2018 outlook and strategy break down
After being very pleased with the results for 2017 I will now turn my attention to 2018.
I have set the goal of 100% ROI for the next 12 months. While maintaining a risk score of 4 or 5.
As most of us have come to realize that the US stock markets are quite heated at this point of time.
Some are calling it a bubble others are saying over heated and some actually are saying that this could be a natural progression and the we could see small correction but no major ones.
I subscribe to the thought there will be a correction of between 10% and 20% over the next 12 months.
However this might not seem as close as we think it could be as the tax bill has given the markets a big boost in the arm and drove the averages up since it came out (well apart from the migration of funds from the technology sector that had received the biggest boost, to the financial sector that is estimated to have more than a 20% boost to their bottom line profits).
For 2018 I will change to a new strategy blending together stocks, commodities and crypto to hedge the risks of a market correction while still seeing a good return on investments.
The following chart shows the minimum and maximum % of allocation that will be spread out between the different asset classes.
STOCKS: We will hold a minimum of 30% to a maximum of 40% in stocks until at least some corrections have occurred.
Cryptocurrencies: This is a market that I see great potential in, however I am looking for a balanced portfolio that reduces risk and also drawdowns. So taking this into consideration we will hold a minimum of 20% to a maximum of 30% (remember this is in allocation, not exposure).
Commodities: A minimum of 10% I see as very prudent and with the commodities of metals forecast for early 2018 I will be aiming on upping our commodities allocation as soon as possible. A maximum of 30% as unless we use higher leverages it would impact our returns overall.
Available Assets: This is the funds that are available to pick up good deals on all three asset classes. In times of corrections. COPIERS please note, If you remove these funds from the copy it can severely skew the profits of new trades as if there are no available funds for me to open a trade the best deals will not open in your copy.
Leveraged Day/ Short term trades: I will reserve between 5% and 10% to invest in stocks that I believe in the fundamentals but have had just a bad day or week in circumstances that are beyond their control. This we can use to turn a quick buck on trades and will come in most useful for the stocks that we have already been successfully bottom feeding on during 2017.
I believe this overall strategy will give us the most amount of padding and protection during the corrective phases while still meeting our 100% ROI goal.
Our hedging of 2017 already stood us in very good stead during the migration of funds from technology to the financial sector.
I already have my eye on a couple of the sectors that have been left behind some what in 2017 and the eagle eyed of you have already noticed a few of the new names in our portfolio.
I hope this really helps all current and future copiers and bring comfort that we will be prepared for a correction in the US stocks and better hedged against risk.
I will also release a 3 month projective strategy for our plan on what cryptocurrencies we will hold the most of.
For those of you who want more exposure to cryptocurrencies I would advise you to open some trades separately to the copy and use the copy of my portfolio to diversify your holdings and to off set some of the risk that the cryptos bring to your account.
I aim to have a very balanced portfolio that suits my risk aversion and also my quest for profits, therefore it can either be used as a complete investment program or to off set current risks.
I wish you all green and happy trading for 2018!