Total Loss: -11.69%
Commentary
As indicated in our broader market view published in Wealth Building Ideas, it has been our gowing belief that the market was preparing to shift direction with Treasuries showing a “bottoming” effect.
Precisely predicting such turning points is nearly impossible and at best one can look in the rear-view mirror and say, “Of course it would happen right here”…
So with Treasuries still in a “bearish” mode we opened short positions through TMV scaling in from 12/31/13 through to 01/13/14. Had we not scaled in, the total loss would have been in excess of 16%. This is part of the risk-managed power of scaling in.
In addition, as we were fully invested in TMV we avoided long investments in the SPXL which has suffered greater than 16% losses throughout this same period.
The method generally produces an 80% win-rate but losses do occur. At least 65% of the time, losses that are generated when moving from a bearish to bullish market call tend to indicate a very strong trend change.
