TradingTechTrends

This strategy was inspired by a broad body of scientific literature finding that past outperformers (momentum) tend to be future outperformers ever since assets have first been traded on exchanges. This non-discretionary quantitative system optimizes different factors to take advantage of this phenomenon in a very efficient manner. Simplified, the trading system is regularly rotating into strongly trending liquid, large-cap Nasdaq-traded stocks. Even though buying what has been going up seems to defy common sense and certainly made me feel uncomfortable in the beginning, the system is able to identify potential winners early and massively profit if they continue trending (e.g. Moderna and Tesla in 2020). Admittingly this system will tend to underperform (which it hasn't so far) if there aren't any strong winners in a certain year. Targeted Performance A backtest has found that the strategy had an incredible CAGR of 54% (before fees) since the beginning of 2014. It's probably more realistic to expect returns of around 30% going forward as growth valuations are elevated and market returns might revert to historic averages. Still, a performance of 158% in 2020 and 60% YTD (07.2021) could mean the best is yet to come: I assume that low-interest rates will boost this kind of strategy as changes in expected growth on a company level, which tend to be priced in gradually, have a larger influence on overall valuation as the discount rate decreases. Risk As the investment approach is quite concentrated, high short term volatility needs to be stomached. That being said historical max drawdowns (percentage decline from peak to bottom) are in line with the Nasdaq-100 benchmark in the last years so the overall past risk-reward profile has been excellent. And while the strategy underperforms in 42% of all months which can be painful it has outperformed every single year since 2014. As I put my money where my mouth is I'm currently having 100% of my own money in this strategy.