply