Thursday, July 6, 2017

H1' 2017 Market & Strategy Performance Review

First half of 2017 was very eventful where SP500 continued to rally in face of many uncertainties. Hence, it was a difficult period of investors as they had to absorb a lot of headline risk and be brave in their investments. Both of our proprietary strategies have beaten SP500 in 2017 with good margins and with uncorrelated returns. Therefore, not being influenced by news headlines.

Let's first review the markets in H1'2017 to gain a perspective for circumstances in which market beating uncorrelated performance was given. 

Market Recap
First half of 2017 was very eventful. It started with an overbought market, which continued to gyrate with new president coming into the office. However, earnings propelled the market to new highs in February. Market topped on March 1 (within IPM turn window) for 1.5 month decline. 

At the time, many reasons were given for this decline including overbought market, high valuations, sentiment, potential for unfulfilled presidential promises and geo-political turmoil. However, market resumed its rally with Q2 earnings in April (again within IPM turn window). But in the process, many investors had to exit the market due to confusion regarding future direction. This is why investing is a difficult task.

Market rally continued in May through early June. as market was approaching a key IPM turn window on June 8th (posted on twitter), we saw excessive optimism from famous investors calling tech stocks extremely cheap. While on one hand this proclamation was very dangerous because tech stocks had already rallied substantially and they were rallying without any real profits, these headlines make investing very difficult for long-term investors because of emotional attachment. 

Fast forward 1 month from June 8 and Nasdaq is down ~5% from the top. And many of the reasons for market correction that were being discussed in March are still here but are not being discussed because markets are near the highs. And lastly, stocks have rallied for consecutive ~8 months. Everyone should ask themselves if their portfolio is positioned to absorb increased volatility because it will come, and to potentially take advantage of rotation.

In order to properly and profitably navigate through markets where extreme gyrations and news driven moves are the norm, one needs to maintain their composure. Hence, we created strategies that don't depend on market news, rather take into account underlying market tones to make investment decisions. This reduces transaction cost, dampens volatility, moves taxes to long-term bucket and generate consistent results.

Portfolio Strategies
Two strategies are currently live. Goal for both is to generate absolute, uncorrelated returns for long-term growth:
  • Conservative: Suitable for retirement accounts and risk-averse investors
  • Aggressive: Suitable for risk taking investors, with longer-term invest goals

Note: Following strategy performance numbers exclude fees.

Conservative Strategy: 9.59% vs 9.34% for SP500 (w/ dividends)

In 2017, Conservative strategy has beaten SP500. Keep in mind that SP500 has had a very good start of the year since 1950. 
H1 2017 Performance 

Aggressive Strategy: 23.75% vs 9.34% for SP500 (with dividends)

Aggressive strategy has performed very well in 2017. 

H1 2017 Performance 

Although past performance doesn't guarantee future results, H1'2017 performance was very good for both strategies. June was the first negative month after 6 positive months, providing a much needed correction to avoid over-heating!

The best aspect of these strategies is that they enables the investor to concentrate on the work that is more important in life than losing sleep over investments through daily news because we do the research and invest using proprietary algorithms and valuation models.

These strategies are open for investment. Please feel free to contact via for details. These strategies are being implemented via managed account setup through a Registered Investment Adviser. As a result, you keep control over your assets. 

Please contact us for details. You can also sign-up for free email updates below: 

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