September 1st, 2019

First Quarter Update - Nearly Doubling The Market Returns

The first quarter of Smart Money Math is now officially in the books.

I started this project on June 1st, 2019 and now have taken it a full financial quarter. While there have been ups and downs over these first three months, overall, the Smart Money Math Portfolio has outperformed the S&P 500 by 5.77%. The details are shown below.

  S&P 500 Smart Money Math Portfolio
  Value On June 1st     2,752.06   $1,000
  Value On September 1st     2,926.46   $1,121.10
Percent Change 6.3% 12.1%

In all, I traded a total of 16 times using five different ETF’s and stocks. The full details of all these trades can be found here. Equities traded include one REIT, one international stock, one domestic stock, one bond ETF and my most common holding the S&P 500 index ETF. While I am not surprised at my success, there are a few things I took away from this first quarter of experience that I will use in the future to progress the Smart Money Math Portfolio even further.

What I Learned

Beating the marking wasn’t as tough as I thought it would be. Through this first quarter of Smart Money Math, I used very little difficult math and relied more on basic financial statements and a general understanding of market factors. I read in detail the financial statements of the three individual companies I traded and followed closely when they reported earnings during the quarter. In some sense I feel like the limited number of companies I examined, while detrimental to diversification, actually helped me achieve a higher rate of return.

I also took the approach of slowly entering into a position as opposed to putting all my money into a single company right away. This paid huge dividends as most of my initial trades worked against me, but my second purchase into the companies helped lower my cost basis and ultimately led to a successful trade. I didn’t exactly take the same approach to exiting my positions once I had achieved my desired return, however, this is something I will need to look into in the coming quarters to see if it will improve my results.


One of the biggest problems I had through this first quarter of Smart Money Math was trying to keep my portfolio diversified. As mentioned above this might have worked to my advantage in some sense, however, it is undeniable that it ultimately was a very large risk. Had any of my analysis proved incorrect I could have decimated my Smart Money Math holdings by consistently putting myself into one or two individual companies.

Another one of my biggest “risks” was the inability to invest all my funds in the market at any given time. With it costing over a quarter of my holdings just for one share of VOO I was unable remain fully invested at all times. On average I found I was holding between 3-5% of my portfolio in cash. Having cash in a bull market environment makes things even harder.

Opportunities For Improvement

During the course of the quarter there were a few times I contemplated purchasing options which tend to move up and down in much larger percentages than the overall market. Unfortunately, the strategies I was testing relied primarily on day-trading which is not allowed in a portfolio under $25,000 in value. I will continue to look at different options strategies in the future that do not rely on such short durations since it seems like I might be able to increase my returns even more with these leveraged positions.