July 29, 2024

* Welcome To YOUR Stupendous Retirement Fund* covers three aspects connected to the

*stock trading program: (1) the choice of the trading instrument, (2) a short walk forward on the strategy, and (3) ways of financing it all.*

**One Percent Per Week**I want to improve on this program and find generalized and worthwhile methods to increase its long-term CAGR. The added code should increase its current high-performance level (>50%). I also want to reduce the impact of drawdowns, not eliminate them; I will not be able to do that, but I will reduce their drag on performance and overall impact on the system. That I can do, and you can too.

**Parts I** to **VIII** of my series of articles on the * One Percent Per Week* stock trading program were to understand this simple stock trading strategy better. The program (v5) has only three trading rules: all trades are limited to one week, the strategy takes a long position on Mondays if allowed, and will take a 7% or 8% profit target if it occurs before the week is over. That's it.

**CLICK HERE FOR THE PDF VERSION**

I made three minor and justifiable modifications to the original program, accessible free on **Wealth-Lab**. It resulted in the outcome shown in **Part II**, Figures #1 and #2.

In my papers **The Age Of The Individual Investor** and **The Big Open Project**, a QQQ weekly rebalancing trading strategy was proposed as a do-it-yourself program designed to build your investment/retirement/generational fund (see my series of articles on QQQ and those on building your retirement fund).

The QQQ rebalancing program did propose that anyone could build a substantial retirement fund that would provide them with all the financial freedom they might need and leave their children with a considerable inheritance. That program was structured to generate rising withdrawals after retirement for the rest of your life.

People could do this simply by taking care of their self-interests.

In my present article **Welcome To YOUR Stupendous Retirement Fund**, I propose you explore going faster and further using TQQQ as the vehicle of choice for this * One Percent Per Week* trading strategy.

With this trading strategy, small investors could significantly boost their portfolio growth, surpassing the methods proposed in the above two papers. If hundreds of thousands of individuals build their retirement funds, their collective wealth would empower them and have a positive ripple effect not only on their families but also on the country's wealth. They could also achieve their goals faster in this race against globalization where you "would own nothing and be happy", according to an often-cited WEF mantra.

It is all part of a chain reaction motivated by your future needs and the desire to care for your children.

The hidden side effect is helping society in general. Companies invest in their future; they spread the risk by issuing shares. Investors buy those shares, hoping the company will prosper and their share price will increase. The more people invest, the more companies can dare to grow and produce more of what people need and want.

The impact: companies grow, people find work, investment funds grow, and individual investor funds grow along with the general wealth of the nation. A win-win scenario for all participants.

It becomes a wealth distribution system aimed at the betterment of society in general. You need businesses of all types to employ all those people and provide them with some income, part of which could be invested in growing businesses.

Investing in stocks is a convenient way for the individual to accumulate wealth.

There is a higher risk than buying CDs, bonds, or putting your money in indexed or money market funds. But then, you have a limited timeline. That retirement age is coming, and you need to reach your goals before it arrives. One way to increase your retirement fund is to increase your portfolio's average growth rate. That is what TQQQ is addressing.

The short table at the end of the last article (**Part VIII**) is extended below.

No matter how you would want to invest for your retirement, you could always estimate the outcome based on your fund's expected growth rate and how long it would take using the future value equation: F(t) = F_{0} ∙ (1 + r)^{t}.

The above table offers scenarios based on average growth rate estimates using SPY, QQQ, TQQQ, and TQQQ+ over 10, 20, and 30 years. With the above future value formula, you can make intermediate estimates using your numbers.

The point to be made is easy: there is a serious return advantage in using TQQQ+. Based on the simulation in **Part II**, you could achieve an even higher return.

An ongoing generational wealth transfer is underway and should continue in the coming years. The estimate is that some $70 trillion dollars will move to the younger generation within the next 20 to 30 years. Those are staggering amounts of money.

Meanwhile, that money is appreciating and will continue to do so. If this money was in the stock market, we could give it the secular average market return over the next 20 years; it would grow to $70 ∙ (1 + 0.10)^{20} = $470 trillion. If the next generation could push its growth rate higher, we could have: $70 ∙ (1 + 0.20)^{20} = $2,683 trillion.

If we push it to some 30 years, at a 20% CAGR, the thing would fly much higher: $70 ∙ (1 + 0.20)^{30} = $16,616 trillion on the condition that the average growth rate could be achieved and maintained, and that QQQ continues to grow at the same average rate it has for the last 25 years.

We usually do not realize the implications of such numbers and their impact. Still, the primary task will be to find that sustainable higher growth rate.

Only the expected 10% and 15% long-term average returns are readily available: you buy respectively SPY or QQQ and hold.

Going higher will require some investment skills. However, we already have, for example, Mr. Buffett achieving an average 20% CAGR over 50+ years managing the Berkshire Hathaway conglomerate. So, it is not impossible to maintain a 20% CAGR oven for extended periods. Or push higher as Medallion Fund has done with its net 39% compounded over the last 30+ years.

**Trading Methods**

The * One Percent Per Week* trading strategy is remarkably straightforward, consisting of three trading rules as described above.

The strategy finds its profit in that there are more up weeks than down weeks. You have the last 200+ years of historical data to corroborate that. It is not something new or unrelated to reality. Even if you used a fair coin, you would win. All that is needed is to play long enough for long-term averages to pan out.

But that does not say how the ride would be. The higher the volatility, the more likely you will be on a roller coaster ride. So, prepare for an interesting and rewarding journey. Should you avoid taking the ride? Nonetheless, consider and be assured that it will be bumpy.

By choosing TQQQ, you're setting yourself up for 3x more volatility than if you were using QQQ, which is already more volatile than a general market average proxy like SPY. This higher volatility can lead to higher returns. Check out my articles over the last three years where QQQ was the focus of strategies aimed at building retirement funds.

Also, refer to the prior articles in the * One Percent Per Week* series to see how this strategy behaves and if such trading procedures would be acceptable to your way of playing this game.

Somewhere, you will have to convince yourself that this program works, and if you make any changes to it, you will have to validate and verify that those changes are to your benefit. Otherwise, why make them?

Presently, the TQQQ strategy has close to a 50% exposure rate (51.06%). The main reason is that it has many trading days when it is not in the market (62.7% of trades lasted four days or less). To improve performance, one could use those non-trading days to extract some added profit.

You could improve the scenario by minimizing some drawdowns, either by accepting some refined stop-loss procedure or simply finding ways not to enter such trades in declining markets, thereby reducing potential losses. Currently, the program (v5) wants to enter a trade only if the week's price trend is going up.

Another approach to consider is to expedite trading by strategically applying leverage guided by your unique interpretation of market conditions. The outside world is open to various interpretations, but by using your reasoning to understand what's happening, you can validate these interpretations through simulations. Even in the face of future uncertainties, your program should be equipped with methods to minimize these uncertainties while still taking calculated risks in the market.

**The Governing Equations**

No matter what or how you will trade, you cannot escape any of the equal signs below.

All the equal signs in the above equations will hold and give the same answer over the same time interval (*t*).

If you can answer any of those equations, no matter the expression used, all the other variables must follow suit and comply with their equal signs. You increase the number of trades, and all the equations will adapt to the new data.

Each equation gives some insight into what you might be able to control.

We can start with the last equation F(t) = F_{0} ± X, which states that whatever your trading methods, *X* will be the ending total net profit or loss over the period (*t*). It is also an expression of the nature of your bet. You might start by putting F_{0 }on the line, but what you are playing for is to make some expected profit **E**[X] by time (*t*).

Note that *X* does not ask questions or require you to know how or which assets you use to achieve that result. You could have it as a long-term estimate, an objective to reach before time (*t*), or the outcome of some simulation. *X* does not care about any of that, not your feelings, your risk aversion, your objectives, or other reasons why you want to trade. It talks about the portfolio's bottom line anytime you want to look at it. It is all about money, the liquidating value of your trading account at time (*t*). Every weekend, the * One Percent Per Week* trading account will be in cash and ready for the following Monday.

Evidently, if X = - [F(t) - F_{0}] at any time over the period (*t*), you are out of the game having lost it all. You will have to start over with a new stake. The later this happens, the harder it will be to recuperate the time lost.

The fear of losing it all should help you put some restraints on your trading methods, especially on curtailing potential losses. From the start, you know you will not win them all. You will have a lot of losses since you will be trading short-term and over an extended period. On the other hand, no one wants to curtail profits; most people want more, not less.

If I want to improve the strategy's current state, I must also comply with all the above equations.

So, for this trading strategy, I want what was there and more: F(t) = F_{0} + X + Y. This could translate to: F(t) = F_{0} + Ʃ_{1}^{N} x_{i} + Ʃ_{1}^{א} y_{i}$ where you are adding (*א*) more trades with a profit or loss of ± y_{i}. It will impact the average profit per trade: F(t) = F_{0} + N ∙ x_{avg} + *א* ∙ y_{avg} and would give a new average profit per trade: (N ∙ x_{avg} + *א* ∙ y_{avg}) / (N + *א*) = x_{avg_(N + א)}. We want to add more trades (*א*) having an average profit of y_{avg}.

We could do this by providing more time (*t*) as in F(t) = F_{0} ∙ (1 + g_{avg})^{t + Δτ} while maintaining the average growth rate by doing the same things as before the added period. But then, you would add more time where it is expected you continue at the same pace as before, that is at g_{avg}. There would be no merit to that, nor would it require any program changes. You could continue to do the same as you did for the prior 14.31 years using TQQQ. The strategy's CAGR exceeded 50% (see **Part II**), which is more than desirable already.

Nonetheless, what you might want is: F(t) = F_{0} ∙ (1 + g_{avg} + γ_{avg})^{t + Δτ}, with γ_{avg} > 0. A small positive percentage in γ_{avg} would reverberate over the entire return series. We would get: F(t) = F_{0} ∙ ∏_{1}^{N} (1 + r_{i} + γ_{i}).

The sequence of trades in the product equation would compound any added profit made, and the impact of these increases would be greater the earlier in the sequence they appear. You are dealing with a cumulative function, a long sequence (N + *א*) of returns (1 + r_{i} + γ_{i}) where each factor can be ± r_{i} and ± γ_{i}.

It will also impact the position sizing from the start: F(t) = F_{0} ∙ Ʃ_{1}^{N} [bi ∙ (r_{i} + γ_{i})], pushing for more and more profits as we continue the journey doing about the same as we did before.

As the sequence of trades grows, so does F(t) since b_{i} = F(t)_{t-1}. The position size is growing in step with the portfolio's liquidation value of the previous Friday. The position size will shrink when TQQQ's price falls and increase when it rises. It is still a leveraged version of QQQ.

The question, therefore, becomes: Where or how will I find that positive γ_{avg}? F(t) = F_{0} ∙ Ʃ_{1}^{N} [b_{i} ∙ (r_{i} + γ_{i})].

We had something like this in the * One Percent Per Week* trading strategy, where we added 1% to the profit target if we had reached close to halfway to the 7% target. The average impact was not significant, a fraction of 1%, but it was compounding over the period, allowing us to make bigger bets later on and get increasing results. This simple maneuver increased profits by some $20 million over those 14.31 years (again, refer to

**Part II**).

**Latest Simulation (July 21)**

Usually, when you read academic papers on short-term trading strategies, you find the strategy failed during or after the simulations. And when you look at their walk-forward, you easily understand. Stocks are evolving creatures that are often quite hard to predict. Strategies fail after their simulations because the economic prospects change, and frequently, we find some curve-fitting in the strategy's design or some form of survivorship bias. Often, the trading procedures themselves were at fault.

It is not because you have a program that runs without crashing that you have a winning strategy.

During the weekend, I ran the * One Percent Per Week* program (v6) for the first time since last April. Here are the snapshots from that simulation. Note: version 6 is an exact copy of version 5. I want to keep version 5 as a future benchmark reference.

**Figure #1: Equity Curve**

From the metrics in Figure #2 below, the strategy maintained its pace, generating some $70 million, $10 million more than in **Part II** Figure #2.

So, the strategy did not break down; it simply continued to do what it was programmed to do.

**Figure #2: Portfolio Metrics**

Since April, the strategy has gone from 744 trades to 753 (386 winners / 367 losers). That is 51.26% winners, about the same as in **Part II** Figure #2, where we had 51.21% winners. That margin is not that high, somewhat close to a 50/50 proposition. And yet, the strategy maintained an average percent per week return of 1.03% compared to the 1.02% of **Part II** Figure #2.

We even had a slight improvement from the added 9 weeks of trading. The strategy maintained its pace with a 57.58% CAGR compared to 56.66% in **Part II** Figure #2.

To its advantage, the strategy did not have survivorship biases by construction. It was not dependent on market cycles or any price arbitrage. It took a shot every Monday in what should be considered a long-term rising market. It was also going to cash every Friday.

You can verify those numbers by running your program version with the modifications described in **Part I** and **Part II**.

You could have made an estimate for those added 9 weeks using the product formula. You had in version 5 a 1.02% average return per week. You added 9 weeks, which should operate at about the same rate; it would give 1.02^{9} = 1.195 to be added to the product equation: $59,176,233 ∙ 1.195 = $70.7 million, which is relatively close to the simulation results of version 6 above.

You did not know anything about the outcome of those 9 weeks, and yet, you could have reasonably estimated where your trading strategy was going. Note that the 1.02% average weekly return is a long-term average spanning 744 weeks (14.31 years).

The above estimate used the information you gathered from your previous simulation to make its projection. And even with all that price gyration randomness, it came relatively close to the expected outcome.

**It's Your Retirement. That Should Be Clear**

You want to retire at 65 or sooner. And you want to live well. Say you define this as having a minimum of $1 million per year for living expenses and other stuff. The amount might appear exaggerated, but it all depends on how much time you have and how much capital you are ready to put in to achieve that goal.

Let's do it all in reverse: first, set the objective and then find ways to achieve it.

Your $1 million per year withdrawal should represent 5% of your portfolio. So, you know now that you will need $20 million in your investment account to satisfy that requirement. The problem is finding ways to accumulate $20 million before you retire.

You also have to consider the time it will take since, during that time, inflation will be reducing your buying power. A million in 20 years will not buy what it could today. You will have to make adjustments to your estimates. Still, let's go with the $20 million needed in your trading account. We will find ways to get it later.

If you retire at 65, you might have another 30 to 40 years to go, where you will have to rely on your retirement fund to cover all your living expenses and more until you die of old age.

After 20 years, your fund would be at $20,000,000 ∙ (1 - 0.05)^{20} = $7,169,718. Each year, your 5% would have given less and less in withdrawals. You have to alleviate that since you will also have inflation to account for. Putting inflation into the formula would give $20,000,000 ∙ (1 - 0.05 - 0.03)^{20} = $3,773,866, almost $3.4 million less just for an average 3% inflation over the period. Your take would now be $188,693 in year 20, and not a million.

My point is extremely simple: you will have to compensate for everything.

A simple way to compensate is to have your retirement fund generate a higher return than your withdrawal rate. Thereby growing your fund while in retirement.

Not only do you have to grow your portfolio to the $20+ million, but you also need to have your fund grow after retirement, and while at it, why not have it increase for the rest of your life?

Look again at **The Long-Term Stock Trading Problem**: **Part I**, and **Part II**, where you will find what is needed to build your retirement fund and also how to maintain it for the years while retired.

To reach 65 with $20 million plus, you must earn or inherit your money to invest. Either way, you can achieve your goal.

Discount that $20 million over 20 years at a 20% rate:$20,000,000 / (1 + 0.20)^{20} = $521,681. To get there, you would need half a million invested now at an average 20% CAGR over 20 years. Reduce that amount by increasing the growth rate: $20,000,000 / (1 + 0.30)^{20} = $105,235.

Now $100k or about could do the job on the condition that you could maintain that average 30% CAGR. But you might still have a problem. Where do you get that $100k to start the ball rolling? If you already have it, great, then there is no problem: it could take you 20 years to get to your $20 million mark.

That is not so bad. But it also means that you have to be 45 years old or less since you will need those 20 years to get there. And you will also need that 30% CAGR.

The historical average for the average money manager is about 10%. So, you will need better tools, investment methods, and trading procedures to reach your $20 million goal. In prior articles, I have covered the formula for exchanging time for CAGR levels.

**Figure #3: Annualized Estimates**

**Panel #1** in Figure #3 above presents portfolio estimates based on preset rates of return and years invested. It follows the equation: F(t) = F_{0} ∙ (1 + g_{avg})^{t}.

**Panel #1**shows the estimated outcome of $100k invested in different scenarios. For example, investing in QQQ over the last 25 years would have given about $3 million (see the blue highlight). QQQ has only 25 years of data (created in 1999).

You could have chosen Berkshire Hathaway and achieved a 20% CAGR to reach $23 million in 30 years just for holding the shares. That did not require much of your time, mostly patience and perseverance.

Still, in **Panel #1**, you have Medallion Fund, which over the last 30+ years has achieved a 60%+ CAGR (39% net of fees) (blue highlight again), but where you cannot participate (it is an internal and restricted fund). You could also look at the TQQQ scenarios.

In **Part II**, the simulations have reached the 60% mark over the last 14.31 years (blue highlight). At that rate, your portfolio * could* multiply by 10 times every 5 years (1.60

^{5}= 10.48). I emphasized "could" in the last sentence; the future remains uncertain. However, I would be ready to accept anything above the 40% mark.

As a reminder, TQQQ is a 3x-leveraged ETF aiming for 3x the outcome of QQQ, which has a long-term CAGR average of 15%.

You can pick any column in **Panel #1**and anything in between (use the above formula). You can choose which investment vehicle and trading strategy will suit your purpose. However, if you select SPY as your best choice, do not expect it to outperform QQQ or TQQQ.

We only have 15 years of data for TQQQ, so anything above those 15 years is pure speculation. However, the past 14 years should give you more than an indication of where it is going. It will remain a 3x-leveraged ETF based on QQQ, which holds the top 100 highest-valued stocks on NASDAQ.

**How To Finance Your New Project**

You have $100k to $1 million plus at your disposal; then you are on your way. You might need to find the conviction that this trading strategy could be the tool to get you there, and by this, I mean having a long-term CAGR above 30% to even higher than 40%.

People will tell you you cannot do it alone, but this article series says you can do it all yourself and easily. Study these articles and redo the simulations. Try to find ways to improve the strategy. It can deliver more. You can even do it by hand. But here, I would caution you; the program could do a better job since it won't miss a beat.

To get started, you need capital, a reliable investment method (hereby provided), and the time, conviction, and perseverance to do the job.

All you will do will be within the above set of equations. Each equation will be respected, no matter how you want to trade or invest. It is not because you have your own investment methodology that the above equations will break down.

The * One Percent Per Week* trading strategy gives you a method. If you use the program, it should take you less than a minute a week. If you want to do it by hand, it could take 5 to 10 minutes a week. So, we cannot say it will be time-consuming or that you cannot do it. What could be your excuse? The only thing left would be the lack of money to get started.

You should plan for what you intend to do, especially since this project will take years and years. Building a retirement fund is a long-term project. If you do not intend to carry it out for 20+ years, perhaps you should skip this one and find other means to build your retirement fund.

This is not something you try for a month or two. It requires a long-term commitment and perseverance. You are playing for long-term averages where you can make estimates but cannot get exact numbers. They all come with a ± Δ something. You make approximations and estimates, and they could be things that point in the right direction. For your investment portfolio, that direction should be up.

Here is my list of elements you will need to master with the resources required to achieve your goals: (1) you need a plan, (2) you need investment methods, and (3) you need capital. Trading is a game of money. No money, no game, no retirement fund. At least not by trading.

The * One Percent Per Week* trading strategy provides a method. You will need time to monitor and execute your investment plan. The program is automated, so it takes a few minutes a week to start the program and then let it do its job. Your investment or trading methods should have a long-term expected positive return. There were many estimates presented in this article series. It all depends on the ETF surrogate you choose to achieve your goals.

**Borrow Your Way To Retirement**

**Panel #2** in Figure #3 gives the monthly payments for a $100k loan. I put it there to provide an alternative to someone not having the capital on hand. You can borrow it. Put a second mortgage on your home and use its built-in equity. You could borrow your initial capital from your parents and pay them back as you go, like any other type of loan. Better yet, pay them back as a lump sum payment at the end. I know this is only for some, but those who can do it will find the total cost in **Panel #3**, where the total payments are given, including all paid interest.

You have scenarios for interest rates going from 5% to 15% over 10 to 30 years. At the intersection of any row and column, you will find the monthly loan payment for the selected number of years. For example, 7% interest over 20 years will have a monthly payment of $775 per month ($9,300 per year). We will get back to this later.

Consider your loan payments as contributions to your retirement fund. The loan helps you get a head start, which matters in a compounding environment. If you need convincing, look at the TQQQ column again.

**Panel #1** does state there is a fundamental portfolio choice to be made.

Pick any of the columns as your long-term objective. And whichever column you pick, you should have your trading program show that it could be done with those trading methods. The SPY, QQQ, Berkshire, Medallion Fund, and TQQQ columns are achievable.

Your trading program could fall in any of those columns, including those with no titles or in between.

The column choice is made before you even start playing this game, and **they are all doable**.

It should not be: I hope my program would do this or that. But, whatever your program does, it will satisfy all the equations presented above. You could reverse engineer your expected results and go back to finding ways to achieve those results. What you see in **Panel #1**are some of your choices. There are many, infinitely many others.

**Panel #4** gives the outcome once the total payments and interests have been paid (**Panel #1**minus **Panel #3**). As you increase the CAGR and the number of years, the total loan repayment charges amount to less and less of the total achieved to the point that it represents only a tiny percentage.

For the TQQQ column, based on an interest rate of 13%, the charges represent 0.52% of the portfolio. It would have cost you half a percent of your portfolio to repay your loan with interest. Make sure you pay back your lenders, and if you look again at the TQQQ column, give them a bonus at the end; they deserve it for having helped you become financially independent.

Study **Figure #3**, build your scenarios and then find the tools to make it happen. It is all in your hands. It is all about the choices you can make. And it all can be relatively easy. Your most critical ingredient will be the confidence in yourself and in what you do. You will also need the patience and perseverance to carry it out for years and years.

For those having more means, you could consider putting more on the line. The following table use for initial capital $500k. Everything is multiplied by 5. Five times the input, five times the output. It will also cost five times more if you borrow the money. However, looking at **Panel #4** below, it appears worth it.

**Figure #4: Annualized Estimates - Initial Capital: $500k**

Wishing to go even further, like 10 times **Figure #3**, you only need to add a zero to all the numbers in that table. It is up to you to determine how far you want to go and what you are capable of. It does raise the question: What are your skills at borrowing money? It could make quite a huge difference overall.

Those are your choices. Know it is all doable, and you can easily do it.

**Related Papers and Articles**:

**The One Percent a Week Stock Trading Program - Part VIII**

**The One Percent a Week Stock Trading Program - Part VII**

**The One Percent a Week Stock Trading Program - Part VI**

**The One Percent a Week Stock Trading Program - Part V**

**The One Percent a Week Stock Trading Program - Part IV**

**The One Percent a Week Stock Trading Program - Part III**

**The One Percent a Week Stock Trading Program - Part II**

**The One Percent a Week Stock Trading Program - Part I**

**The Long-Term Stock Trading Problem - Part II**

**The Long-Term Stock Trading Problem - Part I**

**The MoonPhaser Stock Trading Program**

**Anticipating A Stock Portfolio's Long-Term Outcome**

**Sitting On Your Bunnies Might Be Your Best Investment Yet**

**Make Yourself A Glorious Retirement Fund**

**The Age Of The Individual Investor**

**Use QQQ - Make the Money and Keep IT**

**Take the Money and Keep It – II**

**Created: July 29, 2024, © Guy R. Fleury. All rights reserved.**