(NEW) BullDude’s Portfolios: Weekly Report

Within this article you will find a weekly summary of the 6 BullDude’s Portfolios that are in the testing phase (6 months):

  • “Greater Strength” Portfolio
  • “Growing Business Data” Portfolio
  • “Mid / Large – Cap” Portfolio
  • “Small – Cap” Portfolio
  • “IPOs” Portfolio
  • “Tech Stars” Portfolio

Want to know what BullDude’s Portfolios are?

The testing phase started 1 month ago and the results are very encouraging, both in terms of return and in terms of risk. Indeed, all 5 portfolios (the sixth “Tech Stars” started testing last week) are outperforming the benchmarks (the best equity indices in the world) while maintaining a lower level of risk despite this first month having coincided with a difficult time for stock markets around the world and portfolios are 100% LONG.

“Mid / Large Cap” Portfolio – Summary

The “Mid / Large Cap” portfolio grew by 1.39% from the start of the test while the benchmark (S&P 500) fell by -4.56%, achieving an outperformance of 5.95% in just 1 month, despite the full LONG exposure. The even more interesting data is that this exceptional outperformance was obtained with a lower risk, in fact the max drawdown of the “Mid / Large Cap” portfolio during this period was -3.73% compared to -9.62% of the S&P 500 index, obtaining an “Alpha” of + 5.89%, ie the portfolio limited the loss compared to the benchmark by 5.89%, despite growing more.

2 new metrics: Max Drawdown and Alpha

As promised in the past few weeks, the testing phase has reached 1 month so there are more stats to show for each of the BullDude’s portfolios that are in the testing phase. In particular, 2 new metrics are available to monitor the performance of the 6 portfolios both in terms of return and in terms of risk. The 2 new parameters are as follows:

  • Max Drawdown: How risky is the portfolio?

The Max Drawdown is considered one of the main risk measures of a portfolio because it represents the maximum loss suffered by a portfolio starting from a maximum point to a minimum point. In summary, if a portfolio goes from 0 to 100 and then from 100 to 40, the max drawdown is -60, ie the collapse from 100 to 40. A more detailed explanation on the Max Drawdown can be found on Investopedia.

  • Alpha: Is the portfolio beating the benchmark?

The main purpose of the testing phase of these 6 portfolios is to obtain an excellent performance both in terms of return and in terms of risk. This means that portfolios must be able to outperform their respective benchmarks (S&P 500, Nasdaq and Russel 2000 indices) and possibly have a lower risk. This new “Alpha” metric serves precisely to measure how much better the 6 portfolios are doing in terms of return and risk compared to their respective benchmarks, which are the best equity indices in the world so making a better performance with less risk is difficult.

In particular, the Alpha referred to the performances represents the outperformance of the portfolio compared to the benchmark and the alpha referred to the Max Drawdown represents how much the portfolio has limited the loss compared to that of the index. Find out more about the “Alpha” metric on Investopedia.

The table above shows the “Alpha” relating to performance and Max Drawdown. The “Alpha Performance” indicates how much each portfolio outperformed the benchmark in terms of performance and the “Alpha Max Drawdown” indicates how limited the maximum loss was compared to the loss achieved by the benchmark.

Leaving aside the “Tech Stars” portfolio due to unreliable statistical data given that the testing phase started only 1 week ago, all the other 5 portfolios outperformed their benchmarks, maintaining a lower risk level, an excellent result. Even more exceptional is the fact that such a clear outperformance was achieved in just 1 month, which was also very difficult for the equity markets.

You can find all the daily buying and selling operations in the article “BullDude’s Portfolios: Daily Transactions” which is published in the category “BD-Portfolios”

BullDude’s Portfolios

Weekly Summary

Below for each of the 6 BullDude’s Portfolios you will find the “Current Holdings” screen which contains the positions currently open in the portfolio and a second screen containing the following 4 types of information:

  • Weekly Performance

In this section you will find the weekly performance of the portfolio and the index used as a benchmark. In addition, as mentioned above, the “Alpha” metric has been added which is calculated as the difference between the performance of the portfolio and that of the benchmark and therefore represents how much the portfolio has performed better / worse than the benchmark. A positive reading indicates that the portfolio outperformed the benchmark.

  • All-Time Performance

In this section you will find the same data as the previous section but the reference period is not the week just ended but starting from the beginning of the test phase. In this section, the “Alpha” parameter is fundamental because it shows whether the portfolio has been able to outperform the benchmark since the test began.

This section has just been added and contains one of the main metrics for measuring the risk of a portfolio, the Max Drawdown. This metric is shown for both the portfolio and the benchmark and represents the maximum loss achieved starting from a maximum point to a minimum point. In addition, the “Alpha” parameter is shown which indicates how much the portfolio has risked relative to the benchmark and a positive value indicates that the portfolio has less risk.

For example, if the benchmark has fallen by -10% starting from a maximum point and the portfolio by -6%, the “Alpha” parameter will be positive by 4% because the portfolio has had a maximum loss lower than 4% compared to the benchmark.

  • Chart comparison of the portfolio / benchmark and Risk / Reward ratio information

In this section you will find the daily chart of the portfolio and the relative benchmark from the start of the test phase and a box that gives you information on the risk / return ratio of the portfolio. In particular, if the “Alpha” parameters of the 2 sections described above “All-Time Performance” and “All-Time Risk – Max Drawdown” are positive, they indicate that the portfolio is performing better than the benchmark but risking less, ie the optimal situation, and then the indications “Higher Return and Lower Risk” will be shown.

In general, based on the value of the 2 “Alphas”, the indications “Higher Return”, “Lower Return”, “Higher Risk” or “Lower Risk” will be shown.

*all-time performance refers to the start of the test phase (31 August 2020). Only the “Tech Stars” portfolio started the testing phase about 1 month later (28 September 2020).
*profit and loss data refer to all open and closed positions

*current holdings of the portfolios directly from Investing.com

“Greater Strength” Portfolio

Risk Level: Medium

Benchmark: S&P 500 index

The “Greater Strength” portfolio will only include companies that show significant strength in terms of price growth. This does not mean that the companies with the highest performances will be chosen, but those that show a greater ability to reach new highs in the short, medium and long term. There are no limits in terms of market capitalization, industry or sector.

Current Holdings

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