Author: Brendan Ruchert-Dixon

Covestor models: Alpha Trapper and Beta Blocker

The end of December marked the close of the first full year for the Alpha Trapper portfolio.  For most of the year, I had been positioned to benefit most from a volatile sideways market, and that is exactly what we saw. The S&P 500 started the year at 1257.64 and finished virtually unchanged at 1257.60, but went though some major daily and monthly gyrations along the ways.  I did my best to smooth the ride with tactical trades and diversification, and am happy with the results so far.  A few highlights:

Alpha Trapper gained 31.84% for the year vs 0.00% (plus about 2% in dividends) for the S&P.

The S&P 500 suffered several very bad months, including a 5.68% loss in August and a 7.18% loss in September.  Alpha Trapper's worst months were March (-0.24%, no subscribers yet), and September (+0.04%, with -0.31% for subscribers).

The newer Beta Blocker portfolio also held up well during the volatile second half of the year. From its inception on June 2, it gained 9.06% through 12/31, vs -4.33% for the S&P in the same period.

In the coming year, I remain cautious and neutral regarding the overall market.  The US economy seems to be holding up slightly better than I expected, but many things can still go wrong in a hurry.  The developed world still has several years of deleveraging ahead.  Europe is an obvious trouble spot, but other nations (e.g. Japan) could quickly be in just as much trouble if investors lose confidence.  On the macro side, I will continue to look mostly for market-neutral ETF trading opportunities.

As for my one company stock holding, Asta Funding (ASFI), December's annual earnings report was mildly positive, if a little underwhelming.  One disappointment was the lack of share repurchases (only 8900 shares so far) and the apparent lack of any real commitment to purchase much more than that going forward.   Despite this, the company remains very undervalued in my view, so I'll continue to hold until this changes.