Samwise Quick Reference Handbook
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Hey Sam. From your article last Tuesday, since you’re planning on allocating cash from 2 trading portfolios (Baratheon and Targaryen) to 3 long-term portfolios (Arryn, Lannister, and Stark) as trading capital to demonstrate the small % of cash used for short-term trades relative to the cash allocated for long-term trades:
(1) Are you planning on launching future LT portfolios to also include a small % of capital allocated for trading as well? (A kind of reset to track allocation and gains from the start… for example, we would have 5k for short-term, and 95k for long-term).
(2) Since 2 trading portfolios are being split and reallocated to 3 LT portfolios, will you make the same exact trades and send out one notification for short-term trades for each of the LT portfolios Arryn, Lannister, and Stark?
So we will address that once we get both portoflios back to even or green. once Baratheon and Targaryen are green, we’ll move the allocations over. We will actually perform different trades based on the overall portfolio risk tolerance.
For example, Arryn is up substantially more than is Lannister which is up substantially more than Stark. So it’s going to be measured.
I think just basing it on the overall portfolio makes the most sense by far. So that’s the direction we’ll go in.
Position sizing and relative allocation principles dictates that we do it that way. we’ll probably limit trading to 10% of the portfolio’s total assets. As the tradition portion grows, we probably move the cash to long-term positioning and reduce the amount of short-term exposure.
It’ll ll just be one portfolio anyway. So trades we put on in the portfolio will be based on the overall portfolio size.
They’ll all start with teh same amount of cash to start and then time wears on we’ll limit trading to 10% is the key. So if Arryn were trading for a while, it would be limited to a max of $24k out of the $240k in the portfolio.
Awesome Sam, and you plan on launching new portfolio next correction?
Yeah. The key is to launch new portfolios in future corrections. Though at some point, we’ll need to manage or consolidate them somehow because it’s becoming too many.
is it fine if we stick to one type of portfolio per correction going forward? maybe a leaps based one followed by a stock based one? Frey and stark are great examples for investing in a pullback and not a full correction. Just curious on how you’d want it to look in a few years time
Hi Sam,
How do we know when to start segmented rally cycle analysis? For example, upon hitting capitulation the market went on our recovery rally. However; the market was still potentially lined up for further downside with another leg in a bear market. How do we know when the next intermediate term rally starts and when to start running segmented rally analysis again?
Thanks!
In some sense, you can’t know until after the fact. Hence, why we’re bringing up the analysis now and not a month ago.
You look at the chart and consider what just occurred and from there you can derive what’s actually going on
Often times, we catch on a lot sooner than we did here because we don’t normally have 25% corrections.
In a regular 12% correction where the market is oversold and where we’ve seen regular bottoming indicators, we head right into a new intermediate term rally
In the overwhelming majority of the cases, Bear market risk doesn’t even enter into the equation at all.
That only applied to this correction given the size of the correction
Most corrections don’t unfold that way.
Most corrections we’re dealing with a 15 day & 10% drop.
September 2024 or April 2024 are examples of typical corrections
August 2024 is an example of a larger correction but follows the same typical patterns
Has anything changed for NVDA’s pullback? Yesterday it looked like the RSI fell despite the stock staying about the same. Not sure if that would have changed anything
Hi Sam, great insight as always. Glad I started following during this correction as I’ve learned a lot!
Related to the pullback we’re expecting, what are some considerations when it comes to trying to close positions ahead of a pullback and getting back in with similar positions after the pullback vs. time to expiry? For example, would considerations change drastically for this kind of move with options expiring in June or July in this scenario vs. August or September? Are there any risks you keep in mind when it does seem highly likely that a 3-5% pullback is imminent?