"Perfect Portfolio" Update for Q1

Posted on by The INO.com Team

The first quarter of the year proved to be a challenging one for many traders outside of the equity markets. The "Perfect Portfolio" which tracks 4 markets was no exception. In the four ETF markets we track, the portfolio was equally split with winners in two markets and losers in two markets.

The following ETF's provided solid returns for the "Perfect Portfolio" in Q1. Both the FXE which tracks the euro, and SPY which tracks the S&P 500, managed to put in solid performances. However this was not enough to offset losses incurred in the GLD which tracks gold and the USO ETF which tracks the crude oil market. Combined losses in these markets were large enough to wipe away any gains for the quarter.

For Q1 of 2010 the "Perfect Portfolio" showed a loss of -7.05%. This was in sharp contrast to the gain of 12.05% that was seen in Q4 of '09. Normally when markets are in a trading range, they present a challenging scenario for the "Perfect Portfolio and will produce small losses. However, this is not a game changing event as we expect we will see the ETF markets that we track pick up and deliver some excellent returns in Q2, 3, and 4.

No one likes to see losses at any time, however, it is part of the trading/investing game and one should be mentally prepared to accept reasonable losses. The four markets that we are diversified in are going to offer some excellent opportunities in the next 12 to 24 months. We want to continue to follow our game plan and make sure that we keep on track with these global ETF markets.

I expect that Q2 will offer positive results and I'm looking forward to reporting them to you in the very near future.

All of the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

35 thoughts on “"Perfect Portfolio" Update for Q1”

  2. Hallo Adam
    Does INO group has any plan in the future to trade the international future markets like-HongKong,Singapore,Thailand,India ?

  3. Adam,

    I posted the below question a few days ago but did not list your name so it may have been overlooked -- I see that you respond when your name is mentioned. I was considering whether to use the Perfect Portfolio strategy for IRA's, which of course cannot be shorted. Thanks for any advice you could provide on this.

    I did a search to find the Perfect Portfolio webinars, blog comments and performance updates; I was not sure if all this is under one section on the site(?)
    ____________________________________________________________________________________

    2010-07-18 16:31:31
    I’m relatively new to Marketclub and recently looked at the webinar about the Perfect Portfolio. For applying the concept to IRA’s, what ETF’s would you recommend when shorting is the suggested action?

    I have traded SDS at times, and I noticed a recent blog where you mentioned the EUO.

  4. Hi Adam,

    I had been your subscriber of ino.com in the early inception but lost some money and that is why I am a bit sceptical about how I can use the trade triangle. I would like to subscribe again but unless someone teaches me how to use what ino.com has to offer in terms of trade triangle and stock scan, I am still doubtful.

    Cheers,
    HuaSiam

    1. HuaSiam,

      Thank you for your feedback.

      I recommend that you try a 30-day risk free trial to MarketClub. http://marketclub.com

      TUTORIAL
      Here is a great tutorial on MarketClub and how to use the Trade Triangles and service. http://broadcast.ino.com/videos/help_theater/

      Here are the trade triangle rules that we use:

      How "Trade Triangles" work in stocks.
      The major "Trade Triangle" to watch in trading stocks is the monthly "Trade Triangle" as this triangle determines the trend. We use the weekly "Trade Triangles" for timing purposes. Let me give you an example, if the last monthly "Trade Triangle" is green this indicates that the major trend is up for that stock. You would then use the initial monthly "Trade Triangle" as an entry point and use the weekly red "Trade Triangle" as a stop out point. You would only reenter a long position if and when a green "Trade Triangle" kicked in. You would then use a weekly red "Trade Triangle" as a stop out point. Providing that a monthly green "Trade Triangle" is in place the trend is positive for the stock. The reverse is true if a red monthly "Trade Triangle" shows that the trend is down. You would then use the weekly "Trade Triangle" for entering and exiting the market.

      How to use trade triangles in futures and Forex.
      In the futures and Forex markets we use the weekly "Trade Triangles" for trend and the daily "Trade Triangles" for timing. Let me give you an example of how that works. If a green weekly "Trade Triangle" is in place it indicates that the trend is positive for that market. Initial entry point would be on the weekly green "Trade Triangle" and then you would use a red daily "Trade Triangle" as a stop. For example if the trend was up on the weekly you would exit a position on a red daily triangle. This is not to go short but only to exit the position and wait for the trend to reestablish itself on the upside. In the event the trend that does not reestablish itself and reverses with a weekly red "Trade Triangle" you would go short on the weekly "Trade Triangle" and use the daily "Trade Triangle"for money management and reentry points.

      All the best,
      Adam

  5. I'm relatively new to Marketclub and recently looked at the webinar about the Perfect Portfolio. For applying the concept to IRA's, what ETF's would you recommend when shorting is the suggested action?

    I have traded SDS at times, and I noticed a recent blog where you mentioned the EUO.

  7. HuaSiam,

    Thank you for your feedback.

    Unfortunately it is not possible at this time to do what you are asking.

    Adam

  8. Hi Allen, I am a new member to market club and love the simplicity. I have a 401 k plan which I can trade with no brokerage fees.I can trade S&P 500 and do not have to pay any fees. So I plan on using the daily trade triangle.

    Also, I can move money from the 401k to a brokerage so I can invest in specific investments.
    If I set up the perfect portfolio , I would enter and exit using the monthly and weekly trade triangle for the brokerage account. When exiting Gold and Oil weekly trade triangle signal to exit, do you just sit on the sidelines until a trigger to buy.

    In the case of spy and fxe what etf do you buy in to counter act a
    negative trend.

    Thanks,

    Ernie

    1. Ernie,

      Thanks for your feedback.

      With the Perfect Portfolio we only use the monthly Trade Triangles.

      Hope this helps.

      You can also short EFTs at certain brokerage houses.

      All the best,
      Adam

  9. Hi Adam,

    Being New to your trade triangles on these ETFs, would you be leading us newbies in this trading world as to when we should enter long or short. From the recorded webinar, the ETFs are down as indicated by the monthly trade triangles. Should we wait for the turn around (SAR). Please show us weekly on this 'perfect portfolio' movement for this coming Q2. Is that possible?

    Thank you.
    Huasiam

  10. Ralph,

    Thanks for your feedback.

    The Perfect Portfolio unlike our World Commodity Portfolio does not have a stand aside mode.

    The idea is to simply be in markets that have traditionally had large moves either on the upside or downside. That way you never miss a major move and the big move tends to always cover and outperform all the smaller moves.

    All the best,
    Adam

  11. I associate myself with these remarks.

    It's only one quarter. Let's see how things fare by Dec 31, 2010. I believe the game plan will be vindicated.

    Perhaps the plan needs a stand aside signal? I have no idea. Just thinking out loud.

  12. Adam, I don't closely follow your perfect portfolio, however the way I understand it, you selected the euro currency, SP500, gold and oil to be in (or not).

    Why not choose a market according to the technicals discovered? Last night I took some hours to compare charts of different markets, and in my humble view both soybeans and KC wheat are laying the groundwork for a major move up, while live cattles appear to work on a top (two possible reversal formations: double top with key reversal, plus the candle-chart one) and could be in for a major move downhill.

    I'm watching gold as well, rather closely, just this market has been rather frustrating for months now, and the technicals - so far - don't add up suggesting a major move anywhere. And with all the institutional speculation in oil, who ever is to guess that market right?

    In any case, good luck and keep the good work up!

  13. Hi Adam,

    Thanks you very much for all your educative insights. I am very new to this world of trading and your advise, teachings are very valuable.

    Please excuse my dumb question, but something escapes me.

    Are we looking at the same FXE?
    CurrencyShares Euro Trust(FXE:NYSE Arca, US)

    Why do you say this FXE ETF had a solid performance in Q1 when it has been going down for the past 4 months? ( unless you are trading it short off course...).

    Thanks

    Alain

  14. Hi Adam,

    I wonder if the results would have been different if the conventional method was followed - that is used both monthly and weekly instead of only monthly and SAR. Obviously it would have results in more trades hence more commission but may still come out ahead compared to the SAR method.

    Thanks,
    Trikaal

    1. Trikaal,

      Yes, you are correct.

      The Perfect Portfolio is meant for traders who do not want to be so active.

      Over time it produce positive (longer-term) results.

      All the best,
      Adam

  15. Hi Adam,

    Your vivid description of the "perfect portfolio" is fantastic and honest. I would like to follow but you did not indicate for Q2, we should buy all the four ETFs or otherwise.

    Thank you
    Huasiam

  16. This is a good example of why it is important to trade with momentum... exiting positions as needed and buying when they find strength.

  18. Thanks. It is the only way to conduct yourself in life and in business.

    Very true! To bad Goldmam did not use this simple rule. I suspect if more people including politicians followed it we would all be better off.

  19. Now that the market hasn't had a 10% correction since the start of March 2010, many talking heads are predicting a bigger correction, especially since the Market Sentiment has reached the extreme level of 53% Bulls to 17% Bears. So I favor going neutral on a Red Weekly Triangle, and then re-enter on a Green Daily
    Triangle as long as the Monthly Triangle remains Green. What I've learned from Market Club is to let the Charts tell me how to trade, not the talking heads.

  20. USO is dangerous. It doesn't track oil prices, it tracks some selected oil futures prices. It's a bet on a bet. The experts make the big money with USO, and I'm trying to find a better energy ETF (Adam?). Yes, USO does have playable trends, and it is liquid, but I'm not sure it is an honest game.

    I lift this from the Morningstar ETF analysis of USO (go read it all if you can):
    "This fund tracks the prices of futures contracts on West Texas Intermediate light, sweet crude oil that trade on the New York Mercantile Exchange. The fund's net asset value, thus, isn't tied to spot prices, but rather the change in futures contract prices, typically the near month contract. Like most other commodity-futures funds, this fund rolls its contracts over from month to month, so it's susceptible to the shape of the futures curve. When it's upward sloped (that is, longer-dated contracts carry higher prices than contracts near expiration), investors face a head wind in rolling futures, and the reverse when it's downward sloped. ... This 'ETF' is really a limited partnership, a structure whose tax implications are both considerably different from traditional equities and can catch uneducated investors off guard. We'll summarize some of the issues here, but we would recommend consulting your tax professional before diving into these shares."

    1. Tom,

      Thanks for your feedback and excellent advice. I am sure many folks will appreciate your comments.

      Adam

  22. Loic,

    Thanks. It is the only way to conduct yourself in life and in business.

    I have found that when you go through a challenging time period in the markets that the pendulum normally swings back to the plus column. One only has to wait, be patient, be disciplined and follow a winning game plan. When one does that, the odds are stacked in your favor.

    All the best,

    Adam

    1. Adam,

      Will the substitution of leveraged ETFs for these markets work on your Portfolio model?

      George

      1. George,

        The short answer is yes, but the Perfect Portfolio is conservative in nature and does not use leverage. If you want to get into leveraged trading try futures.

        All the best,
        Adam

  23. Adam,

    I love your honesty. In the world we live in today and with all those supposedly great traders that make money all the time, it is nice to read things like what you did write above. I had a great 2009 year trading my own account but just like you, the first quarter of this year prove to be challenging because of all those markets being in a trading range.

    Thanks for the great work you do. Thanks for being honest about gains and losses. Working with guys like you is "refreshing" in the world we live in.

    Loic

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