No. of Recommendations: 1
My bias is toward equally-weighted funds rather than other schemes, because I think they better reflect one's trading experience. (If you knew in advance what was going to work best, you could bet the farm on it. Lacking that foreknowledge, the fall-back strategy has to be equally-sized bets, as Linda Raschke argues.)

As an experiment, I pulled the holdings of someone's small-cap growth fund that's currently in an uptrend, pacing the market, dumped them into a spreadsheet, and calcuated two P/Ls for each holding, one based on its actual weighting in the fund; the other as if all holdings were equally-weighted. Trading an equally-weighted basket racked up a whopping (-18.25% loss). But the fund could report a loss of just (-0.39%) due to some of the biggest losers being small positions.

Next, I applied Quill's Smiley Face/ Frowny Face system to the list of holdings, where 12 would be equally-weighted, ongoing 'longs' (based on their most recent signal). 17 would be equally-weighted, ongoing 'shorts' (based on their most recent signal), with one 'aside' (due to obvious 'chop'). The shorts gained 3.27% for the day. The longs lost (-8.63%).

I found the poor performance of the longs surprising and need to re-run the experiment so that the P/L for each holding is measured from date of entry, because my suspicion is the fund is carrying a lot of longs that would be better shorts, and their few, out-sized guesses about longs is what's saving their butt, rather than a disciplined, replicatable, buy-sell strategy.
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