How to pick which portfolio is best for you

I know it seems obvious that the best portfolio must be the one with the highest compounded annual growth rate (CAGR) which is the Vega portfolio. It has a CAGR of 22.2% since 2005.  The problem with choosing this way is that you need to understand all of the statistics of the strategy.  For instance, this portfolio has an average of the 3 worst drawdowns of 17.1%. That’s the average. The worst drawdown was 18.1%.  And, Cesar and I have saying…

 

”the worst drawdown is the one that’s coming.”

 

We can’t tell you what portfolio to choose and you really have to know yourself.  If you have a large nest egg built up, and you have low risk tolerance, I would trade Capella. This portfolio has had a CAGR of 12.9% and a maximum drawdown of 9.3% with an average of the 3 worst drawdowns of 8.4%.  This strategy is absolutely amazing.  I can tell you right now that is what a pension or large fund would choose.  No question!

 

Well where do the other 2 portfolios fit in your decision making, Deneb and Rigel?  Deneb is the portfolio that had 0 losing years.  It had exposure of only 69% and still had a 17% CAGR.  Rigel had about the same CAGR as Vega with a lower max drawdown, and the highest Sharpe ratio of all of the strategies.

 

You may also consider that Vega and Capella use only 5 slots, so they theoretically have more risk with less diversification.  Also, if you like to minimize trade entry time, you may really want a 5 slot system.  There is less work each Sunday.

 

If you are trading less money and trying to grow your portfolio and have a high risk tolerance I would trade one of the two 20+% higher CAGR portfolios.  If you have a large amount of money I would look at Capella.  Well, if you are in between, I would really consider Deneb.

 

I promise that if you really look at your past trading and your emotions about trading, you already know the answer as to what is the best portfolio for you.

 

If you have any questions, please contact us.

 

Steven and Cesar