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January 2023 HFEA strategy report

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.

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

HFEA net-liq 01
Strategy Net liquidation value

HFEA net-liq 01
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).

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