What I’m Trading: Sam

Occupation: It’s complicated

Industry: Tech/Green Construction

Age: 25

Location: Melbourne

Portfolio size ($): Small, i.e. Five Figures

What do you invest for?

Financial freedom & to accumulate money to change the world for the better.

How much of your income do you put into the market?

As much as I can.

Where does the rest of your money go?

Food, general living expenses and a small amount for travel/entertainment. Otherwise, I spend very little money.

How much time do you spend on your investments / portfolio each week?

I try to only spend time adjusting positions when certain asset classes are changing trend (In which case I am notified through preset alerts) and not spending time just checking my portfolio performance.

What’s in your portfolio on Stake right now?

By my measure not many asset classes are looking too healthy right now (trending down). Out of the 6 different asset classes that I track I’m only comfortable being in two of them (US Shares and US REITs) and even then US Shares are looking dangerously close to exiting my portfolio.

60%

• US Shares: ARKK Innovation ETF / RPG (Invesco S&P 500 Pure Growth ETF) / MTUM (iShares Edge MSCI USA Momentum Factor ETF)
• REITs (Real Estate Investment Trusts): SRET (Global X SuperDividend REIT ETF)

40%

• FLRN: An investment Grade Floating Rate Bond ETF, given we’re late/super late cycle. Protects against interest rate changes while still delivering yield (2.28%) at a low fee (0.15%).

How are your returns?

Not bad but not great given the market is about 10% down from the 2018 peak and I’ve been putting in a lot of money this year.

What are you watching? Why?

My phone — for trend change alerts. Trading View is my go-to.

What’s the best trade you’ve ever made?

In terms of returns, buying FAR Limited off a tip in mid-2014 before it jumped 150%. And before I realised it was basically gambling and that using ETFs was a far safer and easier way of doing things.

Do you have a trading strategy that you follow when making decisions? If so, what is it?

Yeah I believe that you can’t get long term solid returns without having a strategy!

I use a trend following strategy that utilises two moving averages to signify whether an asset class is in an uptrend or downtrend. When the shorter duration lead moving average is greater than the longer duration Lag moving average it’s a buy signal and when the lead < lag — it’s a sell. Each one of the 6 asset classes I trade has its own specific combination of values for each moving average pair. I’ve found this through backtesting a moving average combination search and revealing each pair’s profit/loss outcome that would have eventuated if you had used that strategy.

While using a moving average combination search coupled with backtesting isn’t widely popular, trend following strategies using set moving average durations like 180, 200, 250, 300 days etc. has shown some of the greatest long term results for all different asset classes, for huge periods of history.

There’s a bit more to it including: (1) not overfitting the data, (2) not searching the entire history off the asset etc. which I’m happy to chat to with anyone about if they’re interested in discussing further. Email me HERE.

I also use Trading View to set up alerts for the moving average crossovers for each asset class to notify me when I need to remove or add assets classes and their single or multiple ETF products which I’ve selected to be exposed to the asset class.

For most asset classes I have just the single ETF for exposure. However, for US/International Shares I’m sticking to what’s worked for me in the past (tilts to value, momentum, growth, small/med cap)

When deciding on similar ETF products I utilise a fairly simple calculation for comparison: PERFORMANCE + DIVIDEND — FEE

Is there anything you’re trying to improve about your investments?

Just the amount of money in the portfolio really. I’m pretty happy with my strategy and If I do adjust that, it’ll be on a 10yr + timeframe to ensure I’m not altering the strategy when it’s just going through a rough patch. Even Warren Buffet has underperformed the market for nearly a whole decade straight.

How did you first get in to trading?

My dad encouraging me to get into it earlier instead of later in life and my old running coach who trades full time.

Do you remember the first stock you bought?

I believe it was Argo Investments (ARG) through a tip from my uncle who’s a financial advisor (glad I’ve gone on to accumulate more knowledge than just sticking everything in ARG)

Any lessons you’d give to someone who’s never invested or traded before?

0. LISTEN TO PODCASTS — START BASIC — FIRST MEB FABER’s EPISODES

1. Diversify into multiple asset classes and countries,

2. Tilt away from general market weighted S&P 500 or similar

3. Go for the lowest fee ETFs that you can

4. Use simple moving averages for getting in and out of assets (eg. 180, 200 or 250 day moving averages) — check once a month

5. Rebalance yearly

6. Save more/spend less

7. Start early

8. Don’t check your portfolio

9. Stick to it / don’t follow trends when you feel your strategy isn’t working

Who do you lean on for advice with trading?

PODCASTS

Meb Faber / Nucleus Wealth / Invest Like the Best

If you were to buy a US stock or ETF right now, what would you buy? Why?

RPG / MTUM — The market is down and I like these assets going into the next crash that soon awaits us vs tilts like value which have shown to get killed in a crash — although hopefully I’ll be out of the market completely when it does crash!

ICYMI: make your own decisions

This is not investment advice, just my opinion. It doesn’t reflect any opinions of Stake. I’m as fresh to this as the next person off the street. Do your own research and make your own decisions. That’s where the fun is anyway.