Is UISx3 Worth All the Sleepless Nights?

[RB]

Hi,

I currently invest in UISx3, but it’s so volatile and has such a high Max DD.
Looking at this table of returns for various strategies, I’m starting to question why anyone would invest in UISx3:

Strategy:
(a) Max Drawdown less than 15% (CAGR 5y = 26.7%, Volatility 5y = 13.9%, Sharpe 5y = 1.7%, Max DD 5y = -11.5%)
(b) Leveraged Universal Investment Strategy (CAGR 5y = 26.5%, Volatility 5y = 23.1%, Sharpe 5y = 1.0%, Max DD 5y = -38.3%)
(c) Volatility less than 15% (CAGR 5y = 24.6%, Volatility 5y = 12.5%, Sharpe 5y = 1.8%, Max DD 5y = -9.9%)

I could invest in the “Max Drawdown less than 15%” strategy and achieve the same CAGR 5y without all the sleepless nights.
The only issue I see is that with UISx3, you only have 3 underlying ETFs to worry about, but with “Max Drawdown less than 15%”, you have many more ETFs/stocks to buy and sell…which can be a HUGE pain.

I would be interested in your thoughts, please.

Thanks,
Ron

[randyfloyd]

i hope you are only using this strategy as a small, speculative portion of your portfolio if in fact you are losing sleep over it. one thing that may help, there is a brokerage site called M1, which allows you to basically trade for free. you can set up a portfolio of stocks and etfs on a percentage basis in about 5 minutes

[RB]

Thank you.

[Anonymous]

What’s the worry with this strategy? It’s the only one I use and I’m all in. It’s been a great year and over the past few years, I’m averaging 40% returns. I’m a big risk taker. And being up 70% YTD is awesome.

I know the risk 3x leveraged stocks take on, but I also have faith in the algorithm. Yes, there have been some stomach turning daily returns, but I’m playing with house money now. So it’s just numbers to me until they turn into cash on rebalance days.

My monthly balance is $150k. I skim the profits back down to the balance each month. On months with no profit, I simply rebalance the current total and keep on waiting.

With the 30yr falling below 2% for the first time ever, TMF is on a tear right now.

While CNBC is airing market turmoil specials, this strategy is raking in big profits and every single month this year has posted positive returns. As a matter of fact, this strategy is up 30% from exactly one year ago while the overall market is about dead even.

[R D HATHCOCK]

Yes, if treasuries are falling. So it was a disaster last year when the Fed was raising rates and the markets, SPY, got tanked. BUt. over time, it is good as long as bond rates are flat or falling.

[Anonymous]

To me, it doesn’t matter which way treasuries are moving. I trust the algorithm will put us in the proper percentages so if rates rise, we are holding less TMF or UGLD instead. As rates fall, holding more TMF like it worked out in August, 2019.

The only way this strategy loses is if all three ETFs fall together or we are not balanced appropriately. This could easily happen from time to time in short timeframes and it sucks when it does. But long term, it has been an amazing performer and I am glad I’ve put actual money on this line since 2015.

[Author]

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