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SP500 Update: Safeguarding Against Market Volatility

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13 Comments

D
Jun 13, 2023

Since we are over the 21% I'm assuming the S&P is officially out of the bear market? In Trading View I see the Nasdaq bear end on May 25th, but don't see a S&P bear market end now that we're over 21%, so was curious.

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Unknown member
Jun 15, 2023
Replying to

Vincent, will today's move setting up the 21% threshold you would like to see for entering a bull market? Thank you :-)

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Kiyan A
Jun 12, 2023
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I don’t understand the 1% VIXM allocation. That seems too small to protect against anything? Is it 1% of your UPRO allocation or 1% if your total portfolio (I.e. what would be allocated to SPY, so 3x what you allocate to UPRO)?


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Vincent D.
Vincent D.
Jun 12, 2023
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Replying to

It's 1% of the total portfolio. It's small, but since VIXM has some decay, I prefer to build our position by layer. My objective was to raise this position up to 5%. The idea here is not to protect the overall portfolio but to cover the retracement before we get the hedge signal. With the current setup, I anticipate that it would require a move down between 2-3% before getting a hedge signal. Most of the significant moves on the VIX resulted in an average of a 20% move on VIXM. The highest recorded move was 150%, but let's keep it at 20%. A 20% move on VIXM with a 5% value of a portfolio would cancel out between half…

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Eugene C
Jun 09, 2023

Hi Vincent,


In a previous post you commented "There will be a moment where we will ride the market on margin with a beta of more than 6, but we don't think that this is the time."


You can discuss more on how you will reach that beta of 6. Will it be a combo of leveraged ETFs and stocks? Might those leveraged ETFs be non SP based such as Nasdaq? If stocks are involved will you be letting us know which stocks you are purchasing (of course as non-financial advice :))?


Thanks Eugene

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Vincent D.
Vincent D.
Jun 12, 2023
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Replying to

Yes, we will definitely let you know. In the case of WealthUmbrella, we will always remain invested in ETFs that track the market, not in single stocks. It's not that I don't think buying individual stocks can be a great thing. In fact, I do own a mix of individual stocks and market ETFs in my personal account. It's just that playing individual stocks requires looking at very different data and also implies a very different type of analysis. We do have some ideas on how we could help detect momentum in stocks with data analysis, but I think it would make more sense for us to share such work with groups (like the IOFund) that are dedicated to digesting…



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EO
Jun 08, 2023

Hi Vincent, have the hedge signal flipped back to sell (WU Out)?


Just asking because IO-fund said yesterday that it did, but did not see any notifications here in WU.. Thanks

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EO
Jun 08, 2023
Replying to

Thanks Vincent, makes sense!

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Vincent D.
Vincent D.
Jun 08, 2023
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Yes, I like this way to intrinsically protect a portfolio. Here is the signal on S&P 500. So far this year, 3 successful trades, one almost neutral, and the current one is in profit as well. Despite this very positive outcome, any signal can only come after a bit of a trend (up or down), so this has us retrace a bit each time. I like the fact that playing the non-linear behavior of the VIX usually compensates easily for this retracement in a way that we never actually go down. This is something I started doing early in 2022 and it has helped me greatly. The hardest part is knowing when to sell them. Most of the time, I…


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