Bullish Cross currently runs four actively traded theoretical model portfolios. The goal of these portfolios is generally to demonstrate the different ways one can practically execute a particular investment thesis for the purpose of outperforming the S&P 500. These portfolios have absolutely nothing to do with one another. They're completely unrelated and based on completely different investment strategies. Each portfolio is designed for different types of investors with different types of investment goals ranging from moderate outperformance of the S&P to speculative-aggressive growth.
Please keep in mind that Bullish Cross is not a registered investment advisory, and as such these portfolios are for educational purposes only. Furthermore, before making any investment decision please consider the suitability of these investments to your circumstances and consider seeking advice from your own personal financial advisor. These portfolios do not consider the question of allocation and some are highly speculative strategies. Please read the Terms and Conditions of Use before viewing or analyzing these model portfolios.
Portfolio Strategy Summary
There are very different end goals and strategies for each of the model portfolios managed here at Bullish Cross.
The BC Trading Portfolio
First, the BC Trading Portfolio is a highly speculative options-trading portfolio and seeks to highly leverage different investment opportunities through the use of options and option spreads. It is the most actively followed and actively traded portfolio at Bullish Cross.
Bullish Cross Fund Model #1
Second, Bullish Cross runs what we considered to be the ideal hedge fund model portfolio. This model is intended for those who are interested in either potentially managing their own fund or who might be interested in investing a fund Bullish Cross may launch sometime in the near-future. We believe the most ideal hedge fund strategy aims to accomplish two entirely independent but equally important goals:
Goal #(1): We believe in order to always remain in the game it is crucial to minimize or completely eradicate the risk of under performance. The biggest business-risk for most funds is the threat of underperformance on a highly positive or negative year. If the fund losses more than the S&P on a bad year or produces a fraction of the gains of the S&P on a positive year, chances are investors will pull their capital. Thus, to limit or significantly reduce the risk of underperformance, this portfolio will remain 80% invested LONG the S&P 500 either through relevant sector allocation or through direct purchase of the SPY. If the portfolio is at least 80% invested long the S&P 500 at all times, it significantly lists the potential for underperformance. It hedges against any potential forecast or strategy that might miss a large rally like we experienced with QE2 and QE3. It limits human error.
Goal #(2): Yet, limiting the potential for underperformance does not form the basis of an attractive fund or strategy. That is where goal #2 comes into play. And that is where the 20% on the sidelines comes into play. There are two independent skills that Bullish Cross feels it can leverage to produce suchificent alpha to consistently outperform the S&P 500 on a year in and year out basis. We feel strongly that we can outperform through two separate strategies. First, we feel we can pick the right stocks and sectors poised to outperform at any given period of time. Second, there are periods in the market where we feel the S&P 500 may be bottoming out after a correction or where we feel may be toping after an extended rally. If the market is extremely oversold after a major correction and poised to rally on a technical basis, we may get long 125% for the upcoming rebound. That way if the S&P 500 rebounds 10%, we outperform by a measure of 25%. The portfolio rises 12.5% while the S&P may rise 10% on that one rally. Thus, the model portfolio aims to outperform through a mix of stock/sector picking and technical-based timing strategies. We seek to limit underperformance by being 80% long the S&P 500 at all times regardless of our outlook. We may also hedge that 80% long position by selling monthly or weekly premium against that long position and even purchase a small percentage of puts in situations where we feel there is considerable risk in the market.
The Bullish Cross Fund Model #2
Bullish Cross also runs an alternative to the primary fund model portfolio. Not all investors are looking for consistent outperformance of the S&P 500 and would rather have years with potential outsized returns. By removing the hedge against underperformance through being 80% invested long at all times, the BC Fund Model #2 aims to simply produce outsized returns by strictly trading the SPY. It's similar in every way to Fund #1, except this fund could sit 100% in cash and/or even short the S&P 500 in situations where we feel the market is topping out. IN good years, there could potentially be massive outperformance and this strategy has the potential of even producing very positive returns in financial-criss type years. While BC Fund #1 is always invested long and aims to produce moderate alpha above the market, BC Fund #2 could very well be short during a crash-situation producing positive returns in an S&P 500 down 60% year. The trade-off is that in potential major positive years, this BC Fund Model could potentially vastly underperform in situations where a major rally is missed.
Between 2011 and 2013, Bullish Cross ran a similar portfolio that did far outperform the S&P 500 and approached a near-90% win-rates in trades on the SPY. IT was called the BC SPY Model Portfolio. This portfolio is a resurrection of that portfolio. The fundamental difference is that this portfolio could trade any individual equity to produce that return. So we may trade the SPY/QQQ/DIA/IWM or even individual names. The point is to produce outperformance through the trading of equities.
The BC X-Portfoio
The BC X-Portoflio is an extremely speculative portfolio that aims to leverage compound returns by capitalizing on high probability technical set-ups in the market. The goal of the portfolio is to produce 100% returns on each trade. Thus, the amount investment is very small. However, the portfolio aims to leverage compounded returns by investing all gains in each successive investment. For example, five consecutive 100% returns is a compounded return rate of 3200%. An investment of a mere 1% of total investment assets could result in a total 32% return over the course of 5 success trades. However, on failure, the strategy loses a mere 1%. That is the point behind the strategy.
BC Actively Traded Model Portfolios
1. The Bullish Cross Trading Portfolio (Contrarian + Trending)
2. Bullish Cross Fund Model #1
3. Bullish Cross Fund Model #2
4. The Bullish Cross X-Portfolio