By Jack Brinson
Algorithms can enable investors and traders to substantially increase their returns. My forthcoming book, “Using Big Data in the U.S. Securities Markets,” will explain in some detail. It has taken many years of experience to create what will be described in this book. Although massive amounts of market data are collected to create algos, there is an extreme amount of consistency. So, using extremely similar data taken from market internals to create indicators with rules for machine learning results in continuing profits.
U.S. stocks now are in a bear market (down 20 percent or more). VTI, a Vanguard Exchange Traded Fund comprised of 3,000 of the most active stocks, probably is the most accurate stock market measure. From top to bottom (first week of January 2022 to the middle of October 2022), VTI was down 28 percent. It has rallied (as of Dec. 23, 2022) 9 percent from the bottom but must gain 56 percent to get back to its all-time high.
History tends to repeat itself, and we have experienced seven bear markets in the past 50 years. The shortest lasted six weeks (COVID-19 pandemic) in 2020, and the longest lasted 30 months (2002-03) and was down an average of 39 percent with the smallest 25 percent and the largest 57 percent. The most related period was down 27 percent in 20 months from 1980 to 1982 because of inflation. The foregoing is good to know and can be used as a guide. Each of these considerable down movements was different. There were some similarities but there were many differences.
My own history includes every one of those bear markets, but I was in different positions as they occurred. I have been a wealth advisor (known as a stockbroker at the time), NASDAQ market maker for a regional firm, a member of two different exchanges in Chicago, a money manager, a retirement advisor and licensed as a 65 registered investment advisor. In other words, I have a considerable amount of experience, and that cumulative experience undoubtedly is the best teacher.
I am creating a much more profit-oriented method of investing pension funds. To date, I don’t know of anyone who has done this as it entails trillions of dollars. Hopefully, I will succeed you will be able to benefit.
Finally, here is my interpretation of the current situation with the stock market: If you are concerned and are considering selling some of your holdings in your pension, I suggest you consider that good companies with dividends should not be sold at this point. In fact, I believe one should be buying more now if possible. So, invest as much as you can in your pension.
The best is coming, as I now have potential rules in place for a change in the major downtrend. I have no prediction when this will happen. When it does, I am hoping you will be able to take advantage.
Jack Brinson of Carmel, an occasional contributor to Current, is a former registered investment advisor. Information presented is for illustrative purposes only and not to be construed as specific recommendations. All ideas and material presented are entirely those of the author. No other system or methodology ever has been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using the writer’s methodology or system will generate profits or ensure freedom from losses. For more information, you may reach Brinson at [email protected]
