Long TMF @ 46.01

Updated

Bought at the close. Same concept as my other trades but using a 3x leveraged ETF to trade an oversold bond market. Will hold until overbought and profitable and will add to the position as long as it is oversold. Will add details on the track record for this security later.

Note

So data on the trades over the last 12M for TMF are as follows:

29 winning trades, 5 losing* trades (losing = hasn't been simultaneously oversold and profitable yet - includes a 0% gain for the trade opened today)

12M results including the "losses" on the trades still open (including today's):
Avg. trade = +2.6%
Median trade = +3.7%
Total 12M return using equal dollar amounts for each trade = +88%

These results include 4 "losing" lots that are currently down 32%, 16%, 15% and 5% respectively.

The average winning trade is just over +5%

These results do not reflect expense ratio costs (1.04%) or dividends (3.41%), only price appreciation of the ETF itself.

As always I will update if I open or close lots related to this position.

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2nd line in the previous comment about the recent results should have read "overBOUGHT and profitable", not oversold. Sorry. That's the second time I've done that.

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Overbought and profitable, so I closed the position @51.484 right before the close. Gain of 11.9% in 7 days. Nice trade for this ticker.

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31-3 now with the average gain (including the 3 that are still negative trades) now at 4.1% and the median trade now is 4.4%

Total 12M return on all 34 TMF trades (equal dollar amounts) as of today's close = +139%

Note

Someone just boosted this and I hadn't looked at it in a while, so I just noticed TMF has been oversold for two days now (8/29 and 8/30). I might dip back into this one. I'm a little concerned about 2 ways the rate cut announcement day could go, though, and I think both are very possible.

1) buy the rumor sell the news - EVERYONE sees this rate cut coming and TMF may be oversold because this is the beginning of a BTRSTN sell off in bonds.

2) The rate cut isn't as big as hoped for or forward guidance is for a pause and not another cut right away. I think both scenarios happening is actually the most probable outcome, personally. For better or for worse, this Fed is very deliberate about rates. Everyone complained they were too slow to raise rates when inflation spiked, and I think everyone who wants lower rates will be disappointed that they don't cut rates fast enough now. The "not enough" crowd may see little upside in bonds short term if that happens and sell just because they don't see any fuel for a bigger upside move.

Also, that worry about the Fed possibly being late on staving off a recession by not lowering rates enough or quickly enough could possibly cause stocks to sell off hard after the announcement. Ordinarily I'd say that a stock selloff would be good news for bonds and TMF, but the correlation of bonds and stocks has been so high over recent years, it's hard to predict how bonds would react.

Stocks and bonds have to decouple again eventually, though, and now does feel like a good time for that with inflation cooling and the economy being stable but not spectacular. I think that a return to "normalcy" in the relationship between stocks and bonds is healthy for both markets and investors and the overall economy as well. If that normalcy returns, and traders aren't too disappointed with the cut they get, TMF could make a little run back to overbought here.

As I think more about it, and note to myself that all my exposure is long stocks right now, some bond exposure seems prudent and oversold is always a good time to increase that. I'll spend my extended weekend pondering all this and update if I end up taking this trade on Tuesday.

These are simply musings and records of my activity, and shouldn't be taken as investment advice. Enjoy your long weekend!

Note

IT'S ALWAYS THE TRADES I DON"T TAKE!! It's up over 12% since my previous update🤬

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Trade summary

Wins 1 Losses 0

+11.9% in 7 days

Avg return = +11.9%
Avg hold = 7 days
Per lot per day held annualized return = +428%

redwingcoach

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