OVERVIEW OF REAL RESULTS AND BACKTEST RESULTS FOR PATIENCE IS A VIRTUE (PIAV)
In this post I want to answer
- What are the high and low level expectations I have for PIAV?
- What do tests show?
- How long have I been trading like this?
- What are my real results prior to Patience is a Virtue?
1. Expectations
After a sharp run up like PIAV has experienced it is easy for myself and for subs to think they will continue. This is not going to happen. The numbers I am about to give are not guaranteed or verified. They are only estimates I have made for myself using backtesting and real trading tests. I expect long term returns to be somewhere in the range of 30% to 45% annualized with drawdowns in the range of 20% to 40%.
2. Test Results
Some parts of my strategy can only be backtested back for about a decade while others can be backtested as far back as nearly a century. The period I find the most telling to backtest is 2007 through 2019. Below you can see two charts showing my hypothetical results in blue vs the market in orange. One chart is on a logarithmic scale so that the details of the 2008 recession can be seen.
3. How long have I been doing this?
For about 5 years I have had a hobby of taking old market data and running simulations to see if I could find a way to beat the S&P 500. I have had C2 strategies at various points in the timeline but never something like Patience is a Virtue. All previous strategies are private, and that is how I want to keep them. Sorry. My overall timeline is as follows:
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January 2015 started testing items but never found any success with individual stocks and options.
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Mid-2017 began trading volatility products. I had great returns and definitely got too confident that things would continue. Fortunately, I was out of XIV when it crashed because my indicators told me to get out. This gave me confidence in my volatility indicators just like the recent TVIX gains have. However, I struggled to find an overall strategy that actually felt comfortable to use for the majority of my net worth. This is why I had kept all my volatility positions as a small percentage of my net worth to avoid catastrophe.
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February 2019, I began finding some promising results of how I could combine my volatility trading with several other strategies across multiple asset types including stocks, bonds, precious metals, and crypto.
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From February 2019 through May 2019 I used small amount of money to place real trades. At the end of May 2019 I ran backtests for February 2019 through May 2019 and compared them to the real results. The results were not identical but pretty darn close.
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June 2019, I began trading my overall strategy with the full balance of my brokerage accounts and set up my C2 strategy PIAV. I felt comfortable doing this because I had done Initial backtest for long periods of history, done small amounts of real money investing, compared the real money against new backtests over the same period, and finally checked it all with reason and logic. By my logic there are perfectly valid reasons why my strategies work and will likely continue to work far into the future.
4. Previous Results
The chart below shows me (in blue) vs. three measures of the stock market. As you can see my results since June when I started Patience is a Virtue have paid off for the years of research and low returns.
As you can see I never blew up my account but never did great until starting my strategy in June. This is because I never put too much money into the things I was testing until June. You may be tempted to think that I am only getting lucky and doing well because of the downturn. This could be true. However, from June 2019 until the peak of the market I also had good returns as you can see below. Finally as I mentioned earlier, I have had C2 strategies at various points in the timeline but never something like Patience is a Virtue. All previous strategies are private, and that is how I want to keep them. Sorry.
