Did you follow the abysmal market performance this week and watch your hard earned capital slowly (or rapidly) melt away? It amazes me how many professional analysts and money managers acknowledge the rapidly approaching U.S recession, then offer "defensive" tips to preserve as much capital as possible. Why play defense in this market when you can use this bad beat market to your advantage. I'm not trying to pat myself on the back after just one week (okay, maybe a little) but the Aggressive Trader Portfolio that I suggested last week laid out 8 themes that are doing pretty well so far.
As a benchmark, here are the one week (12/31/07 - 01/04/08) performances of the major US indices:
- DJIA -4.23%
- S&P 500 -4.52%
- Nasdaq -6.35%
- Russel 2000 -6.50%
Here's how each of the eight themes fared this week:
- Theme 1 (Long China stocks) -1.18%
- Theme 2 (Long Yen Options) +107.50%
- Theme 3 (Long Canadian Dollar Options) -36.67%
- Theme 4 (Short British Pound Options) +43.52%
- Theme 5 (Long Gold Futures) +0.00% (although gold surged this week, I did not take a position as I was awaiting a pullback)
- Theme 6 (Short REITs) +7.09%
- Theme 7 (Long Ag Stocks) -2.53%
- Theme 8 (Long VIX Futures) +0.00% (VIX was up 23% this week, but I did not take a position.)
Starting dollar value was $1,000,000. Cumulative one week performance was a gain of 14.7%. Had I actively been in Themes 5 and 8, my returns would have been crazy.
As I mentioned in the original article laying out these themes, this portfolio is not for the faint of heart. But using basic fundamental analysis and applying it to your trading will enable you to PROFIT from this downturn, instead of merely accepting the "preservation of capital."
As always, trade at your own risk.
Disclosure: Actively trading Themes 2, 3, and 4 through options and futures.