Optimum Mix Performance Update as of October 4, 2024

Total Returns:

• 3 Months: -18.67% for Optimum Mix versus +3.60% for S&P 500
• 1 Year: +68.92% for Optimum Mix versus +35.52% for S&P 500
• 3 Years: +72.05% for Optimum Mix versus +32.90% for S&P 500 – see 3-Year Chart
• 5 Years: +476.80% for Optimum Mix versus +98.85% for S&P 500

For additional information including each week’s quick and easy trades to align a portfolio or portfolio segment with the updated Optimum Mix, click this link to subscribe to the FREE Leveraged Momentum Update newsletter.

Welcome to Leveraged Momentum!

Leveraged Momentum, LLC, develops and offers correspondence courses, a newsletter, and other information products to teach investing principles and a system designed to beat the market long term.

Leveraged Momentum is an investing system developed by Pete Nikolai. The backtests for the system and for each strategy show substantially better performance than the S&P 500 for the period since 2002 (see History and Perspective page for more information).

The Leveraged Momentum Update newsletter has been published since 2015. Since April 27, 2016, data on each of the trades placed for the Leveraged Trends (aka LevTrends) strategy has been provided to a third party site, TimerTrac.com, so actual performance can be verified. We have also been reporting the trades for some of our other strategies to TimerTrac for the past few years so performance can be verified.

By clicking the link or the Timer Tracked icon above you will be taken a chart on the TimerTrac site comparing the performance of the FNGU Trends strategy with the S&P 500. Click “Graph” in the left Research menu on that page to select other strategies, and click Next to chart those strategies with a comparative index of your choice (we suggest the S&P 500). In addition to graphing a strategy’s performance, you can also view various statistics and the historical trades for the selected strategy.

The first Leveraged Momentum course is in development and will teach some of the foundational principles and processes of investing with an emphasis on the concepts of leverage, momentum, and market timing.

FREE Newsletter

The free Leveraged Momentum Update newsletter is compiled and emailed on each Leveraged Momentum newsletter/trading day which is every sixth day the NYSE is open for trading. Search the internet for “NYSE holidays” for the list of the weekdays when it is closed. Each issue of the newsletter lists the quick and easy trades needed (if any) to align an investor’s portfolio or portfolio segment with the updated Optimum Mix. The newsletter also includes a link to a Google Sheet with a Trade Calculator tab that is updated each week so it can and should be used to calculate the amount of each of the suggested trades needed to align with the updated Optimum Mix (including any rebalancing needed).

The Leveraged Momentum Update newsletter was originally created for friends and family who requested a simple yet aggressive system for investing, and it is offered as a free service at this time. You can subscribe for free by clicking this link and providing your information. After subscribing, you can unsubscribe at any time by clicking the appropriate link at the bottom of each issue of the newsletter.

Getting Started

1. The first step is to learn about stock trading and investing. Search for “stock trading 101” and similar keyword phrases, read a variety of articles from a variety of sources, and watch a few YouTube videos. Stock trading and investing are as easy as shopping online but much more important so do your homework first.
2. Get familiar with placing trades. Each investment company has training and information on how to place trades on their website. Click here to go to Fidelity’s page on trading stocks and ETFs.
3. Click here to subscribe to the free Leveraged Momentum Update newsletter. Review several issues to get a feel for the information provided and the trades that may be indicated. After reviewing a few issues, post any questions or comments on the Leveraged Momentum Investing Group on Facebook.
4. Review the Disclosures and Disclaimers at the bottom of this page and review the History and Perspective page on this website carefully to determine if the Optimum Mix is a good fit for you.
5. Open a brokerage account and/or Roth IRA. Fidelity and Schwab are two popular investment companies that offer brokerage accounts and Roth IRAs.
6. Determine how much you would like to invest in the Optimum Mix and deposit that amount in your brokerage and/or Roth IRA account (avoid exceeding the annual IRA contribution limit).
7. Calculate how much of that amount to allocate to the different stocks and ETFs that make up the Optimum Mix. Updated suggested percentages are listed on each issue of the free newsletter, and a Trade Calculator worksheet with step-by-step instructions is provided via a link on each issue.
8. Place your first trades.
9. Celebrate!
10. Review each issue of the newsletter when it is received (sent every sixth day the NYSE is open for trading so less than once per week), use the updated Trade Calculator worksheet to calculate how much of each stock and ETF to sell or buy, and place the suggested trades to keep your account(s) aligned with the Optimum Mix.

If you already have a substantial balance then we suggest starting with a small segment of your overall portfolio (perhaps 10%), investing those funds for several months using the Optimum Mix detailed in each issue of the newsletter, and then evaluating the performance and determining any additional amount to invest using the Optimum Mix.

More Information

While the algorithms used in each of the Leveraged Momentum strategies are proprietary, the actions recently taken for each of the strategies and the updated Optimum Mix are listed on each issue of the free newsletter, and the actual trades placed since January 1, 2021, in an account aligned with the Optimum Mix are listed on this Google Sheet (see the “Trades Since 1/1/2021” tab).

The FANGEtc Momentum and Leveraged Index strategies and the Optimum Mix require evaluation (and any indicated trading) every Leveraged Momentum newsletter/trading day (every sixth day the NYSE is open for trading). The Leveraged Bands, Leveraged Crosses, TQQQ Trends, and FNGU Trends strategies require evaluation (and any indicated trading) each day the NYSE is open for trading, however trades are rarely indicated more than twice per month.

If you would like to receive a simple email notification each time a trade is executed for the Leveraged Crosses, TQQQ Trends, and FNGU Trends strategies on days other than the regular Leveraged Momentum trading days then please contact us and ask to be added to the Infrequent Trade Notification distribution list (separate from the distribution list for the regular Leveraged Momentum Update newsletter which is sent each Leveraged Momentum newsletter/trading day). Any trades executed on regular Leveraged Momentum trading days will be listed on the regular newsletter and not sent to the Infrequent Trade Notification distribution list. The regular Leveraged Momentum newsletter provides the details of each trade for each of the strategies including the FANGEtc Momentum and Leveraged Index strategies and updated information for the Optimum Mix. We have found that long-term returns are not substantially improved by trading between the dates the regular newsletter is sent. Returns can actually be negatively impacted by trading too frequently during some periods.

Please keep in mind that the first leveraged ETFs were launched in 2006 and many of the leveraged ETFs used in these strategies were launched in 2009 so the price data for backtesting a strategy prior to an ETF’s launch date is hypothetical and was extrapolated using historical data for the index on which the ETF is based or for another ETF based on the same index.

Following is a description of a few of the strategies to provide some perspective on the tactics used in the Leveraged Momentum investing system:

• The Leveraged Bands (LevBands) strategy buys UPRO on any day after the day it was sold if the price rises a specified percentage above the price at which it was sold or if the price was below the lower band at any time during the prior day and the price either opens above or rises back up to that lower band today (buy low). After buying, this strategy will sell UPRO if the price falls below the price indicated by the algorithm (cover your assets). Attempting to sell high was tested but tends to reduce the long-term return since the market has historically risen over time and attempting to sell high causes an investor to be out of the market during some periods when the market and many potential investments are rising. The higher frequency of trading when using this strategy seems to be the primary factor causing its long-term return to be lower than the Leveraged Crosses (LevCrosses) strategy–and that lower return is the reason LevCrosses is a component of the Optimum Mix rather than LevBands.
• The Leveraged Crosses (LevCrosses) strategy uses moving averages to determine when to buy and sell. A buy signal for UPRO is indicated on any day after the day it was sold when the short-term moving average rises above the medium-term moving average (buy low). After buying, a sell signal for UPRO is indicated when the short-term moving average falls below the medium-term moving average and the medium-term moving average falls below the long-term moving average (cover your assets).
• The FANGEtc Momentum (FANGEtcMo) strategy invests a different quartile every Leveraged Momentum newsletter/trading day (every sixth day the NYSE is open for trading), compares the returns of a variety of mega-cap stocks and cash equivalents such as low-risk money market funds, and buys the two that have performed the best (after selling that quartile’s previous best performers as of 24 trading days earlier if a change is indicated). By using a different quartile every six days, the frequency of wash sales is reduced and good faith violations are avoided. To determine which mega-cap stocks are candidates for consideration, the usual FANG stocks and a variety of other mega-cap stocks were backtested. If the addition of a specific stock generated additional return then it became a candidate. Each quarter the current list is backtested again and any stock which has stopped being accretive is removed from consideration. In addition, each stock that has been added to the SOLFANGT index as part of its quarterly update is backtested and any stock which generates incremental return when it is added to the mix becomes a candidate.
• Leveraged Index (LevIndex) is similar to the FANGEtc Momentum strategy in that it invests a different quartile every Leveraged Momentum newsletter/trading day (every sixth day the NYSE is open for trading), but it compares the returns of a limited number of leveraged index ETFs and a money market fund, and buys the one that has performed the best (after selling that quartile’s previous best performer as of 24 trading days earlier if a change is indicated).
• The FANGEtc Momentum, Leveraged Crosses, Leveraged Index, and FNGU Trends strategies serve as components of the Optimum Mix which is determined by calculating what each fund or stock’s percentage of the overall balance should be based on the updated positions indicated by each of those component strategies and the performance of those strategies relative to each other.

In addition to the rules and tactics listed above for various strategies, several of the strategies utilize a black swan indicator and will stay in cash after selling any stock or ETF positions if a black swan event is indicated and interest rates are expected to rise or will switch from stocks and/or leveraged equity ETFs to a leveraged bond fund if a black swan event is indicated and interest rates are expected to fall. When the end of a black swan event is indicated then each of those strategies will switch back to their normal rules and tactics.

Perhaps the easiest way to implement the Leveraged Momentum system is to use the Google Sheet link on the newsletter to open the current Trade Calculator worksheet which can and should be used to calculate the trades needed to align a portfolio or portfolio segment with the updated Optimum Mix. Then on each Leveraged Momentum newsletter/trading day (every sixth day the NYSE is open for trading) that same link can and should be clicked to use the updated Trade Calculator worksheet to calculate the needed trades.

While the Optimum Mix may underperform a component strategy and/or the market during some periods, the Optimum Mix tends to be more diversified than the component strategies and tends to provide more consistent performance over longer periods that include both bull and bear markets (see History and Perspective page for more information).

 

Disclosures and Disclaimers

Return percentages and projected balances do not include interest, dividends, fees, or other costs and are based on trades placed at optimal times.

Dividends, transaction charges, management fees, liquidity issues, bid-ask spreads, taxes, and other costs will impact results.

Performance will vary based on the timing and details of trades.

For a description of the risk considerations for each fund, please refer to each fund’s prospectus, which should be read carefully before you invest.

References to “cash” usually refer to the money currently held in a sweep account. Proceeds from the sale of a stock or ETF are usually swept into an interest-bearing account of some type such as a money market fund that is invested in low-risk, low-return assets such as Treasury Bills and other short-term interest bearing notes.

Markets and investments such as stocks and ETFs are unpredictable and volatile. To reduce downside risk, prices should be monitored, and assets should be exchanged for other assets that are more likely to increase in the near term, and/or assets should be sold if the price declines more than an acceptable amount. Trailing stop loss orders set at low percentages will trigger frequently due to normal volatility and result in frequent losses that eliminate any possibility of long-term gain.

You can lose money by investing in any fund or stock. Any investment strategy should be one part of a comprehensive investment program. All investments are subject to market risk, including possible loss of principal.

Investors in exchange-traded products such as ETFs will bear risks including but not limited to, risks associated with smaller companies, foreign securities, emerging markets, debt securities, commodities, and derivatives. In addition, investors in exchange-traded products are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of ETF shares may be higher or lower than the value of its underlying assets, there may be a lack of liquidity in the shares of the exchange-traded product, or trading may be halted by the exchange on which they trade.

ETF redemptions can be limited, and trading fees can apply. Funds may be sensitive to economic, business, political, or other changes which may result in fluctuation of the value of shares and greater risk of loss. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value.

Principal risks of investing in foreign securities include changes in currency rates, foreign taxation and differences in auditing and other financial standards. Debt securities may be subject to credit risk and interest rate risk. Investments in debt securities typically decrease in value when interest rates rise.

Many advisers would suggest more diversification but adding additional assets can water down a portfolio’s performance rather than increasing long-term returns. Over-diversification tends to create a false sense of security. Is it really safer to keep money under a mattress or invest in a variety of assets when doing so prevents the possibility of that money growing substantially more in the years to come? We prefer to keep things simple by investing in a few assets that seem likely to appreciate in the near future. 

We believe that Leveraged Momentum is providing the best return that we can achieve without spending considerably more time for little additional benefit.

ETFs are relatively new. Data for backtesting a strategy prior to an ETF’s launch date is hypothetical and was extrapolated using historical data for the index on which the ETF is based or for another ETF based on the same index along with the historical correlation between the ETF and its related index or between the ETF and the other ETF which is based on the same index.

The results are hypothetical results and are NOT an indicator or guarantee of future results and do NOT represent returns that any investor actually attained. No representation is being made that any account or portfolio is likely to achieve results similar to those shown. Indexes are not managed, do not reflect management or trading fees, and one cannot invest directly in an index. 

Many indexes have limited actual historical information. The sponsor of an index may adjust the index in a way that may affect its level, and may, in its sole discretion, discontinue the public disclosure of the intraday index value and the end-of-day closing value of the index. Many indexes lack diversification and are vulnerable to fluctuations in the industry or market segment they are supposed to represent. A limited number of index constituents may affect the index closing level, and an index is not necessarily representative of its focus industry or market segment. An index constituent may be replaced upon the occurrence of certain events as determined by the index sponsor.

Any index data prior to an index’s launch date is hypothetical and a result of the application of the index methodology to historical data which has inherent limitations.

The creation of hypothetical data necessarily involves assumptions and cannot take into account the impact of financial risk in actual trading. Alternative modeling techniques or assumptions may produce different hypothetical back-tested information that might be more appropriate and that might differ significantly from the information presented. Hypothetical back-tested data should not be considered indicative of actual results that might be obtained from any investment. Historical and hypothetical back-tested results are neither an indicator nor a guarantee of future performance.

Because the strategies rely heavily on third party quantitative models, they are subject to model and data risk. Certain returns shown may reflect backtested performance. All performance presented prior to index or fund inception date is backtested performance. Backtested performance is hypothetical and is not based on actual transactions. Backtested data is based on simulations after the fact with the benefit of hindsight. It is important to remember that backtesting produces hypothetical results based on historical data and extrapolations rather than actual transactions. Backtesting may identify relationships that hold true for the testing period by chance (short-term correlation) but then breakdown due to the lack of actual causation (long-term correlation). Some of the text and figures are based on hypothetical results which do not represent actual performance and can be misleading. Securities with positive recent momentum have had above-average recent returns, may be more volatile than a broader cross-section of securities, and may generate returns lower than other styles of investing or the overall stock market. Momentum can fluctuate and assets that previously exhibited momentum may not continue to do so.

Charts and graphs are provided for illustrative purposes only. Index returns do not represent the results of the actual trading of investable assets. 

Hyperlinks are provided as a courtesy and should not be deemed as an endorsement. When you click through to a third-party website you are leaving our site and assume total responsibility for your use or activity on that third party website.

Opinions and statements of market trends that are based on current market conditions constitute the author’s personal judgment and are subject to change without notice. The views described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.

Past performance does not guarantee future results. No investor should assume that future performance will match the results presented or be profitable.

Leveraged Momentum, FANGEtc Momentum, Leveraged Bands, Leveraged Index, Leveraged Crosses, TQQQ Trends, FNGU Trends, BULZ Trends, the Optimum Mix, and every other investment strategy that beats the market during some periods will lose money during some other periods.

Performance data, laws, and regulations can be revised or otherwise change over time which could cause the information in this publication to become outdated and less accurate. The Securities and Exchange Commission (SEC) does not approve or disapprove of any investment. The information in this publication is for informational purposes only and is not intended to serve as the basis for any financial decision or as an offer to sell or purchase any security or investment product. Information contained herein has been obtained from sources believed to be reliable and written in good faith, but the information is not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. References to funds or other assets should not be interpreted as an offer or recommendation of those securities. Only a prospectus may be used to offer to sell or buy a security, and a prospectus should be considered carefully before investing.

Please carefully read all fund documentation including the prospectus. We urge you to consult your investment, legal, tax, accounting, and other advisers before you invest.

Investing involves risk, and each investor is responsible for determining whether each investment is suitable based on their personal financial situation and objectives. Investment information is provided without consideration of your financial sophistication, financial situation, investing time horizon, or risk tolerance. Readers are urged to consult with their own independent financial advisers with respect to any investment.

The author is not an investment adviser, broker/dealer, accountant, or attorney. No part of this publication should be interpreted as investment, accounting, tax, or legal advice. Each investor should consult with an investment, tax, or legal professional regarding investments and their personal financial situation.

Leveraged Momentum, LLC, was incorporated in the state of Tennessee in 2018. Should Pete Nikolai become unable to send the newsletter then the board of directors will have a message sent to all newsletter recipients suggesting that they sell their positions and invest the proceeds according to the best alternatives they can identify. If you become aware that you have not received this newsletter for more than 21 days then something may have happened to Pete Nikolai. Feel free to try to contact him. If you do not receive a response within a few days then we suggest that you sell your positions and invest the proceeds according to the best alternative strategies you can identify.

While we have used our best efforts, we make no representations or warranties as to the accuracy, completeness, timeliness, or correctness of the contents of this publication and disclaim any implied warranties of merchantability or fitness for a particular purpose as well as any responsibility for any liability or loss which is incurred as a result of the application of any part of this publication. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or any delay or interruptions in the transmission thereof to the users. All investment information contained herein should be independently verified.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher and author are not engaged in rendering investment, legal, tax, accounting, or other professional services. If investment, legal, tax, accounting, or other expert assistance is required, the services of a competent professional should be sought.

© 2015-2024 Leveraged Momentum, LLC