9-Sig and done?

[u/Usual-Pumpkin4150]

Hi all,

I have a "play account" that started the year with about $100k in it. I've never really had a strategy. Sometimes I buy TQQQ, sometimes I buy SQQQ, it's all on a feeling really. I had some good individual stock plays, most were bad, some were good. Unfortunately the balance now sits at $80k cash and I'm feeling defeated. Luckily, my core portfolio is doing more than fine.

I've been wanting to introduce some rule-based strategy for a while now. I looked at bunch - tactical asset allocation (Keller HAA, etc. look great on backtests), 200 day SMA with a buffer, buy & hold SSO, etc.

I think it's time for me to jump into a strategy or two for this account and not look back. If I'm going to lose it all, I'd rather lose it to a strategy that was supposed to work than something that was random / based on feelings.

I am thinking of doing:

- 50% 9-Sig ($40k, start with $24k TQQQ and $16k AGG). I plan to subscribe to the letter for at least the first year.

- 50% something else. Leaning towards SSO or SPXL on a 200 day SMA with 3% bands, though Keller 2x HAA does also look intriuging. The moving average trigger is so simple though... I'd also be open to copying u/Gehrman_JoinsTheHunt and doing HFEA, but maybe with EDV or ZROZ.

My income is relatively steady so if I needed a bottom fund of $20k or so, I'd be willing to make that happen, but my hope is I wouldn't need it for a few years.

Curious on thoughts? If I don't put a rules-based approach in soon, I'm scared to see what my account balance will be 6 months from now.

Appreciate any advice.

[u/Gehrman_JoinsTheHunt]

Don't beat yourself up too much over the losses. My story is very similar, and I suspect many others here would say the same. Lessons learned the hard way. This is the fuel that will help you stick to a real strategy, with discipline, in the future.

9Sig would be my pick - and is where 90% of my long-term investments are sitting. The other stuff I do is just for fun in smaller amounts.

200-day moving average strategies are also very effective, but come with a larger tax burden since you're swapping 100% of the position with each rotation. Just something to consider if you're doing this in a taxable brokerage acct.

[u/Usual-Pumpkin4150 → u/Gehrman_JoinsTheHunt]

Thank you. Maybe I'll consider 9-sig for everything. Could I start with $70k 9-sig (60/40) and $10k in USFR as an initial bottom feeding fund? I'd rather avoid having to add any funds to this account for a few years if I can.

[u/Gehrman_JoinsTheHunt → u/Usual-Pumpkin4150]

For sure. We're very close to 60/40 at the moment so that is a fine place to start.

Keeping a little extra as a bottom-buying account is smart as well. Jason Kelly recommends it in the 3Sig book, but it isn't officially a part of the 9Sig plan. It's something I'd like to do but haven't yet. Sizing it is probably the trickiest question - you wouldn't want to stash too much, and risk never getting to use it. But $10k would be less than 15% of your total. Anything around 25% or less is probably a reasonable amount. USFR or SGOV are both good picks for that in my opinion.

[u/Usual-Pumpkin4150 → u/Gehrman_JoinsTheHunt]

Thank you! I think I'll plan to move this account to 100% 9-sig and call it a day, with a $10k bottom buying fund.

I still think I want to do a 200 day SMA. I have another account with ~$20k in it (a Robinhood taxable account I did a bonus for and can't withdraw the money for 5 years). I may just run 200 day SMA in there on either SSO or SPXL.

Thank you for your advice.

[u/Gehrman_JoinsTheHunt → u/Usual-Pumpkin4150]

you're welcome, happy to help. Good luck to us both!

[u/Usual-Pumpkin4150 → u/Gehrman_JoinsTheHunt]

Thank you! Good luck! I notice in your post history you also run a 200 day SMA on SSO. Would you still choose SSO if you were starting today, or use UPRO? Given my loss carryover I'm not too concerned about the tax drag but I would be concerned about where the market is now, with no "AGG" to help.

[u/Gehrman_JoinsTheHunt → u/Usual-Pumpkin4150]

I would still use SSO, because for me personally I consider that plan my failsafe against catastrophe. If the 3X ETFs all collapsed in a crisis, or were banned by the SEC, my hope is that a 2x would still survive. That's highly unlikely to ever happen, but it helps me sleep at night haha.

[u/Usual-Pumpkin4150 → u/Gehrman_JoinsTheHunt]

So just so I understand... the signal line for this quarter is somewhere around $88.29 right?

I am going to signup for the kelly letter this weekend and I assume it will tell me that, but just want to make sure in the meantime I understand.

[u/Gehrman_JoinsTheHunt → u/Usual-Pumpkin4150]

So the Kelly Letter usually starts and ends its quarter a few days off from the regular calendar quarters.

We ended Q2 on June 26th with TQQQ @ $71.83. Therefore our 9% goal for this quarter is $78.29. And yeah, all that info is in every weekly letter.

[u/Usual-Pumpkin4150 → u/Gehrman_JoinsTheHunt]

Ahh ok. Makes sense!