HOW ONE iTuliper IS INVESTED?

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I use MS Money for personal finances and including my investments. I also use Excel spreadsheets though as Money is rather limited, and I like to make pretty pictures (charts) with the data.

In particular as relates to WDCRob's quest for an annualized number, in my experience when Money calculates an annualized return for something you have not yet held for twelve months, it comes up with a wildly inaccurate number, usually fantastically optimistic. For example, you've held an investment for a month and it's up 5%, Money thinks your annualized return is 60%. Basically, MS Money is the most bullish investor on the planet. The YTD and other short-term calculations are accurate. It is a little frustrating trying to compare different investments in your portfolio when the numbers for relatively recent investments are dubious future projections while numbers for your longer-term investments are more reliable annualizations of past-to-date performance. I have never determined if the overall annualized return number for the entire portfolio is accurate or not.

Note: I am still using, I think, Money 2002, so perhaps newer versions have fixed this.

Don't know what happened to WDC, perhaps I succeed, unintentionally, in offending him

Zoog, if you invested 10,000 and made 500 in 30 days, then I would divided the 500/30days and get 16.67 gained/day. I would mulitply that by 365days/year and that would give me 6083.33. I would divide the 6083.33 by 10,000 and that gives me 60.83% which I think would be the correct annualized yield. That is pretty close to what you are saying MS money returns, not so?

[zoog]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I agree with the significance of your concern here, and I don't know of any way to attempt to do it with economy of time except to use a spreadsheet, but maybe Quicken or MS money will do it. I use MS money for tracking expenditures and stuff, but I don't use it seriously to track my investments.

I use MS Money for personal finances and including my investments. I also use Excel spreadsheets though as Money is rather limited, and I like to make pretty pictures (charts) with the data.

In particular as relates to WDCRob's quest for an annualized number, in my experience when Money calculates an annualized return for something you have not yet held for twelve months, it comes up with a wildly inaccurate number, usually fantastically optimistic. For example, you've held an investment for a month and it's up 5%, Money thinks your annualized return is 60%. Basically, MS Money is the most bullish investor on the planet. The YTD and other short-term calculations are accurate. It is a little frustrating trying to compare different investments in your portfolio when the numbers for relatively recent investments are dubious future projections while numbers for your longer-term investments are more reliable annualizations of past-to-date performance. I have never determined if the overall annualized return number for the entire portfolio is accurate or not.

Note: I am still using, I think, Money 2002, so perhaps newer versions have fixed this.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I agree with the significance of your concern here, and I don't know of any way to attempt to do it with economy of time except to use a spreadsheet, but maybe Quicken or MS money will do it. I use MS money for tracking expenditures and stuff, but I don't use it seriously to track my investments.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I guess at some we'll get on the same wave length, sorry for my not being more attuned.

Do you use a spreadsheet, I guess most people who do use Excel? I don't own any Microsoft, I don't think, but in my opinion anyone who is serious about investing should use a spread sheet to track their activities. I'm sure there are other methods, but to me spreadsheets are the most interesting thing I have ever happened upon in computerdom. I love my spreadsheet.

Please answer.

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

jk, It sounds like you and Jim are getting a little nervous about the recent rapid rise in PM prices, right? So rather than calling a top you are just positioning for a short term consolidation?

As Fred points out on a different thread, there doesn't seem to be any change in the underlying fundamentals to change the trend of PM's. Granted, things may flatten for a while, but the fundamentals are still there.

I get lucky occasionally and can pick absolute tops and bottoms but by and large, I am trend follower. And I assume the trend remains in place until proven otherwise. Being a contrarian only works at major inflection points. Be ever cautious of a trend change but in between those major junctures, just follow the trend and enjoy the tailwind.

By the way, if the Canadian central bank is lowering their interest rates, does that mean a race to the bottom for fiat currencies, so each country can maintain an export advantage? If so, bullish for PM's?

Greg,

jk can give you his answer. I look at gains and measure them against some likely nebulous number I have as to what is a good gain. The gains I showed in my table last Friday in PM, commodities, and energy were gains that I would settle for in a year in some of those investments, or in SLV or GLD for two years. I didn't get out of them yesterday with as much gains in them as last Friday, but still to me very good simple gains for the short periods I held the bets.

I don't think I have ever put in new money at an exact bottom or sold at an exact top, and I am not expecting to do so. If you have 100% gains in anything today on an open position, it very much remains to be seen what will be your ultimate profit. I just made a decision to take some rather exceptional profits that were gained over short periods.

I do expect as I wrote above, to buy back some or most of those positions, and that could even work out to be buying them back at higher prices, but for sure it will be after some sort of pullback, and for sure at some point prices will pull back.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I was asking a general question, Jim - not challenging you or anything.

I was just wondering if you weighted each investment return for time invested and its proportion of your overall investment whether it's right to say you have a annual return of X for the whole portfolio or not.

WDCRob,

I didn't take your post as a challenge of any sort, and I am sorry if my reply came back to you with that inference.

Those gains in the last table I put up, which were through last Friday, are simple gains on the positions in the table, and the 10.82% is the total gain on those positions, not my entire portfolio. Those gains would be considerably higher had I chosen to figure and display them on an annualized basis, and I am sure you understand that.

I guess if one had reason to compare gains to understand their significance, then the only way to do it for gains/losses made in periods under one year is to report them as annualized gains. The point you put forth in your post is all correct, again I didn't check your formula, but the concept is exactly correct.

What I put in the table is the amount of money I have gained on the investment without regard to time.

I don't know how many individuals pay any attention to this tread, but if you think it would be a better depiction of reality for me to figure all the gains on an annualized basis, then tell me, and I'll probably do it, "probably" is in that statement just because of the factor of my time--which I will get around to doing if you think it would be more meaningful, and please give me your opinion, WDC.

Thanks for questioning my method.

[BiscayneSunrise]

Re: HOW ONE iTuliper IS INVESTED?

jk, It sounds like you and Jim are getting a little nervous about the recent rapid rise in PM prices, right? So rather than calling a top you are just positioning for a short term consolidation?

As Fred points out on a different thread, there doesn't seem to be any change in the underlying fundamentals to change the trend of PM's. Granted, things may flatten for a while, but the fundamentals are still there.

I get lucky occasionally and can pick absolute tops and bottoms but by and large, I am trend follower. And I assume the trend remains in place until proven otherwise. Being a contrarian only works at major inflection points. Be ever cautious of a trend change but in between those major junctures, just follow the trend and enjoy the tailwind.

By the way, if the Canadian central bank is lowering their interest rates, does that mean a race to the bottom for fiat currencies, so each country can maintain an export advantage? If so, bullish for PM's?

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

I was asking a general question, Jim - not challenging you or anything.

I was just wondering if you weighted each investment return for time invested and its proportion of your overall investment whether it's right to say you have a annual return of X for the whole portfolio or not.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

Quick Q...

If you're calculating an annual return for your entire portfolio is it normal/appropriate to weight both for the amount of time invested and the proportion in each investment to get an all-in annualized return?

i.e. does this:

Investment One - $1,000 for 1.82 years with a annual return of 10.6%
Investment Two - $1,000 for .16 years with an annual return of 104%

Equal this?

(1k/2k * 1.82/(1.82+.16) * 10.6%) + (1k/2k * .16/(.16+1.82) * 104%)

For an 18.2% annual return?

WDCRob,

I am not going to check your algebra. All the returns I have mentioned above in the tables are simple gains/losses without regard to time.

I have also periodically indicated what have been by one, two and three years returns and return from when my portfolios were at their zenith at very end of 1999 or very first of Y2K--so far that is always the negative bold number in red. Those notations represent compounded annual interest rates.

You know, if I look at my gains in gold and silver, over the 10 months and actually much less on average, on an annualized rate, the numbers would be significantly higher, but to me that is just sort of blowing smoke. I am not trying to impress anyone with how much I have gained or lost (hopefully keeping the latter to a minimum). I am just trying to put up for my benefit, if for no one else's, a semi-public record of what I do and hopefully a few reasons for whatever trades I make. Definitely I have never even suggested, I don't think, that anyone should take my actions as recommendations for what they might be doing with their own monies. If anything, one might argue, they would better consider doing the opposite.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

i, too, was slightly unnerved by yesterday's action. i still think that the recession will surprise on the downside and that will lead to a commodities sell-off along with equities. instead of selling my pm's and smaller ag positions, however, a bought some puts on dbb - the base metals etf which is 40% copper, the rest zinc and aluminum. these will cushion a sell-off, but the nominal face amount is only about 5.5%, while i still hold 31% pms and 5% agriculturals. [btw, as of last friday i'm up 10.5% ytd, 24% last 52 weeks, but all that means is that i'm carrying a heavy pm position, and remain vulnerable to giving a lot back.]

I should've waited a day, but whatever I do that is usually the case it seems. Decision was made not in fright or excitement--I don't think.

I am back in your camp on this, there are now six 90% down days on the NYSE in volume and points since 12/11/08. I don't have extreme confidence in any single indicator that involves market data, but I guess were I to have to pick one, Desmond's 90% study would be the one. I think you are one of the smartest guys here, jk, (why else? The Brain), and I am positive my reasoning is much less profound than yours on these issues, but nevertheless we are in agreement--more importantly, I would like it if we turn out to be correct.

You know I don't know nuthin' about birthin' no babies, and I don't know nuthin' about no puts and calls options, except I collect and attempt to make sense from the data on such trading.

I've been thinking you should have racked up gains with your PM allocation--great work!

I expect to buy back into probably everything I sold yesterday, when? No idea.

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

Quick Q...

If you're calculating an annual return for your entire portfolio is it normal/appropriate to weight both for the amount of time invested and the proportion in each investment to get an all-in annualized return?

i.e. does this:

Investment One - $1,000 for 1.82 years with a annual return of 10.6%
Investment Two - $1,000 for .16 years with an annual return of 104%

Equal this?

(1k/2k * 1.82/(1.82+.16) * 10.6%) + (1k/2k * .16/(.16+1.82) * 104%)

For an 18.2% annual return?

[jk]

Re: HOW ONE iTuliper IS INVESTED?

i, too, was slightly unnerved by yesterday's action. i still think that the recession will surprise on the downside and that will lead to a commodities sell-off along with equities. instead of selling my pm's and smaller ag positions, however, a bought some puts on dbb - the base metals etf which is 40% copper, the rest zinc and aluminum. these will cushion a sell-off, but the nominal face amount is only about 5.5%, while i still hold 31% pms and 5% agriculturals. [btw, as of last friday i'm up 10.5% ytd, 24% last 52 weeks, but all that means is that i'm carrying a heavy pm position, and remain vulnerable to giving a lot back.]

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

3/3/08 Monday. I opened ~ 1% positions in SKF, SRS, DXD, SDS, QID, and TWM. These all move -200% to the underlying indices.

3/4/08 Tuesday. Have you ever imagined a conversation that might take place in one of these big crowded clubs where everyone is partying like there is no tomorrow, and one guy asks another do I smell smoke, and the other says nah, keep partying, and then another guy says well, maybe I do smell smoke, and the second guy says nah, keep partying. What woud you do? I hope I would go outside and discuss it further.

I sort of "read" the impression on iTulip as more than one or two people are wondering about whether they smell smoke with precious metals. I surmise the collective wisdom is, "Nah, keep partying."

Today I liquidated all my positions in GLD, SLV, GTU, RJZ, RJA, DBA, NLR, DIG, and GEX all of which are in an IRA so no tax consequences.

I maintained my CEF and GTU in a personal account.

I added 1% today to DXD, SDS, QID, and TWM, thus bringing those positions to about 2% each in my total portfolio.

Note I did not open up any short positions against the PM's. I did something similar in November 1999. Liquidated a lot of long stuff, and went short some indices with some inverse mutual funds and was hurt badly in a very short period of time. So I don't know where gold, silver and the miners represented by GTU are going next, but they have been going up too strongly for my tastes. I noted elsewhere tonight Platinum is up 64+% in 4 months and silver is up 51% in 3 months. I can live with my profits that I locked in today. The longest any of the positions had been open was an original position of 1.3% held since mid-July in GLD. Everything else was opened since December 2007.

I had a 0.5% position in GEX (global alternative energy ETF) which I sold today. That fund has moved rather closely to how the major equity indices have moved. It's behavior so far does not show that it is moving counter to the rest of the equity market. I don't know how good a proxy, if at all, this fund is for the iTulip's "next bubble mentality," but were it to be even close to representative of such a proxy, it suggests to me that alternative energy is not ready to move up now. That is my impression.

It's late, maybe tomorrow I'll put in my gains and losses on the positions I liquidated yesterday and today (Tuesday 3/4).

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

End of February, 2008

2/29/2008	POSITION	% INVESTD	NOW GAIN	% GAIN	ALLOCATION
DJ US FINANCIALS	UYG	0.00%	0	0.00%
DOW	DDM	0.00%	0	0.00%
NDX	QLD	0.00%	0	0.00%
SPX	SSO	0.00%	0	0.00%
RUT	UWM	0.00%	0	0.00%	0.00%
GOLD & SILVER	CEF	0.85%	3,532	58.48%
PM MINING	GDX	1.90%	1,489	7.53%
GOLD	GLD	2.57%	7,533	35.33%
SILVER	SLV	1.76%	5,439	38.23%
GOLD	GTU	1.34%	5,450	56.71%	8.42%
METALS	RJZ	1.05%	2,160	22.36%	33% IN PM'S
COMM AGRIC	DBA	1.11%	2,574	26.02%
COMM AGRIC	RJA	1.04%	1,566	15.54%	5.51%
GLBL ALT ENERGY	GEX	0.40%	-287	-5.99%
NUCLEAR	NLR	0.89%	576	6.12%
DJ US OIL GAS	DIG	1.01%	1,052	10.27%	2.30%
YEN	FXY	10.29%	13,490	13.24%
YIELD ON 30YR-BOND	RRPIX	3.19%	-1,792	-4.78%
HEDGED EQUITY	HSGFX	18.76%	7,757	3.83%	32.24%
		46.18%	50,538	10.82%
	BOLD GREEN SYMBOLS = MOVE +200% OF RESPECTIVE INDICES

On Friday, I was stopped out of my +200% LONG EQUITY POSITIONS (DDM, SSO, QLD, UWM) and+200% LONG FINANCIAL POSITION (UYG) ending with a loss of -1.65%. This jimbo is not nimbol enough. On Wedneday, I had a 4.38% profit in them, that shrunk Thursday and evaporated Friday. So is life, sometimes. I hate to lose, but still I don't regret too badly having bet the long side which I began back on 1/18/08. So for about six weeks I was, as I see it, on the correct side of the equity market, except for the last two days, that left me with the above loss. Perhaps next time, I'll do better.

Still for the week ending Friday, I am better off than at any point since the 10/9/02 lows of my portfolios, and my current drawdown is -0.77%.

Here I think is a nice article by Carl Swenlin http://www.decisionpoint.com/ChartSp...9_whipsaw.html
appropriately titled "WHIPSAW!" and further expansion of his perception of trading in a bear market, which by his definition we are in. I don't use any of the indicators Swenlin discusses, and I don't subscribe to his chart service. I looked into it once on a freebie trial, but it has so much in it, it caused me "information overload."

Here is another good report that I look forward to reading each Saturday http://www.safehaven.com/article-9600.htm because Mike Burk puts it on the line and says where he thinks the markets will be in a week, though he is wrong at least half the time--which is okay by me because he makes his analysis and then draws a conclusion, a methodology with which I agree.

Burk thinks a "multi-month low" will probably occur in the next few weeks. If you look at his 8-year chart (right above the subtitle Seasonality) he shows the behavior of new lows on the Nasdaq in the period of 04/2001-10/2002 a period of 18 months.

If one accepts that the disarray in the US credit markets and secondary fallout into the equity markets has some significantly more unwinding to do, then attention to how the last serious bear market played out seems to me worthwhile to study and try to keep in mind. I think it was Burk who recently pointed out that the new lows for the Nasdaq of 877 on 1/22/08 was the all-time high number. Assuming further new lows in the Nasdaq, then paying attention to see if the number of new lows shrinks with successive further lows (if that in fact occurs), may offer some indication of a coming bottom in the next one to two years, again assuming this market fulfills bears' desires and continues downward.

YTD: +6.37%
1-yr: +15.05%
2-yr: +11.74% comp.
3-yr: +13.13% comp
From my 10/02 lows: +19.18% comp.
From my 1999 high: -0.81%