Friday, January 11, 2013

Anti-Turner ETF - Theoretical Returns 2010 -2011

This  forum post is interesting, as a poster on there has laid out Turner's 2010 macro overview succinctly. 

From this we can analyse approximate returns on the immediate Anti-Turner trades and longer term holds. The ETF would only look to make specific trades in markets that are easily available to amateur traders through retail accounts in one form or another. Here is the whole list and we will break it down in more detail below

Re: Garth Turner: Buy Bank Preferreds not GICs

Postby BRIAN5000 » 23 Jan 2010 11:55
The world according to Garth- don't shoot the messenger.

Gold is in a bubble
Real estate is in a bubble
Mortgage rates have averaged 8% last 20 years
Don't use ETF's
Don't do-it-yourself you can't
Use TFIA's (tax free investment accounts) TFSA's
Use TFSA to income split with wife and kids (no explanation how to get it back from kids)
Use RRSP's borrow to catch up
Borrow at 2.25% to pay off higher debt
Use leverage to remove funds tax free from RRSP
Current bull market has about 10 months then sideways for ? Long time till normal
Oil is going to $100 soon and maybe $200 later
If 60% or more of your networth is in Real Estate its time to balance things out
Use tax advantaged investment vehicles, dividends and CG, dividend stocks are stable.
Invest in Global Growth outside of US except for a few multi nationals.

For retirement you want income and liquidity

What's going up
Interest rates
Bond yields
Canadian dollar $1.10 - 1.15-1.20

What's going down
Gov't spending
Bond prices ( record amounts invested last few months)
Car sales

1.  A subject that his been covered here in depth.

Gold is in a bubble - Gold price $1084 on 22 Jan 2010  Gold price 11 Jan 2013 approx $1650

ETF Trade 1 - WIN + 52% over 3 years. Continue to Hold until Turner starts buying

2. (Canadian) Real Estate - also discussed

Real estate is in a bubble
ETF Potentially profitable but NO TRADE 

Although cash rich investors could have flipped at least two houses in a rising market against Turner's call, but this is not one we could trade unfortunately.

3. "Mortgage rates are going up" - implies bond prices down, ETF long Bonds?

Mortgage rates have averaged 8% last 20 years ..and gone down steadily since this call
ETF Potentially profitable but NO TRADE 

Then we have some Canadian-specific advice and tax avoidance advice which we will not pass judgement on, it is only Turner's Macro-expertise specialist skills we are interested in directly fading.

4. Oil - this one we could have really worked with. 

Oil is going to $100 soon and maybe $200 later
ETF Trade - BEWARE TURNER ALSO BULLISH, Stay out & look for better entry.

As regular traders of crude oil futures this one is worth a closer look. Some idiot traders had been trading in the period up to this, buying at $70.00 and selling at $80.00 profit (1000 points) per contract as the market reached it's long term trend line each time.  Note the exact placement of Turner's call on the line. This is the true value of a quality contrarian indicator, because if a trader was leaning towards taking a long position at that point, and the contrarian indicator agrees with you, then you are simply wrong, so step aside and save your losses.

Traders who want to win consistently should always strive to not find themselves buying at the top of a decent run, but sometimes temptation can be strong, however in this instance the ATETF traders would have been saved from the dumb money trap and being stopped out for a potential 5% loss, plus still get the opportunity to buy at $70 again before the market actually took off properly for a $40+ run, minus of course all the previous top buyers, now just watching the run and nursing their losses. 

We cannot credit a $40 win  to the ETF here but had various idiot traders been aware of Turner's unique capabilities at the time, this is a potential $40,000 win or +40% account size in a solid 12 month run, for a 5% loss risk. 

And last & quite a find is a CAD currency call. 

Canadian dollar $1.10 - 1.15-1.20
 ETF Trade - Wins & re-enters short at test of & close below "Turner's Top" 

This is a thing of rare beauty, to be able to look at a chart and know as a virtual certainty (historical data entirely on your side) that Turner's bullish call will hold as the top,  and you even get to do it again the second time it when it comes back up for another look, before for the real move. 

These two trades, taken at 2% loss risk on a $100k account, would allow 2 contracts on trade 1, and 1 contract on trade 2, set by required stop size. 

Trade 1 profit = 2 x 7000 points  = $14,000 or + 14% on a 100k account

Trade 2 profit = 1 x 12000 points = $12k or + 12% on a 100k account. 

It should now be fairly apparent why some idiot traders are excited over the potential of fading Garth Turner on an ongoing basis, hands up who thought they were only joking about opening a PAMM yesterday?

We also harbor a strong suspicion that if Turner's "balanced portfolios" are indeed achieving 7-8% per annum, that Turner's role in things is primarily on the marketing / lead generation side, and whoever is in charge of the actual trading portfolio balancing there is probably using his skills exactly the same way we propose to.

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