Copy of Research 20240119
Research
Research
AI powered, data driven Quantitative models
AI powered, data driven Quantitative models
THE PROBLEM
Money is probability the second most important thing after health, and unfortunately, in today’s society, sometimes you need money to afford health.
Everyone is saying Passive Investing is the best for the average investor, but they never tell you what index fund to buy and more importantly when exactly to do it.
Just holding an index fund for the long term can be actually a mistake and if you’re in the wrong index at the wrong time, it can take you 5, 10, or even 15 years just to break even…
Let’s face it, most people do more research about buying a new car, restaurant or TV, than investing for retirement or any other major purchase, like house, etc.
If you think about it, the average portfolio is either at all time high or losing money (so called period of a drawdown) and the next crisis is always around the corner, could be this year, or next, but it is coming, make no mistake about it...
In last 20 years or so, we had 2 major black swan events resulting in two 50% drawdowns and drawdowns are very important to avoid, because the market might remain under water for very, very long period of time, just check Japan, the strongest market in the world at the time, is still almost 50% down from it's peak for 30 years and counting! Imagine being buy and hold investor about to retire...
On top of that, every 50% drawdown or loss will require 100% gain, just the break even.
It gets even worse at the bottom of a recession/financial crises. This is where people lose jobs and needs those funds to survive and if you are down already 50% and take half of the investments to live off until you find the next job, there is no coming back from this as if you are down 80%, you will need 400% gain to break even
In the end, the Passive Investing is an active decision by itself and I we are here to help you do it the smart way to avoid the losses you cannot simply afford.
THE SOLUTION
We have build an AI powered Quantitative Semi-Passive ETF Investing with Robust Downside Protection systems running on servers in the cloud, collecting data and making decisions, either be invested in index funds essentially tracking the US economy or switch to cash to preserve your wealth.
Money is probability the second most important thing after health, and unfortunately, in today’s society, sometimes you need money to afford health.
Everyone is saying Passive Investing is the best for the average investor, but they never tell you what index fund to buy and more importantly when exactly to do it.
Just holding an index fund for the long term can be actually a mistake and if you’re in the wrong index at the wrong time, it can take you 5, 10, or even 15 years just to break even…
Let’s face it, most people do more research about buying a new car, restaurant or TV, than investing for retirement or any other major purchase, like house, etc.
If you think about it, the average portfolio is either at all time high or losing money (so called period of a drawdown) and the next crisis is always around the corner, could be this year, or next, but it is coming, make no mistake about it...
In last 20 years or so, we had 2 major black swan events resulting in two 50% drawdowns and drawdowns are very important to avoid, because the market might remain under water for very, very long period of time, just check Japan, the strongest market in the world at the time, is still almost 50% down from it's peak for 30 years and counting! Imagine being buy and hold investor about to retire...
On top of that, every 50% drawdown or loss will require 100% gain, just the break even.
It gets even worse at the bottom of a recession/financial crises. This is where people lose jobs and needs those funds to survive and if you are down already 50% and take half of the investments to live off until you find the next job, there is no coming back from this as if you are down 80%, you will need 400% gain to break even
In the end, the Passive Investing is an active decision by itself and I we are here to help you do it the smart way to avoid the losses you cannot simply afford.
THE SOLUTION
We have build an AI powered Quantitative Semi-Passive ETF Investing with Robust Downside Protection systems running on servers in the cloud, collecting data and making decisions, either be invested in index funds essentially tracking the US economy or switch to cash to preserve your wealth.
If you zoom out on the SPY chart bellow and scroll back and forth trough time, you'll see that the market is going up and down all the time. If you think about it the average investor is ether at all time high of it's investment portfolio or in a period of a drawdown. Our goal is to limit the drawdown and still participate in on the upside.
Low Risk Model vs Buy and Hold System
Low Risk Model vs Buy and Hold System
As you can see bellow, the rate of return of the 2 models are very similar, but the downside protection of the quantitative model is exceptional compared to buy and hold strategy.
Low Risk Model
- Average Annual Growth 12.55%
- Maximum Drawdown 28.18%
- Maximum yearly loss -17.34
Worst drawdowns:
- November 30, 2000 -28.18%
- December 24, 2018 -22.19%
- October 8, 1998 -20.86%
- March 23, 2020 -19.83%
- February 6, 2022 -18.17%
Worst yearly losses:
- 2022 -17.34
- 2000 -16.33
- 1999 -14.87
- 2008 -9.82
- 1994 -5.34
Buy and Hold Model
- Average Annual Growth 10.08%
- Maximum Drawdown 56.48%
- Maximum yearly loss -23.37%
Worst drawdowns
- March 9, 2009 -56.48%
- October 9, 2002 -49.16%
- March 23, 2020 -34.10%
- October 12, 2022 -25.37%
- December 24, 2018 -20.18%
Worst yearly losses:
- 2002 -23.37
- 2009 -20.63
- 2022 -19.44
- 2001 -13.05
- 2000 -10.13
Why it works?
Contrary to the common believe, investing in S&P 500 is not a passive system, in fact S&P 500 is a trend following active management system by itself: there is a committee responsible for choosing which stocks to be part of the index and also the stocks are equity weighted, which means the stronger one company is, the bigger part of the index it becomes, essentially making it a momentum trend following investment.
The only thing missing from this type of index investment model is the risk management to prevent the regular 50% drawdowns, which are coming sooner or later...
This table to shows how much you need to gain to offset a loss, to see how important drawdown protection actually is:
Percent Loss Percent Gain Required to Recover
5% 5.30%
10% 11.10%
15% 17.60%
20% 25%
25% 33.30%
30% 42.90%
35% 53.80%
40% 66.70%
45% 81.80%
50% 100%
55% 122.20%
60% 150%
65% 185.70%
70% 233.30%
75% 300%
80% 400%
85% 566.70%
90% 900%
95% 1900%
100% wipe out - there is no recovering from this one...
5% 5.30%
10% 11.10%
15% 17.60%
20% 25%
25% 33.30%
30% 42.90%
35% 53.80%
40% 66.70%
45% 81.80%
50% 100%
55% 122.20%
60% 150%
65% 185.70%
70% 233.30%
75% 300%
80% 400%
85% 566.70%
90% 900%
95% 1900%
100% wipe out - there is no recovering from this one...
“Compound interest is the most powerful force in the universe.”
Albert Einstein