Gyroscopic Investing

1.58% drop today - fingers crossed that it dips a few more % before I go all in.  I don't think I've ever rooted this hard before for the short side of a position... 

Stock Order: ERX-DIREXION DAILY ENERGY BULL 3X SHS
Status Filled at $45.068
Action Buy
Quantity 401 Shares
Order Date 08/02/2012, 10:51:25 AM ET

Stock Order: TMF-DIREXION SHS ETF TR DAILY 20+ YR TREASURY BULL 3X SHS
Status Filled at $87.586
Action Buy
Quantity 206 Shares
Order Date 08/02/2012, 10:52:13 AM ET

I'm in!  Let's see what happens now...

Good luck and keep us posted.  I am still considering it with a small portion of my funds. I think until the Fed starts raising rates, which they have said won't be until 2014 (could go later), this strategy will work.

Hi Clacy, would you mind testing with 50/50 TMF and UWTI with the quarterly rebalances?  Reub suggested this in the other thread.  UWTI is crude x3.

UWTI is not currently available on etfreplay, but I have requested that it be added. 

Thanks Clive. I had not really plotted the two on a chart like that.  That is concerning.  I feel like much of the ERX/TMF performance is probably due to stimulus activities from the central banks in the past 3 years. 

Clive wrote: More me messing around with HTML5 than anything particularly informative : Video message for Storm

Clive, I tried to view this in Chrome, IE9, Firefox, and even Safari on an iPad and I only get a black box.  In Chrome I get a black box with a play button but clicking the play button does nothing.

Is there something really concerning I should know about?  My portfolio was up about 2% but now it's down by 2.31%.  ERX is up 14.35% but TMF has been taking a beating (as expected) and is down 18.99%.

Clive wrote: The charts for the 1x energy and LTT have a nice inverse correlation, whilst the charts for the 3x's are more correlated (even though one was up +50% and the other down -50% over the period I looked at (around a year of history).

That's about all I said in the video file (you might be able to download (or view) it directly via a direct link to the video http://www.jfholdings.pwp.blueyonder.co.uk/storm.webm )

Ah, that worked beautifully.  I think you have the wrong ticker though on your 3x... You used ERY (3x Energy Bear) instead of ERX.  Had me scared there for a bit; would you mind running it again with the ERX/TMF?

Here we go, with the correct ticker:

Storm I joined you today with a small position (5% of my investable monies) in ERX/TMF.

That is unfortunate for you because I'm sure this strategy will draw down now that I've entered  ;)

clacy wrote: Storm I joined you today with a small position (5% of my investable monies) in ERX/TMF.

That is unfortunate for you because I'm sure this strategy will draw down now that I've entered  ;)

Congrats!  Actually yesterday was a good day to buy; the portfolio just passed into the green again, so most likely you timed the TMF rally perfectly.

Up 4.59% so far... When the Bernanke speaketh, oil does pretty well...

As an aside to current thread, another one of Clive's ideas that resonated with me was his idea of a Timber REIT portfolio.
Nov 10 2011 made a small VP investment in his idea of 50% TLT the rest split between PCL, RYN, and WY. Up almost 18%. Way better than when I committed to PP earlier this year when gold was so high. Finally back in positive territory with gold and my PP up 3.77%. Back to the point, I really like Clive's Timber Portfolio!  
Now back to our regularly scheduled programming!!

Bernanke and Draghi have basically signaled that this strategy SHOULD continue to work for the near future (several months).

QE is good for risk assets, including LTT's and leverage seems to be worth the borrowing costs.

This section of my VP has been hovering between down 6% and break even the last 90 days or so.  I'm thinking of dumping these positions and putting it back in the PP.  Yet again, VP teaches me humility and to just stick the money in the PP and don't worry about losing it.

Storm wrote: This section of my VP has been hovering between down 6% and break even the last 90 days or so.  I'm thinking of dumping these positions and putting it back in the PP.  Yet again, VP teaches me humility and to just stick the money in the PP and don't worry about losing it.

Yes, this goes to show that by the time an edge shows up in backtesting, it is probably too late to implement it for a profit.

Thanks so much for posting the follow-up. I admire this intellectual honesty, and had forgotten how intrigued I was when you were initially discussing this.

Storm wrote: This section of my VP has been hovering between down 6% and break even the last 90 days or so.  I'm thinking of dumping these positions and putting it back in the PP.  Yet again, VP teaches me humility and to just stick the money in the PP and don't worry about losing it.

What was the exact strategy?

MachineGhost wrote:

Storm wrote: This section of my VP has been hovering between down 6% and break even the last 90 days or so.  I'm thinking of dumping these positions and putting it back in the PP.  Yet again, VP teaches me humility and to just stick the money in the PP and don't worry about losing it.

What was the exact strategy?

50% ERX, 50% TMF, rebalance quarterly.  I've only had these positions 4 months now, so honestly I probably haven't given it a chance to work yet.  I may hold onto them a while longer.  The market has been anything but normal the last quarter due to congressional failure aka the fiscal cliff.

Storm,
What makes for a normal market?  Just curious.

I closed out these positions flat after ~120 days.  Too much volatility.  My VP days are over - If I would have stuck with PP I'd probably be up 2-3%, but instead I'm just happy to not have a loss.

I'm out of the position as well.  I'm sure now it will go straight up 

Clive, you are missed! Would you consider a return?

Agreed, I wish Clive would come back. He still actively posts on bogleheads and the AIM investorshub board.  He wasn't a complete believer in the PP during some time periods.  That's a good thing, IMO.  Dissenting opinions make for healthy debate.

clacy wrote: I'm out of the position as well.  I'm sure now it will go straight up 

I'm equally confident that my closing the position is a great buy indicator!