11/03/2012 Mousetrap

Small Portfolio XLF & IAU 16.16%

Position Date Return Days
DECK 6/15/2012 -36.88% 141
RIMM 7/16/2012 20.14% 110
OKE 9/25/2012 -3.77% 39
SEAC 9/25/2012 8.20% 39
CAJ 9/25/2012 -7.88% 39
DDAIF 9/25/2012 -8.67% 39
SSD 9/25/2012 1.14% 39
NSC 10/8/2012 -7.90% 26
WMK 10/22/2012 0.59% 12
CFI 10/31/2012 0.00% 3

S&P Annualized 3.59%
Small Portfolio Annualized 11.31%
Large Portfolio Annualized 15.80%

From: [url]http://market-mousetrap.blogspot.com/2012/11/11032012-new-trade-and-backtest.html[/url]
Scheduled rotation: selling SSD; buying CGX.
The new purchase, CGX, is the first based entirely on the new adaptive fundamental feature. Quite honestly, when I look at this stock, it looks horrific. Scares me about as much as RIMM did when I bought it.
Since my gut instinct is about as bad as it gets, that may be a good sign…
I feel like I’m George Castanza trying to succeed by intentionally doing the opposite of what I want to do.
In the same vein, SSD (in the building industry) is something that I would expect to benefit from Hurricane Sandy. We do, after all, have a lot of rebuilding to do up here.
This is one of those trades that I have to throw up my hands and hold my breath to see what happens.
NEXT SUBJECT:
Just to clarify my earlier note – the “Annualized” return percentages are calculated from the time that the model went live with real money, 5/31/2012. The total returns from that time are:
S&P Return 5.13%
Small Portfolio Return 16.16%
Large Portfolio Return 22.58%

So, the 22.58% return from 5/31/2012 translates into an effective annual return rate of 15.80%.
This corresponds to the return rates that were back-tested for the Sector rotation model from 2/07/2000 through 10/22/2012. The following graph shows the S&P 500 index compared to the sector model returns for a regular taxed account (in green) and an IRA account (in red):

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Tim