Profit Farmer cover art

Profit Farmer

Other Strategies
Results over the full published history, 1991 to September 2026. Net of trading friction.
CAGR28.2%
Maximum drawdown-86.8%
MAR ratio0.32
History35 years (429 months)

Profit Farmer is a momentum-driven Adaptive Allocation strategy that rotates monthly among a small basket of 3x leveraged ETFs. Each month it ranks the universe by trailing two-month return, selects the strongest three, and weights them using Minimum Variance optimization - sizing each position to minimize the combined portfolio's expected volatility rather than splitting capital evenly. The optimizer works from a real daily-return covariance matrix rather than a simple inverse-volatility rule, which means the three holdings are rarely equal-sized and a selected asset can legitimately be sized to zero if it adds risk without adding diversification. The base universe is emerging markets (EDC), U.S. small cap (URTY), Nasdaq-100 (TQQQ), long-term Treasuries (TMF), and U.S. real estate (DRN), each 3x leveraged.

Profit Farmer is always invested. There is no absolute momentum test, no cash position, and no defensive sleeve - the strategy is fully deployed in three leveraged positions every month, and its only risk management is the momentum ranking itself and the volatility-aware sizing on top of it. Long-term Treasuries in the universe can be selected when equities weaken, but that is a consequence of the ranking rather than a deliberate exit to safety. Because the entire investable universe is built from 3x leveraged instruments, Profit Farmer carries substantially higher volatility and deeper drawdowns than an unleveraged momentum strategy. It is designed for investors who want amplified trend-following exposure, understand what daily-reset leverage does over a sustained decline, and are sizing it as a high-octane sleeve within a broader plan rather than as a core holding.

A companion version, Profit Farmer w/Gold, adds 3x leveraged gold as a sixth candidate.

Performance in detail

Growth of $10,000 (log scale)

Drawdown from previous high

Calendar-year returns

Selected range Jan 1991 to Sep 2026

PortfolioCAGRMax DDUlcerUPISortinoMAR
Profit Farmer28.2%-86.8%29.270.871.470.32
QQQ15.6%-81.1%36.370.361.190.19
S&P 50011.1%-51.0%13.810.621.240.22
60/408.8%-32.3%6.660.921.530.27

What the record shows

From Jan 1991 through Sep 2026, Profit Farmer compounded at 28.2% a year after trading costs. $10,000 invested at the start grew to about $72,146,043.

That is 12.6 points a year more than QQQ, its default benchmark, over the same months, and it out-returned QQQ in 3 of the 4 decades in the record.

Its deepest decline was 86.8%, from a peak in Dec 2021 to a low in Oct 2023, and it has not yet recovered that high.

Return is only half the picture. The Ulcer Performance Index measures return against the depth and length of drawdowns, and on it Profit Farmer scores 0.87, ahead of QQQ at 0.36.

In the 145 months the S&P 500 fell, Profit Farmer still made money in 28% of them.

Since 2000

The modern half of the record, with the dot-com bust, 2008, the long zero-rate decade and the 2022 rate shock all inside it.

Jan 2000 to Sep 2026CAGRMax DDUlcerUPISortinoMAR
Profit Farmer24.3%-86.8%33.280.671.250.28
QQQ8.8%-81.1%41.950.170.710.11
S&P 5008.1%-51.0%15.890.390.880.16
60/406.6%-32.3%7.620.621.110.20

Return by decade

Annual return1990s*2000s2010s2020s*
Profit Farmer+40.5%+29.9%+37.8%+0.1%
QQQ+38.2%-6.4%+17.8%+21.0%
S&P 500+20.7%-1.0%+12.9%+15.3%
60/40+15.4%+2.1%+9.4%+9.4%

* Partial decade, annualized over the months available.

Through the hard stretches

Total return over each period, start of the first month to the end of the last.

PeriodPFQQQS&P 50060/40
Dot-com bear marketSep 2000 to Sep 2002+60.6%-79.7%-44.8%-23.5%
Global financial crisisNov 2007 to Feb 2009-42.3%-49.7%-51.0%-32.3%
COVID crashFeb 2020 to Mar 2020-11.0%-12.9%-19.6%-11.9%
2022 rate shockJan 2022 to Dec 2022-80.7%-32.6%-18.2%-15.9%

How it behaves month to month

Since Jan 1991Worst 12 monthsPositive monthsPositive when S&P 500 fellCorrelation to S&P 500
Profit Farmer-80.7%63%28%0.50
QQQ-67.3%61%15%0.83
60/40-27.5%66%6%0.98

Every figure is net of trading costs and computed from the same monthly data as the rest of the site, over the months all the portfolios shown have in common (Jan 1991 to Sep 2026). Returns before an ETF's launch come from a matching index, as explained in where the data comes from. Backtests are hypothetical and are not a promise of future results.

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