Review of the VIX & More Stock of the Week
This is a review of the VIX & More Stock of the Week included as part of V&M’s subscriber newsletter. As the name implies, Bill Luby (the brain behind V&M) picks a single stock each week and holds it until the following week, and has issued 107 picks since the newsletter’s inception.
The SOTW isn’t independently-audited in the strict sense, but because of the nature of the newsletter (issued just once-a-week before the trade) and a large readership keeping Bill honest, I feel good about using his list of trades in this analysis.
Bill’s newsletter is issued every weekend. The graph above assumes a subscriber purchased the SOTW at the first open and sold at the last close of the following week. The SOTW is in red, and for comparison, the SPY is in grey.
A couple of important notes about these results:
First, these results are frictionless (i.e. do not account for transaction costs or slippage) because trading frictions are very specific to the individual trader. The average/median return per trade was 1.38%/0.89%, so there’s quite a bit of meat to work with.
Second, these results (while very good) are south of what Bill uses for tracking purposes in the newsletter. Newsletter results assume a trader purchased the SOTW at the last close of the previous week (before the newsletter is issued). Bill has always been very clear about this and hopefully the chart above helps subscribers better understand how a delayed entry affects the program.
Numbers for the number lovers…
Thoughts on the VIX & More Stock of the Week
Bill has shown a real knack for picking weekly winners on a fairly consistent basis.
Periods of flat returns have generally coincided with bearish periods in the market (which is to be expected with a long-only equity program that’s always in the market).
I’ve assumed a trader simply bought at the open and sold at the close, so there are all sorts of opportunities here for intraday traders (which I am not) to improve entries/exits.
One last note: it should go without saying (but I’ll say it anyways), because of how concentrated the SOTW portfolio is (just one stock), it should only constitute a very small portion of a trader’s portfolio.
The Play Money Project
In 2009 I decided to commit $100k to 10 test accounts trading all sorts of programs that (a) looked promising, (b) could be traded mechanically by a small investor, and (c) were radically different than my own. I’m calling it my Play Money Project.
This is the first in what I hope will be a series of posts talking about the successes of the Play Money Project, but note that I still haven’t found all of my 10, so if you have any suggestions please let me know.
[click for a summary of all recent posts about the VIX & More SOTW]
P.S. I am NOT being compensated in any way for this post – just trying to shine the light on the good guys.
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