eToro popular investor and CopyFund tracking

The popular investor and copy fund tracking for August shows meager returns for 2018, worst among crypto investors. The ranking formula, which used square roots had to be adjusted due to negative results, with six months losses exceeding 30% on some Popular Investors, who have diminished the investment of thousands of eToro copiers.

 

The ranking is based on a zero to one hundred percent value relative to the performance of the other investors and CopyFunds tracked. The aim of the “desirability ex crypto” formula is to highlight popular investors and funds with a balanced portfolio, preferably low risk and a continuity in increasing the return on equity.

Unfortunately the CopyFund SharpTraders and GainersQtr hide cryptocurrency investment and possible imbalances behind the eToro investors data. These two funds rank highly largely for their low risk score, reasonable 12 months performance and supposedly balanced portfolio.

Pos Trader Desirability 6 months Risk 12months Profitable Aug 2018
Aug handle @ ex crypto return % return, % months (8) return, %
2018 Min 0.08733484302 -0.7874 3 2.35% 1 -0.3823
Mean 0.6652816771 -0.1824 5.32 41.81% 2.36 -0.06666060606
Max 1 0.1879 9 179.49% 5 0.0568
1 SharpTraders 100.00% -2.24% 3 31.85% 2 -1.34%
2 GainersQtr 97.01% -0.46% 3 19.74% 3 -1.51%
3 JeppeKirkBonde 95.06% 1.17% 4 53.01% 4 1.09%
4 oroumann 91.41% 0.23% 4 17.65% 2 -1.67%
5 TrendingR7 91.12% -16.51% 3 5.92% 1 -2.48%
6 BigTech 90.82% 10.86% 5 39.78% 5 3.71%
7 OutSmartNSDQ 89.34% 18.79% 5 47.13% 4 0.22%
8 eddyb123 85.91% -2.05% 6 179.49% 4 -0.64%
9 AlexandruCinca 85.24% -3.89% 5 37.92% 4 -1.73%
10 InTheGame 83.56% -2.66% 5 18.19% 4 0.74%
11 goodgoing 81.08% -14.07% 3 2.35% 1 -6.65%
12 Fastik 79.11% -28.66% 5 26.04% 2 -8.74%
13 CRISPR-Tech-Only 75.64% -3.26% 6 6.76% 2 5.68%
14 ADC0602 75.42% 13.96% 9 55.90% 2 -4.91%
15 Wesl3y 74.66% -19.26% 6 27.86% 3 -3.23%
16 Xavier86 73.13% -13.78% 6 28.61% 3 -1.18%
17 SallyForex 72.87% -8.54% 4 20.93% 2 -5.64%
18 AlexPlesk 72.14% -16.49% 5 9.45% 3 -11.36%
19 MrThor7734 64.85% -35.41% 5 27.76% 1 -12.45%
20 KarinRoth1 64.28% -39.79% 7 115.15% 2 -8.89%

The OutSmartNSDQ CopyFund produced the best six months return on the list. ADC0602 produced the highest 3 months return.

 

You can find the spreadsheet with a lot of data on the portfolio and performance for download here  http://iitm.be/etotrader – for your own analysis.

 

I welcome hints for the names of eToro Popular Investors with outstanding performance to include in the tracking.

Why stock markets will stay volatile – and how to make money from volatility

Record highs

Most markets are near record highs, point at which more volatility is to be expected. This is exacerbated by many events in world politics. I will highlight three here:

 

Brexit

The UK may struggle to find an amicable exit from the EU, pointing towards a prolonged, business friendly transition period, which has send the FTSE to record highs. The only problem is that a prolonged, close relationship with the EU will not be acceptable to hardcore Brexiteers, which risks leading to new elections, likely to be either inconclusive or ending with an old Trotskyist taking the keys to number 10 Downing Street. The Brexit negotiations outcome is still unpredictable, with only weeks left to find an agreement on the divorce. Thereby the EU’s third largest economy holds a lot of potential for volatility in the UK and wider markets.

 

USA and Donald Trump

Surveys give the Democrats a ⅔ chance to take a majority in both houses at the upcoming mid-term elections in the USA. As this will increase the pressure to impeach Donald Trump with all the mud sliding that goes with it, the compulsive tweeting POTUS45 holds a lot of potential for volatility in the USA, which still sets the pace for global markets. As a side note, one has to wonder how to control that his family and friends are not benefiting from advanced knowledge about tweets which move markets?

 

At the same time, an increasingly protectionist, inward looking US is retracting from Africa and the Middle East. Having gained greater independence in its energy supply, the USA is for the first time in decades in a position to fight trade wars and to strategically withdraw from oil supplying countries. These regions won’t fall into a vacuum, as Iran, Russia and China are all keen to replace American influence. For better or worse, this will change energy markets and investment markets dramatically.

Italy

The European Union and the common currency have made great progress since the real estate bubble burst and caused the last global financial crisis. The “PIGS” economies of Portugal, Ireland, Greece and Spain (though currently under the threat of a no-confidence vote) are growing, unemployment had been reduced, public finances are in better shape and so are most European banks. Except for Italy, where little has been achieved so far, and populists promising a guaranteed income are forming a coalition government with separatists demanding a flat rate income tax of only 15%. Much of the press is relating Italy’s economic woes to the Euro and some populist elements in Italy are playing with fire when toying with introducing a soft Lira. Brussels and Frankfurt will exert pressure on Rome making great headlines and sending the Euro and European markets occasionally lower.

 

How to make money in volatile markets

Where investing and waiting is a simple valid, profitable strategy in bull markets, volatility requires a more active and informed approach.

 

Some of the traditional instruments used in volatile times are gold and Volatility Futures. I am no fan of them. Commodities are not productive and investing in them is only driven by speculation, with gold having had a poor performance over the past five years. I find Volatility Futures hard to handle and it is tough to find the right entry point. I prefer shortening particular stocks and indexes when the signs are right. I also hold cash in orders to take advantage of extreme swings in stocks which I consider sound companies with a great future or sell positions in stocks where I see trouble ahead (eg Deutsche Bank or some UK retailers).

 

As a side note I would like to highlight the positive development of our unleveraged buy positions in eToro’s OutSmartNSDQ fund and GW Pharmaceuticals plc have developed well.

New DAX Stocks on eToro

eToro has  finally added a few more CFD options in the German stock market.

The British foreign secretary Boris Johnson, who read Classics and is married to a barrister, once claimed that German chancellor Angela Merkel, who holds a Ph.D. in quantum chemistry  and is married to a full professor in that subject, to be ‘jealous of British tech‘. On a similar occasion Johnson contrasted the British economy to Germany’s as excelling “not in the old industries in which, of course, Germany still excels. Not in metal bashing …”.  So if you believe ultra Brexiteer Boris Johnson, you don’t need to read on. But if you consider him a serial liar anyway, as some people have suggested, you might want to find out more about German tech stocks less well known than Daimler, Volkswagen or Siemens.

Among the new German CFD options on eToro, I find the following interesting:

Aareal Bank AG, Aixtron AG, Dialog Semiconductor, Drillisch, Evonik Industries AG, Evotec,  Gea Group AG, Gerresheimer, Hella GmbH & Co KGaA and Kion AG.

I have opened a long CFD in the international real estate bank Aareal Bank AG (ARL / DE0005408116) headquartered in Wiesbaden (near Frankfurt) at €39.18 and I a position in “metalorganic chemical vapour deposition (MOCVD) equipment” maker Aixtron AG (AIXA / DE000A0WMPJ6) at €16.30.

Hella has the complex German structure of a GmbH & Co KGaA, keeping the company under family control. It is among the top 50 global automotive suppliers, employing around 33,700 people at more than 125 locations in over 35 countries, with more than 7000 engineers and technicians working in research and development. Hella (HLE, DE000A13SX22) is a welcome addition to eToro – I opened at €54.60. Most analysts see $HLE.DE stock rising to above €60.

I am observing the smallish, German-British fabless Dialog Semiconductor plc (DLG), which could become subject of a take-over. I have no orders yet on telecommunication and internet service provider Drillisch (DE0005545503 / DRI) – also known for it’s brand 1&1;  specialist chemical maker Evonik Industries AG (EVK / DE000EVNK013);  the very speculative pharmaceutical research company and CRISPR-Cas9 licensee Evotec AG (EVT / DE0005664809) of Hamburg;  engineering company Gea Group AG (G1A / DE0006602006);  specialist glass maker Gerresheimer (GXI / DE000A0LD6E6) or leading forklift and supply-chain solutions business Kion Group AG (KGX / DE000KGX8881).

If you invest in German stocks may be influenced on where you think Germany stands in its economic cycle and if how big you think the downside risks to German car making are. For the medium term I think German industry will keep growing, despite the current hiccups emanating from the Trump-administration in the USA…

 

 

eToro popular investor trading update week 4 2018

Another interesting week, in which I think we have created potential for the coming days and weeks.

 

CRISPR-Tech

Our best performing positions are currently the CRISPR-Tech stocks like Cellectis SA $CLLS, Merk Inc $MRK, Editas Medicine Inc $EDIT, Intellia Therapeutics $NTLA and Sangamo Biosciences Inc $SGMO. CRISPR stocks are highly speculative, so setbacks are to be expected, but the potential upside in gene editing is enormous.

 

Crypto-currencies

I have further reduced our crypto-currency holdings. Just before eToro increases the weekend spread, I have  gone one step further, partially hedging the remaining crypto-buy-positions, with so far only one short each on Dash and Bitcoind each. I would love to open a few more sell positions, specially on Ripple, but, as cryptos are purely speculative, I find it incredibly difficult to gauge the entry points. I hope the smoke lifts sufficiently, to allow me to see which of the opposite positions (buy and sell) I should close. I found eToro’s crypto discussion on Thursday informative in that I feel that the participants (eToro traders liamdavies, Wesl3y, Jaynemesis, stebliss, matthewne) failed to address the central questions putting crypto coins’ medium term value in doubt; eToro failed to put up a single panellist questioning cryptos as to create a debate.

If you are heavily invested on cryptos, you may want to consider copying my crypto-sceptic portfolio as a hedge.

 

FOREX: EUR/USD

ECB chief Mario Draghi failed to stop the Euro’s rise against the greenback. Though the US president has then said that he is supporting a strong Dollar – this may have been because he simply finds the word “strong” appealing. For its unpredictability, we have no US-Dollar currency positions in our portfolio. The drop in the value of the US-Dollars is in the short term bad news for selling CHF/JPY and in particular GBP/CAD, where I had to cut losses on two positions (eToro’s risk ratings unfortunately force popular investor’s hands in such circumstances), check the situations and I re-entered later with a smaller profit. The US-Dollar’s extreme weakness is – at least in theory – also bad news for European stocks, e.g. Unilever plc $ULVR.L and Commerzbank AG $CBK.DE. I closed Commerzbank at €13.59 and a profit of 10.13%. Though thanks to sustained growth in the Eurozone, European exchanges remained largely unaffected by the common currency’s appreciation.

 

In view of the €997 million fine against LTE chipmaker Qualcomm Inc imposed by the European anti-monopoly watchdog, I opened a CFD short position in Qualcomm $QCOM at not particularly lucky $67.44. It is near break even and I will close it soon.

 

Looking at Paris

We closed a buy position in Essilor International SA $EI.PA of Charenton-le-Pont (Val-de-Marne), France, at a small profit and opened a buy in L’Oréal SA at €183.97 – analysts see a target well above €200 for $OR.PA.

 

Green bio-pharma

The two bio-pharma stocks in our portfolio, AbbVie Inc $ABBV of Chicago and GW Pharmaceuticals plc of Cambridge, UK (my second home), are growing well (no pun intended). Before I could get around to readjusting the take profits, our position in $GWPH with leverage x2 hit a take profit overnight. I took the opportunity to open a new position in GW Pharmaceuticals plc without leverage.

 

Have a good weekend and profitable trades!

Tracking popular investors and traders on social investment network eToro

One of the advantages of eToro is the social aspect and the opportunity to learn from other traders. Observing other strategies is interesting, even for experienced traders.

I am regularly updating the “eToro popular investors’ spreadsheet”, trying to find the investors closest to the kind of portfolio and performance I aim for.

In early January, the portfolio of the popular investors, traders and two eToro funds tracked was exposed to crypto-currencies with 34.36%. The average exposure to cryptos has dropped to 21% by mid-May. Personally, I am interested in diversified traders with a limited exposure to crypto-currencies (more on why you should treat crypto-currencies with care http://iitm.be/cryptos4asset).

Profitable popular investors on eToro.

 

During the first months of 2018 we have seen losses in share prices, the value of crypto-currencies and most of eToro’s (but not all) popular investors have seen the number of copiers shrink. If in early January you used a $1000 to copy a popular investors or invest in one of the two funds tracked, you would expect to have lost about $180 (on average) by now, but with forex investor goodgoing, popular investor Wesl3y or the OutSmartNSDQ fund your investment could have been profitable. As a side note, eToro copiers should remember that you don’t sell but BUT when prices are low.

 

Having now nine months of data to look back on, has allowed to improve the desirability ranking formula:

=((current month return*6months return*(12months return/3))*(1-(SQRT(Risk)-SQRT(Profitable months of past eight)))*(1-(crypto’s share of portfolio during the past four months)))*(1-investment category exceeding 60%)

 

The ranking is now based on a zero to one hundred percent value relative to the performance of the other investors and funds tracked. The aim of the “Desirability ex crypto” formula is to highlight popular investors and funds with a balanced portfolio, preferably low risk and a continuity in increasing the return on equity.

 

The profitability of an investor or fund with a risk of six who has managed to increase the value of his portfolio during the past six of eight months is 2.10 by the same risk/return value (here 1), as a risk three fund or investor who has ended five of the past eight month with diminishing returns. E.G. eToro gives GainerQtr a risk of three and the past six of eight calendar months trading closed in profit resulting in multiplier of 1.72. eToro gives popular investor “isuuu” a risk seven and six of the his past eight month trading closed in profit, resulting in a multiplier of 0.35.

Pos Trader Desirability 6 months Risk Copiers 12months Profitable May 2018
May handle @ ex crypto return %   last count return, % months (8) return, %
2018 Min 44.57% 0.00% 3 0 4.12% 2 -9.29%
Mean 85.92% 33.75% 5.42 2437 557.66% 5.06 0.91%
Max 100.00% 125.73% 8 12541 12742.00% 7 12.75%
1 karinroth1 100.00% 118.75% 7 7 592.55% 6 10.03%
2 eddyb123 96.85% 98.55% 6 1167 315.85% 6 5.85%
3 JeppeKirkBonde 94.45% 26.54% 4 7022 115.58% 6 4.10%
4 Fastik 92.20% 35.53% 5 2136 126.96% 4 -2.87%
5 goodgoing 91.76% 13.34% 3 7588 37.67% 6 -5.00%
6 alexandrucinca 91.56% 22.48% 5 4736 76.16% 6 1.67%
7 OutSmartNSDQ 91.18% 25.61% 5 256 36.19% 6 12.75%
8 MrThor7734 91.03% 44.54% 5 6911 132.46% 5 -5.35%
9 GainersQtr 91.01% 15.78% 3 650 26.84% 6 0.48%
10 BigTech 90.96% 15.51% 5 608 38.30% 7 6.30%
11 AlexPlesk 90.93% 14.24% 5 7863 66.32% 6 4.96%
12 InTheGame 90.89% 7.84% 5 516 40.83% 4 4.03%
13 Xavier86 90.85% 18.98% 6 3047 75.37% 6 5.81%
14 matanspalatrin1 90.62% 20.94% 6 402 80.62% 6 5.28%
15 Wesl3y 90.47% 11.70% 6 9210 59.99% 6 3.74%
16 oroumann 90.46% 23.04% 5 71 17.62% 5 4.33%
17 TrendingR7 90.35% 7.82% 4 469 51.77% 4 -0.36%
18 27cyrix 90.13% 27.89% 5 143 50.28% 6 7.05%
19 ADC0602 89.75% 16.32% 5 0 42.16% 4 -3.85%
20 Willscuba 89.44% 23.26% 6 273 79.55% 4 -2.35%

Investment in crypto-currencies leads to lower ranking, but not if returns have been stable and high. An unbalanced will punish the ranking, reason why funds investing 100% in stocks, like BigTech, OutSmartNSDQ or InTheGame, rank slightly lower than a popular investor with a portfolio mixing different markets. The goal is to measure the returns produced in the coming months against the effectiveness of this ranking and to re-adjust it accordingly with more data available. If you dislike the formula the data is there available for download.

 

You can access the data at http://iitm.be/etotrader – I am open for suggestions to add to the list.

For control purposes, I am investing $1,000 on each of a over 50 eToro traders on my virtual account, copying only new position (un-ticking open positions) and reducing the stop loss to 50%.  Here some of the results for traders not necessarily appearing on the tracking list above:

The results when copying an eToro trader are dependent on the conditions of the copy and the prices prevailing when the copy started. The above table is therefore in no way representative of the individual trader’s performance. It is just meant as an example of what can happen…

When you start copying a trader, the positions will be opened at the prices, once the respective exchanges are open for trade (crypto-currencies trade 24/7). To get good results, you should copy traders at least for a few months.

But if you want to close the copy of a popular trader, the respective trading centre (Milan, Frankfurt, Paris, Madrid, London, New York, …) must be open, otherwise the stock prices can not be determined. A good time for the speedy realisation of the copied positions is shortly after 15:30 hrs Brussels time (2:30 pm GMT).