It’s embarrassing, but hoping it might be useful to others, I’ll share it anyways.
At the beginning of January, as usual, I posted the allocations for that month for the strategy I call Max-Sharpe and which I try to follow. So what’s the deal? Well, I wasn’t able to enter these positions, since I became too “greedy”.
I trade this strategy in a registered account, thus, no margin, no shorts. So, as always, I had to close the previous month’s positions first and then do the buying. I close the positions quickly, alright, but then, when it came down to buying, the markets were moving quickly higher both in IYR and in TLT. So what did I do? Being a very skillful (punt intended) trader, and like many other traders in the same situation, myself included, I decided to wait for the price to come back to me. In other words, a limit order to save a few dollars (might have been a few hundred even, but that’s irrelevant). You starting to guess what happened – yep, I am still waiting. But only a little would have been lost if not for my second exceptional move. Usually my commitment in similar situations is that if I don’t get in by the end of day or so, I buy market. Well, facing 1.25% advance I decided to wait for the another day …
Both the IYR and the TLT have advanced about 3.5% since, and that’s as of the 2nd’s close, thus, excluding any gains I would have realized on the 2nd. They accounted for about 96% of the total allocations, so it’s very ugly at this point. The bottom line is that by trying to save a few dollars, I kind of missed what may turn out to be otherwise a great month.
I am curious to see the math at the month’s end, but my feeling is that it will turn out to be a serious mistake.