Think Different, Invest Smarter: The Path to Alpha Returns
The Wall Street Code - Case Study: Week #47 Alpha Hedge AI Algo Portfolio Snapshot
Think Different, Invest Smarter: The Path to Alpha Returns*
*Extract from my the new next book “The Wall Street Code: How Cycles, Trends, and AI Drive Exponential Growth”
The Formula to Become a Superior Investor, as Taught by Howard Marks
The key to being a Superior Investor, as Howard Marks1 teaches us, is to think and act differently from others. If you want superior performance, you can't do what everyone else is doing.
But this is only the first step—just thinking differently doesn't mean you'll achieve better results. In this book, you will learn what it takes to decode Wall Street, and achieve alpha returns.
This was only possible because I developed the strategy I present to you every day in the Wall Street Insider Report —a strategy that enabled people to exponentially expand wealth in the financial market.
Beta vs. Alpha: The Core Concept
Beta is the return you earn by taking on market risk. Another way to view it is that Beta represents the returns earned by doing what everyone else is doing. Alpha, on the other hand, is the return you achieve by doing something different.
Most investors have Beta portfolios. The problem with these portfolios is that they merely track market indices, meaning your results will always be average.
To achieve results above average, you must do things most other investors are not doing.
As Nicholas Darvas2 taught in his book How I Made $2,000,000 In The Stock Market:
"There are no such things as good or bad stocks. There are only stocks going up and stocks going down—and I should hold only those that are going up and sell those that are going down."
The Power of an Alpha Portfolio
An Alpha Portfolio is one with the potential to multiply your investments above market indices, with lower risk.
The Wall Street Insider has an Alpha portfolio. In this book, I will give you the exact step-by-step process to start building your Alpha portfolio today. To do this, you will need to understand the Alpha Hedge AI Algo Strategy.
Why is the Alpha Hedge AI Algo Strategy Global?
It can be applied in any country. It has already been used in the stock markets of England, Germany, Brazil, and the United States. Today, we focus exclusively on the U.S. market.
It works across asset classes. It can be applied to any exchange-traded asset, including stocks, ETFs, and REITs. Today, we focus exclusively on the U.S. ETFs.
It adapts to any market scenario. Whether the market is rising, falling, or experiencing black swan events like the COVID-19 crisis in 2020, the Subprime crisis in 2008, or the Dot-com bubble in 2000.
What You Don’t Need:
No hours of investment analysis. Our planning is monthly and the average duration of the positions is 14 months.
No wasted time on news or company details.
No guesswork. Asset selection is based on data, with objective guidelines on when to buy or sell.
From here, you will take your first steps out of the Matrix, realizing that much of what you've been told about the financial market is a myth.
The Wall Street Code: Case Study
Weekly Alpha Hedge Portfolio Snapshot
New York Call
Every business day, we hold a live meeting with our Brazilian clients, called the New York Call, where we analyze the market, our portfolio, and assets on demand. This is an excerpt from the meeting in Portuguese and AI-Dubbed in English.
🔰 In Portuguese ↓
🤖AI-Dubbed in English ↓
Keeping track of your portfolio's performance is crucial. As we navigate the financial landscape, the data we gather helps us refine and optimize our strategies.
Let’s delve into our portfolio’s performance this November and explore how we’ve fared against notable benchmarks.
Portfolio Performance
**The Collective2 Portfolio was launched on September 17, 2021, with an initial investment of $50,000 to ensure transparency and credibility in the reported results. This approach allows our Premium Subscribers to access our positions in real time, providing unparalleled insights and confidence. The portfolio operates through a real-life brokerage account with Interactive Brokers, seamlessly integrated with the Collective2 platform—a U.S.-regulated company headquartered in New York.
This month, our portfolio showed a promising increase of 4.8%, with a steady growth of 0.4% today alone. As we look ahead toward 2024, projections show a cumulative rise of 21%. While we may be trailing slightly behind the S&P's performance over the past year, our longer-term results tell a different story.
A Three-Year Retrospective
Since September 2021, when we began publicly documenting our strategy, our portfolio has gained a remarkable 45.6%. In contrast, the S&P recorded a 29.6% increase over the same period, spanning approximately 38 months. With an annual compounded return of 12.5%, our strategy allows for doubling our investments every 5.8 years, given that there are no new contributions or withdrawals, and profits are reinvested.
Investing in and holding the S&P would yield an 8.5% annual compounded return, doubling in 8.4 years. By following our approach, we shave 3.4 years off this timeline.
Current Metrics and Strategy Highlights
Our portfolio holds steady with a drawdown of 21.7% across 28 positions in 3 years. Notably, 57.1% of these positions have been profitable, achieving a profit factor of 4.4:1. In simple terms, for every dollar lost, four dollars were gained.
Moreover, more than half—56.4%—of the months were winners. While the S&P remains on an upward trajectory, we’ve positioned ourselves to leverage these market conditions by maintaining a 37.7% allocation in high-performing assets.
Portfolio Allocation and Risk Metrics
Currently, nearly 60% of our portfolio is parked in fixed-income assets equivalent to cash, with an additional 3.2% kept in cash. Our correlation with the S&P stands at a modest 0.177.
Recent improvements in our risk-adjusted returns are evident. Our Sharpe ratio has nudged upwards to 0.68, and the Sortino ratio has increased to 0.97. The beta remains unchanged at 0.13, as does the alpha at 0.03.
Our model portfolio, which started with $50,000 on September 17, 2021, has grown to approximately $72,649. By contrast, last Friday, which was the 15th of the month, it was at $71,587. With a weekly increase of 1.48%, our trajectory closely parallels the S&P's 1.73% rise.
Conclusion
As we continue to monitor and adapt our strategies, these insights reveal the robust nature and potential of our investment approach.
Consistently assessing performance and refining tactics based on data, enables us to stay ahead and maintain growth even amidst market fluctuations. Here’s to more strategic leaps and bounds in the years to come!
Historical Returns
Our current strategy parameters have consistently delivered remarkable results over an extensive period.
Looking at the past 15 years, as recorded up to November 23, our approach has yielded an average annual compounded return of 45%.
▶️Read what the Wall Street Insiders wrote about us↓