Are you making profit investing darwins with STOPS ?
I think the secret is looking for darwins with good fundamentals (investable attributes) and a long trackrecord.
CIS has been lucky for one year.
The lesson for me with CIS has been to avoid to invest darwins with EX lower than 10 (CIS reached it only in 2021) and to avoid darwins with very low LA score (lower than 1).
Being selective we can prevent the loss instead of realizing it with a stoploss.
No, certainly I'm not making money, just recovering some of the losses accrued when I did not use STOPS and was pursuing the dream of a profitable free-floating portfolio built on selection, allocation, diversification and correlation.
1) The first fact is there are too few profitable Darwins with full Experience and enough capacity left.
3) The second fact is any Darwin, no matter how good, can collapse any time.
4) As a result, diversification is not enough to ensure profits, and STOPS have to be used to limit the downside.
5) Moreover, the volatility of Darwins, i.e. the PNL of the strategy, is unlike price action in most financial markets, in that it is extremely biased to downside. The unstopped collapse of one single Darwin in your portfolio can erase all the profits, past and future, of the whole portfolio, and even more so if using leverage.
Textbook example to illustrate 5) above:
but its lifespan has been very short...
