Optimum Mix Performance Update as of May 7, 2021
3 Months -3.11%
1 Year +260.23%
3 Years +669.27%
For additional information including this week’s quick and easy trades to align part of your portfolio with the 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.
I’m Pete Nikolai, and I developed the strategies in the Leveraged Momentum investing system and the Optimum Mix of those strategies. The backtests for the system and for each strategy show substantially better performance than the market for the period since 2002.
I’ve been publishing the Leveraged Momentum Update newsletter since 2015. Since April 27, 2016, I have been providing the data on each of the trades placed for the Leveraged Bands (aka LevBands) strategy to a third party site, TimerTrac.com, so actual performance can be verified.
By clicking the Timer Tracked icon above you will be taken to the site where you can graph the performance of the LevBands strategy and/or some of my other strategies along with a comparative index of your choice (I 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 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.
The free Leveraged Momentum Update newsletter is compiled and emailed on each Leveraged Momentum 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 two quick and easy trades to align an investor’s portfolio or portfolio segment with the Optimum Mix. The newsletter also provides performance data for each of the Leveraged Momentum strategies.
The Leveraged Momentum Update newsletter was originally created for my 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.
I suggest that interested investors subscribe to the free newsletter and review several issues to get a feel for the information provided and the trades that may be indicated. After reviewing a few issues, please feel free to post any questions or comments on the Leveraged Momentum Investing Group on Facebook. If you decide to implement the strategies, then I suggest starting with a small percentage of your overall portfolio (perhaps 10%), investing those funds for several months based the Optimum Mix detailed in each issue of the newsletter, and then evaluating the performance and determining whether to invest additional funds based on the Optimum Mix.
While the algorithms used in each of the Leveraged Momentum strategies are proprietary, the actions recently taken for each of the strategies and the current Optimum Mix are listed on each issue of the free newsletter.
The FANGEtc Momentum and Leveraged Index strategies and the Optimum Mix require evaluation (and any indicated trading) every Leveraged Momentum trading day (every sixth day the NYSE is open). The Leveraged Bands, Leveraged Crosses, TQQQ Trends, and FNGU Trends strategies require evaluation (and any indicated trading) each day the NYSE is open, 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 Bands, Leveraged Crosses, TQQQ Trends, and FNGU Trends strategies then please contact me and ask to be added to the Infreqent Trade Notification distribution list (separate from the distribution list for the newsletter which is sent each Leveraged Momentum trading day and provides the details of each trade for each of strategies including the FANGEtc Momentum and Leveraged Index strategies and for the Optimum Mix).
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 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:
Leveraged Bands (LevBands)
- schedule a stop loss order each day beginning the day after buying to sell if the price falls below the stop price that is the specified percentage below the High since it was bought (CYA; 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 increasing)
- buy UPRO on any day after the day it was sold if the price rises a specified percentage above the stop loss 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)
- when UPRO is sold then consider buying it again beginning on the day after selling
The FANGEtc Momentum (FANGEtcMo) strategy invests a different quartile every Leveraged Momentum trading day (every sixth day the NYSE is open), compares the returns of the infamous FAANG stocks (FB, AMZN, AAPL, NFLX, and GOOG) and a variety of other stocks, and buys the two that have performed the best even if the return is negative (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, wash sales are reduced and good faith violations are avoided.
Leveraged Index (LevIndex) is similar to the FANGEtc Momentum strategy in that it invests a different quartile every Leveraged Momentum trading day (every sixth day the NYSE is open), but it compares the returns of several leveraged index ETFs, and buys the one that has performed the best even if the return is negative (after selling that quartile’s previous best performer as of 24 trading days earlier if a change is indicated).
The FANGEtc Momentum, Leveraged Crosses, TQQQ Trends, 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 current positions indicated by each of the those strategies and the performance of those component strategies relative to each other.
Perhaps the easiest way to implement the Leveraged Momentum system is to use the Optimum Mix percentages listed on the newsletter to calculate how much to have invested in each asset until the next issue of the newsletter is received on the next Leveraged Momentum trading day (every sixth day the NYSE is open). To align a portfolio or portfolio segment with the current Optimum Mix an investor would multiply the total balance to be invested using the Optimum Mix by the percentages listed for each asset to calculate the approximate amount to be invested in each asset. Then the investor would sell and buy as needed so their position in each asset is close to the calculated amount.
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.
Disclosures and Disclaimer
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 exchanged for other assets that are more likely to increase in the near term, and/or stop loss orders should be used to automatically sell if the price declines more than an acceptable amount. Trailing stop loss orders set at a low percentage 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 advisors 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? I prefer to keep things simple by investing in a few assets that seem likely to appreciate in the near future.
I believe that Leveraged Momentum is providing the best return that I can achieve without spending considerably more time for little additional benefit. I prefer to spend that time doing other things that provide more satisfaction and fulfillment.
ETFs are relatively new. Data for backtesting a strategy prior to an ETF’s launch date 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.
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 link 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, 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 to 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.
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 advisor, 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.
While the author and the publisher have used their best efforts, they 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.
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