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Portfolio Update December 26 2014

|Includes: SPY, SSO, VXX, VelocityShares Daily Inverse VIX Short-Term ETN (XIV)

We have fully invested the little guy's assets by Dec 22nd after the Fed meeting. The holdings and performance as of December 26 are in Table 1. This is a very aggressive portfolio with ~3X implicit leverage. As I mentioned in the last post, I think this is reasonable because the little guy will have a very long investing horizon and he will not (or can't, haha) touch the money for at least 10 year.

Table 1. Little guy's portfolio December 26 2014

The current allocation is ~50% in SSO, 2X S&P500 daily index ETF and ~50% in XIV, inverse 30 day VIX ETN. It is worth mentioning that some people argue that SSO and XIV are not suitable for long term holding. However, I think that is only true in trendless and high volatility environment. It is fine to hold them for longer period in an up-trend environment as long as you have clear exit strategies.

Please note we make the portfolio public solely for entertainment purpose. Under no circumstances the portfolio will be regarded as advice, guidance or solicitation for investing. We will publish the portfolio monthly but the holdings will be evaluated daily and can (and will) be changed without notice. Furthermore, we may hold hedging positions outside the published portfolio.

Disclosure: The author is long SSO, XIV.