PERFORMANCE 2016 (and 2015)

I started this blog 2 years ago writing this blog about momentum investing with some models I created. I liked the idea to post every month the monthly allocation and monitoring how they performs just to show that, if someone study and work hard, can have nice satisfactions. Before going ahead with the comment, I want remind that if you follow these signals, you do it at your own risk because I am not your personal advisor.

In the performance I don't compute transaction costs, bid/ask spread and other things as I wrote many times in previous posts. Because the allocation is on monthly basis, the total cost can be small if the capital is big enough (if you want to be quite defensive take out 1.5-2% for models 3 and around 1% for model 1 and 2 even if in real it will be lower).

In this second year all models had a positive return and I am quite happy about that.  


I dedicate this blog to Bruno that I'm sure is watching me from the sky.
 

 Let's see how 2016 was.In the first post of 2016 I wrote about my fear for 2016 (higher volatility, negative rates world and difficult scenario because of central bank bubbles). Because of this, last year I introduced  new versions of older standard models. They passed the exam too ;-)

Let's see results

For the second straight year, all models had a positive performance.
Model 1 (safest) e Model 2 (safest...a bit less) had low digit returns, but It's fine. They are built to deliver positive returns, with contained volatility (historically recorded between 4 and 5%)

Models 3 are more aggressive, with an historical volatility between 8-10% a year. They had many negative months, but thanks to end year rally they closed well positive. This again show why, if you decide to be a momentum investor, you need to take every signal, even if you don't believe in it.
Just decide the size of portfolio to allocate to that "philosophy", then follow it like a monkey.

Models 4 are built to beat an equal-weighted portfolio of 9 assets in the long term. They tend to underperform in good years (for the benchmark), but strongly overperform when the bear market arrives. It's a good way to have a diversified portfolio with a much lower downside risk vs the benchmark. Its strength will need to be tested in market adverse conditions.
This year benchmarks (for € and US closed positive) and models 4 underperformed but recorded a positive year.

In the next chart you can see the monthly performance 2016

2016

And just for record, here the performance in 2015 when I had less models on the blog

That's all for today. In coming weeks I'll post my considerations about markets as well
Have a nice and prosperous 2017