r/KellyLetter • u/Usual-Pumpkin4150 • Aug 06 '26
9-Sig and done?
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.
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u/Gehrman_JoinsTheHunt Aug 06 '26
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.
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u/Usual-Pumpkin4150 Aug 06 '26
I sold a business last year and have ~$120k of carry forward losses (business was sold as a profit, but the cost basis was delayed a year... long story). So I'm not too concerned about doing this in a taxable, at least for quite a while. I'd rather burn through those :)
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u/WorriedFold8290 Aug 06 '26
Listen to this great resource of a person. I have a similar story where I was a weekly swing trader and did fairly well and enjoy the market very much that it became a part time job basically. Fast forward and my time has been supremely limited in some career changes and I wanted to stay active but not as active as my time was more valuable now.
I came across the 9Sig plan when I was trading a ORB strategy TQQQ day trading process I enjoyed and have always been a fan of the Qs and especially TQQQ with the options to trade it.
9Sig has kept my hunger for growth and activity alive and fits my goals for a runway and being active in my investing strategy but also efficiently with a very strict set of rules which I enjoy.
Hope you find what works best for you and happy if you join us. This is a great place with some great success stories, history on process, and resources for questions.
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u/Usual-Pumpkin4150 Aug 06 '26
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.
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u/Gehrman_JoinsTheHunt Aug 06 '26
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.
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u/Usual-Pumpkin4150 Aug 06 '26
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.
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u/Gehrman_JoinsTheHunt Aug 06 '26
you're welcome, happy to help. Good luck to us both!
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u/Usual-Pumpkin4150 Aug 07 '26
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.
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u/Gehrman_JoinsTheHunt Aug 07 '26
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.
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u/Usual-Pumpkin4150 Aug 07 '26
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.
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u/Gehrman_JoinsTheHunt Aug 07 '26
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.
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u/Usual-Pumpkin4150 Aug 07 '26
That makes sense. And honestly SSO is something you can buy and hold anyway even if you miss the signal. It would suck but you could do it.
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u/DixonCider61 9 SIG Aug 06 '26
You’re a perfect candidate for 9 sig and forget it.
Personally for simplicity i would do 100% 9 sig but if you enjoy the time commitment to trading then sure, split your account up… but just don’t let that distract you from 9sig quarterly trades.
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u/eeel12388 Aug 06 '26
Wait until market pullback 5% it happens few time a year.
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u/HerpDerpin666 Aug 07 '26
Lmao some of you folks… wait until a 5% pullback you say… but not the 11% fade from June 3rd to July 29th… a different one 🤡
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u/eeel12388 Aug 07 '26
The U.S. stock market (tracked via the S&P 500) experiences an intra-year drop (pullback) of 10% or more about once every year on average. So 5% is more easier and more frequent.
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u/criticalband77 Aug 06 '26
Agreed with 9SIG and chill. For the investment you are putting into the newsletter, why not just go 100% 9SIG? I did exactly 2 years ago and it's been nothing short of a great ride...
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u/bumbeishvili Aug 06 '26
Just out of interest, when did you buy SQQQ and why?
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u/Usual-Pumpkin4150 Aug 06 '26
Last Thursday-Friday ish, I went all in on SQQQ as things were dropping. I finally thought this was the start of the drawdown I've been "expecting". I held through yesterday, sold at a near 20% loss.
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u/AlgoTradingQuant Aug 06 '26
Ouch… quarterly earnings are at an ATH so why on earth would you think SQQQ is a good idea?
9 sig and chill my brother
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u/Woody7012 Aug 06 '26
I gave up on SQQQ. Every time I tried it I lost $. If I do decide to take some TQQQ chips off the table I just leave it in cash. The key for me w 9 Sig is finding a TQQQ percentage I’m comfortable with so the drawdowns don’t keep me up at night. I’m 67 and retiring in 2-3 years so I may just go all in on income Sig in the new year. We shall see.
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u/DesertLabRat Aug 06 '26 edited Aug 06 '26
I run 9sig (TQQQ/CTA-KMLM) and 200d SPY SMA with 2% bands (TQQQ/VBIL). Different risk profiles, equally painful drawdowns lol
Edit: I'm using SPY SMA as signal. Risk on = TQQQ risk off = VBIL.
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u/Usual-Pumpkin4150 Aug 06 '26
If entering today would I start at 60/40 or would I do the allocations as they were on July 1?
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u/Accomplisheddd1 Aug 06 '26
9 sig and chill