Research w/Luck Yields a 23.11% Portfolio Return?

Starting from this week’s title, shouldn’t there be a factor called”Skills”?

Michael L. Hartzmark has a very interesting paper on luck v.s forecasting ability as determinants of trader’s performance in future markets which brings out a conclusion that returns of traders are the result of luck. Well, I guess here I am!

Trade and portfolio summary:

My portfolio value ending this week is$123,110.24 (notice a gain of approx. $23000!) with an overall  23.11% return and 1/24 ranking(!?). So far, I brought 15 units of wheat, 13 units of maize and 5 units of soybean. I only made one transaction this week for a purchase of 3 units of maize at a price of $4.5 on Tuesday morning. This moderately contributes to my portfolio gain along with an overwhelming win from wheat. Soybeans, without any surprise=<, still gives me a negative return of nearly $7000.

Personal reflection & lessons learnt:

As we can see from above, this weeks’s S&P500 was with a moderate opening, followed by fluctuations with an overall decline trend and ended Friday at a slightly lower point. With a positive correlation between market index and future profitability, I will say the result of my portfolio return looks good.

Why I brought corn this Tuesday is definitely based on my forecast. Noticing the  long term trend of corn prices,as shown in the following figure, I felt that I entered the market at a somewhat relatively low point, and there’s great opportunity to sell high in the following months. Again, due to the busy MFRE period, I obviously do not have the opportunity to do short term trades(need to check market performances all the time). Thus, long term trends make more sense to me.

 

For the soybeans, I am considering short them all at a good price next week cause I researched the USDA reports and I found soybean’s harvest season is coming which will ideally  drop  the price down even more!

Strategy for the week ahead:

1. Still, information matters

I did my research on Monday and brought corns on the following day, which does give me a gain! More research needed next week and knowing more about the market you are dealing with is always a beneficial tool.

2. Historical data may also help

Although I am dealing with Futures, historical data will help me identify potential trends and improve my performance. I will try to include this in my research next week.

New sources found:

Bloomberg L.P.:This is a financial software which provides useful financial tools such as an analytics and equity trading platform, data services and news to financial companies and organizations.

Fingers crossed for staying in this position next week or… the rest of the term!