The tastytrade network is proud to announce a new addition to the programming lineup called Top Dogs!
Top Dogs is a series featuring concepts and strategies relevant to managing larger accounts. While the target portfolio range for a Top Dog account is $250,000 to $1,000,000, the hosts of the show, Tom Sosnoff and Tony Battista, are quick to point out that any trader can benefit from these discussions.
Depicted below is the content guide for each upcoming segment of the Top Dogs series:
As noted above, the first episode in the Top Dogs series focuses on "building a core position." Tom and Tony indicate early in that first episode that a large portfolio is usually launched with core positions that provide a foundation for account.
The hosts expand on this notion by providing five specific examples of liquid securities that provide easy and fair access to the market: SPY, IWM, TLT, GLD, and EEM. Using these instruments, Tom and Tony move on to examine research tastytrade conducted on all possible portfolios that might include SPY, IWM, TLT, GLD, and EEM.
Considering the above stocks, there were a total of 243 different portfolios analyzed under the assumption that each symbol could either be included or not included. And, if included, could be long or short. The back-test also assumed 2% standard fees and equal weighting among the stocks in the portfolio.
The conclusions from the back-tests on these 243 different scenarios revealed that a portfolio with a $250,000 original investment would have on average lost $5,008 (-2%) with the worst performing portfolio losing $18,000.
The graphic below illustrates the range of returns on the 243 different scenarios that were tested using the 5 core positions:
Tom and Tony infer from this range of returns that the average 2% loss represents an intriguing reflection of the standard 2% fees set by many traditional investment managers/mechanisms. They further build on this conclusion by emphasizing how damaging fees can be to the theoretical growth of a portfolio valued at $250,000.
Additionally, Tom and Tony go on to discuss how the seemingly random way these portfolios were constructed still produced on average a small negative return that essentially represented the same percentage a trader might lose while using a traditional investment manager/mechanism.
We encourage you to watch the entire first episode in the Top Dogs series to gain a complete understanding of Tom and Tony's thoughts on building a core position in a larger account.
New weekly episodes of Top Dogs can be accessed by following this link.
Please don't hesitate to follow-up in the comments section below or on social media with any suggestions or questions.
Thanks for your continuing interest the tastytrade community!