Return Comparison
My personal consolidated accounts return YTD. I removed account values and tickers for performance returns to protect my personal confidential account balances and information. I am currently sitting in QQQ and majority of my return has come from QQQ for disclosure. QQQ, firm margin, and leveraged QQQ ETFs are part of our investment strategy.
My returns for my moderate hedged portfolio. YTD we are up 43.44% with a Sharpe ratio of 3.07. These accounts that use TQQQ always have PUTs on them due to them being leveraged.
My consolidated account returns across all accounts. We are up 26.58% YTD and have Sharpe ratio of 3.97.
Comparisons:
My personal consolidated accounts. Me: 21.07% vs SPY: 15.18%
Consolidated Accounts Firm: Firm: 26.58% vs SPY: 15.18%
Moderate Hedged Portfolio: 43.44% vs Benchmark: 9.22% (50% SPY & 50% AGG). SPY has returned 15.18% YTD
It is not lost on me that my strategy is aggressive. That aggression is controlled and monitored daily, weekly, and monthly to make sure we are sitting where we should be sitting. For people that want a more “conservative” allocation we can just do QQQ with a hedge.
I am sitting in just QQQ because my personal account balances have not hit the threshold I determined to be sufficient to use QLD or TQQQ. Clients that don’t meet the threshold in terms of asset value will not be put into QLD or TQQQ until their balances hit that threshold. Everything I do is based on knowing my client and risk management.
I see myself like a cook, I can cook up whatever you want in terms of risk and portfolio performance, just know more return = risk. We can control that risk but generally speaking if you want more return you have to be willing to take on more risk. How I invest a pension fund is going to be different than how I invest an individual or an entity with a large appetite for risk. With that being said our firm tries to really push strategies that we think can generate positive Alpha.
Let me tell some things I have seen at other firms I’ve worked at and research I have done. Number 1, 85% of money managers are less than the S&P 500 after 10 years. Many of these managers put you in collection stocks, ETfs, or mutual funds cooked up by them or a large financial institution like Lazard, JPM, or Goldman Sachs. They charge their fat fees on your portfolio with below benchmark performance. Some of these fees can go upwards of 2+ percent. 2 percent fees with lackluster performance will really drag down your portfolio return over time. I aim to do the complete opposite of what they do. I play the odds, I play the indexes, and I add my sauce onto it to boost returns. The way I look at it is, if these white glove RIAs, Hedge Funds, and managers out there can charge their sometimes outrageous fees for underperformance I can at least charge a modest fee and get S&P level returns or above. The best advice out there was given by Warren Buffett, he said something along the lines of it is best for most people to just invest in the indexes. That is what we do with the Nasdaq-100 index but with a little bit of a twist to get those excess returns. Many of the managers out there and the ones you see on TV telling you which stock is good and which ones you should avoid are exactly like consultants. They have never worked in the industries they speak about with such conviction. Steve Jobs had some opinions on the consulting industry. I am not saying their picks or devoting time to really understanding a company or industry is bad/wrong. I am just saying that it can be hard to fully understand an industry or company if you have never worked in it. You can read 10ks till you’re red in the face, you might only touch the surface of that business/industry. Thus if you don’t have a full complete understanding it could be hard in determining where that stock could be headed.
