2001-2003 21st Century Alert Rydex Trading Track Record
Rydex Trading
It's a good time to look back at how we've done on the Rydex trading. Since I "locked down" the methodology a couple of years ago, the results have been, well, pretty darn good.
I'm particularly pleased that during more than a 20-month period, we didn't have a single loss with these leveraged Rydex Funds. (We used these Rydex funds prior to July 2001, but it was in a much looser way, without a strictly defined methodology -- I only formalized the methods and recommendations in July 2001). To date, we've had 14 wins out of 15 total trades since July of 2001 -- profits of up to 229.3%.
First, I'll recap which Rydex Funds we trade, for those who are unfamiliar:
Rydex Venture Fund (RYVNX). Bear fund, designed to go up if the Nasdaq 100 goes down. Provides 2 to 1 leverage (200%) on the daily price movement of the NDX, so if it is down 1% on the day, this fund should go up 2%.
Rydex Tempest Fund (RYTPX). Bear fund, designed to go up if the S&P 500 goes down, with 2 to 1 leverage.
Rydex Velocity Fund (RYVYX). Bull fund, 2 to 1 leverage on the Nasdaq 100.
Rydex Titan Fund (RYTNX). Bull fund, 2 to 1 leverage on the S&P 500.
Below are the trading results since July 2001. Please note that there isn't a "fudge factor" on these prices, as everybody gets the exact same end-of-day Net Asset Value (NAV) with these mutual funds.
July 6, 2001 Timing Signal: Short
7/6/01 Buy RYVNX at $55.18
7/6/01 Buy RYTPX at $66.60
9/19/01 Sell RYVNX at $95.54, gain 73.1%
9/19/01 Sell RYTPX at $90.10, gain 35.2%
Note: These trades encompassed the whole period during the summer of 2001, with profits taken during the dramatic market swoon following September 11. While I recognized that week that sentiment was reaching a bearish extreme and took profits near the bottom, I regret not having the fortitude to turn around and go long. The subsequent massive rally turned out to be a huge demonstration of the power of moving against the majority.
December 14, 2001 Timing Signal: Short
12/14/01 Buy RYVNX at $47.58
12/14/01 Buy RYTPX at $71.45
5/20/02 Sell RYVNX at $61.23, gain 28.7%
5/20/02 Sell RYTPX at $72.83, gain 1.9%
This short position was entered after the rally off the September lows was exhausted, and it took a long time for this downtrend to fully develop. Even during the bear market, the effects of positive seasonality kept the market from really collapsing until late March. I should have used the weekly chart for the stop on this position, as a strong rally after Cisco's earnings in May shook us out too early.
July 23, 2002 Timing signal: Long
7/23/02 Buy RYVYX at $9.33
7/23/02 Buy RYTNX at $6.12
8/16/02 Sell RYVYX at $11.21, gain 20%
8/16/02 Sell RYTNX at $8.18, gain 33%
Also, we had a second entry on this move:
7/29/02 Buy RYVYX at $10.81
7/29/02 Buy TYTNX at $7.74
8/16/02 Sell RYVYX at $11.21, gain 3.7%
8/16/02 Sell RYTNX at $8.18, gain 5.6%
Looking back, I'm especially pleased with this trade, as we took a brave leap of faith and bought into the massive wave of selling in late July. This was a really tough thing to do, as it felt particularly horrible at the time. But this was true contrarian investing, and we were rewarded with very quick gains.
August 29, 2002 Timing Signal: Short
8/29/02 Buy RYVNX at $91.52
8/29/02 Buy RYTPX at $93.86
9/11/02 Sell RYVNX at $92.09, gain .6%
9/11/02 Sell RYTPX at $94.58, gain .8%
This short trade didn't fit the risk/reward parameters that I favor, so I got out early with a sliver of a gain. It is much more important to not put us in a position of taking a big loss on these Rydex positions, and I saw too much potential for a big up move.
October 15, 2002 Timing Signal: Long
10/15/02 Buy RYVYX at $9.81
10/15/02 Buy RYTNX at $7.19
12/05/02 Sell RYVNX at $11.70, gain 19.2%
12/05/02 Sell RYTNX at $7.52, gain 4.6%
This was another classic bottom where the VIX shot up over 50. Unfortunately, most of the gains on this move came right off the bottom, and while there was still money to be made, if you didn't buy into the abyss on this one, there wasn't as much available -- especially in the S&P 500.
January 22, 2003 Timing Signal: Short
1/22/03 Buy RYVNX at $66.96
1/22/03 Buy RYTPX at $92.88
2/13/03 Sell RYVNX at $73.81, gain 10.2%
2/13/03 Sell RYTPX at $105.99, gain 14.1%
5/19/03 Buy RYTPX at $79.91
9/03/03 Sell RYTPX at $62.8, loss of 21.4%
So there you have it. That's what we were able to catch by taking the opposite side of the crowd as best we could. There is room for improvement, that's for sure, and 25 months is definitely not a long enough time period to get in a lather about how fabulous this is.
But I know that if I stick to these same risk/reward parameters, then we've greatly skewed the odds in our favor, and at least eliminated a good chunk of the downside risk in the markets.
After all, the goal is to have a method that limits your downside risk, and still puts you in a position to make great gains to the upside. "Fading the crowd" is the most reliable way to accomplish this, so we're certainly going to take every opportunity to do this in the upcoming months.
Please note: These profits are hypothetical, assuming that subscribers bought and sold at the time the recommendations were issued. Actual results can and do vary based on day of execution and commission charges.