Results: limited losses amid the sell-off
Last week's sell-offs trigger losses to investors, but our dowside risk is protected
Welcome back! The competition is officially open for week 9/10 (two more weeks to go!). Get in, have your say on our 5 indicators and 4 stocks, and keep pushing for that $1000 prize, just in time for Christmas!
Last week was a topsy-turvy week. Markets rebounded on Monday after the Omicron sell-off last Friday, fell again on Tuesday, at which point we again predicted a rebound. The rebound started on Wednesday but was then reversed by the end of the day amid yet another Omicron scare. And finally, as things were getting back up and close to our predictions on Thursday, Friday was again hit by another very strong sell-off. The predictions were off in almost every indicator. Our second losing week.
Notice the increased weekly volatility across all 5 indicators, over 10% for oil, the 10-year yield and BTC, and almost 4% for the S&P and the Dow. In times like these, it would have probably been a good idea to leave in the VIX. Estimating the weekly volatility was usually a good correction mechanism for estimating the S&P. We will most likely bring the VIX back into the bundle next year.
As for stocks the most interesting is the AAPL prediction. Over the past 8 weeks, we have consistently correctly predicted AAPL every single week. Even our S&P predictions were not as good as the AAPL ones. This could very well be the next thing we put our money into.
As always, something good came out of this, despite the losses. While many investors reported large losses, our losses were limited by our call exposures. We sold at the stop-loss of 50%, limiting the losses to $300 for the iron condor and $425 for the 2 SPY calls. This was even less than last week, even though the market declined even further.
In total we lost $725 for the week, bringing us down to $4375 for the 10 week period, and $7150 since the start of Oraclum’s predictions (over a cumulative 20 week period), for a total 71% return. The S&P delivered a 9% return over the same time period.
The BASON is still profitable 90% of the time, and it is still a bit more sensitive to periods of higher weekly volatility. It is worth considering further protection when weekly volatility is expected to be higher, which is why we will surely bring back the VIX predictions for next year.
Until then, stick around and…
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