This page will not necessarily be kept up to date with each signal.
Most recent signal
- Sell on Friday, February 9, 2018
My algorithm thinks the global market has weakened.
My BullSignals algorithm generates "buy" and "sell" signals for the stock index. The goal is to get out of the market during weak periods of high volatility, to minimize losses (maximum drawdown). The primary goal is risk avoidance, but not necessarily outperformance.
In the Humble Canadian Edition, the "buy" signal indicates it's time to buy XIU (stock) and the "sell" signal indicates it's time to sell XIU. At each point, you would switch into XSB (cash-like).
In the Extreme Greed Edition, the "buy" signal indicates it's time to buy SVXY (inverse volatility derivative) and the "sell" signal indicates it's time to sell SVXY. At each point, you would switch into SHY (cash-like) and have a stiff drink. Please note that the Extreme Greed Edition strategy has imploded due to the catastrophic failure of SVXY as described here. At the next "buy" signal, I will introduce a new Moderate Greed Edition.
Performance Over 3 Years
Here are 3 year annual returns to 2018-02-09 of BullSignals versus buying the index ETF directly, including dividends and interest when sitting in cash. CAGR = compound annual growth rate, and Maximum drawdown is the worst loss seen, from local high to low.
Humble Canadian Edition
BullSignals returned slightly less than buying and holding the index, but significantly reduced drawdown. This is the expected behaviour, where you pay a small performance penalty for safety.
Extreme Greed Edition (imploded)
This was an extremely greedy strategy. I warned since last year that SVXY could become worthless, and you can forfeit all profits in just a single day. Unfortunately, this is exactly what happened on February 5, 2018.
BullSignals was not able to avoid this maximum drawdown (sharp 93% drop this week). To make sense of this negative annualized return: if the original investment was $100, BullSignals left you with $44 whereas buying and holding SVXY left you with $42.
This is the nature of high-risk, high-reward. Before this Monday's collapse, the original $100 had grown to $492, which is an unbelievable 70% annual return. Obviously, something growing at 70% per year comes along with high risk (as I warned about in each update). I would have preferred it if the Extreme Greed Edition had not blown up, but the outcome is not too surprising. It also wasn't a total loss; starting from $100 three years ago, you'd still have $44 today.