Really enjoyed the article. Funny thing is I see a number of similarities in the approach I’ve developed over the last 7 years (also beating the market since 2019) - but my approach has taken more of a direct indexing angle. I’m planning to publish my first breakdown of the system this Saturday.
What I like most about your system is its simplicity. And if it works? Awesome.
Looking forward to reading more. And if you’re open to checking out mine when it publishes on Saturday, would welcome your thoughts
Good research, but I think it would be fair to acknowledge somewhere the >30% maximum daily drawdown of the strategy during COVID in 2020 or the >20% drawdown in 2025 during Trump's tariffs madness, those monthly charts mask those pain points.
Thank you 🙏 And fair point, there are certainly drawdowns. In some of my other articles where I focused on the drawdowns, I have also tried to explain the difference between monthly and daily drawdown figures. Maybe this can be improved. Thanks for the input!
If everyone in the world actually used it, it would no longer work, as everyone would indirectly be trading the same stocks underneath.
But I believe it would require a significant share of global equity trading to impact, as the ETFs used by the strategy cover the biggest and most liquid stocks in the world. It would require massive capital to move prices in those.
Hi Michelle, glad to hear you’re interested. Actually, that list already exists, although I could probably make it more obvious :)
In the article below, I have a section named List of ETFs for the European market.Each ETF in that list has an ISIN code that works on the London Stock Exchange as well.
I always include the ISIN code in the trading signals, so you can simply search for it on the London Exchange to get the GBP version.
Interesting strategy. Why are you not including financials and utilities in your sectors? Also, EU and US sectors? Would that not improve your results?
Thanks, and great question! 👍 Financials and Utilities have simply not provided historical returns at the same levels and with the same consistency in trends as the others. I looked into this originally, and found they decreased the results when included.
EU sectors could have been included, but I had better results with US only, and I also didn't want to move too far away from the global equity distribution of roughly 70% US stocks.
Thx for the great content, like the simplicity and "reduced to the max" blogging approach. One question understand that you are an europe based investor (eur). Dependent on the strategy selection the whole investement for a period may be in usd. So the whole currency risk kicks in, any special consideration or just take the currency risk?
Thanks, I appreciate your comment! I did think a lot about the currency risk, and yes it is definitely there. Personally, I came to the conclusion that hedging wasn't worth it (it's like buying an insurance to cover losses from currency changes), as it will also remove currency wins and you will pay for it in some way or another.
Based on the consistency of the back-tested performance, I decided to take the currency risk. As a European investor I guess this is normal: Even a regular world index ETF will imply a ~70% USD exposure given the size of the US market.
I like this a lot. It’s really solid work, which in my experience is the only way to be successful in investing. Or in most things for that matter! You put the work in, you get the returns.
Have you ever considered using long dated options to mitigate risk and maximize returns? I basically show my trades and how options work in my articles as most investors do short term options which is much more akin to gambling . Options are poorly understood by most investors unfortunately. Also, typically 'systems' don't work. do you trades and holdings?
Systems don’t work is not true. MarketFighter’s system is based on academic research on sectors, factors and momentum. Joel Greenblatt and others have demonstrated that systems can work extremely well. Systems invented by monkeys don’t work. Systems invented by sophisticated, hard-working people do work. Aren’t you using a system with your options trading anyway?
No sorry, I don't have that. The only "proof" I have is the ongoing monthly selections and results that I've been documenting here on Substack every month.
Really enjoyed the article. Funny thing is I see a number of similarities in the approach I’ve developed over the last 7 years (also beating the market since 2019) - but my approach has taken more of a direct indexing angle. I’m planning to publish my first breakdown of the system this Saturday.
What I like most about your system is its simplicity. And if it works? Awesome.
Looking forward to reading more. And if you’re open to checking out mine when it publishes on Saturday, would welcome your thoughts
Good research, but I think it would be fair to acknowledge somewhere the >30% maximum daily drawdown of the strategy during COVID in 2020 or the >20% drawdown in 2025 during Trump's tariffs madness, those monthly charts mask those pain points.
Thank you 🙏 And fair point, there are certainly drawdowns. In some of my other articles where I focused on the drawdowns, I have also tried to explain the difference between monthly and daily drawdown figures. Maybe this can be improved. Thanks for the input!
Would your strategy still work if everyone used it?
If everyone in the world actually used it, it would no longer work, as everyone would indirectly be trading the same stocks underneath.
But I believe it would require a significant share of global equity trading to impact, as the ETFs used by the strategy cover the biggest and most liquid stocks in the world. It would require massive capital to move prices in those.
Thanks for your reply
Will you be adding the equivalent GBP ETFs at anytime? Really interested to subscribe if you do. Thanks
Hi Michelle, glad to hear you’re interested. Actually, that list already exists, although I could probably make it more obvious :)
In the article below, I have a section named List of ETFs for the European market.Each ETF in that list has an ISIN code that works on the London Stock Exchange as well.
I always include the ISIN code in the trading signals, so you can simply search for it on the London Exchange to get the GBP version.
Let me know if this solves the problem :)
https://www.marketfighter.com/p/the-watchlist-see-the-15-tickers
Interesting strategy. Why are you not including financials and utilities in your sectors? Also, EU and US sectors? Would that not improve your results?
Thanks, and great question! 👍 Financials and Utilities have simply not provided historical returns at the same levels and with the same consistency in trends as the others. I looked into this originally, and found they decreased the results when included.
EU sectors could have been included, but I had better results with US only, and I also didn't want to move too far away from the global equity distribution of roughly 70% US stocks.
Thx for the great content, like the simplicity and "reduced to the max" blogging approach. One question understand that you are an europe based investor (eur). Dependent on the strategy selection the whole investement for a period may be in usd. So the whole currency risk kicks in, any special consideration or just take the currency risk?
Thanks, I appreciate your comment! I did think a lot about the currency risk, and yes it is definitely there. Personally, I came to the conclusion that hedging wasn't worth it (it's like buying an insurance to cover losses from currency changes), as it will also remove currency wins and you will pay for it in some way or another.
Based on the consistency of the back-tested performance, I decided to take the currency risk. As a European investor I guess this is normal: Even a regular world index ETF will imply a ~70% USD exposure given the size of the US market.
I really like how simple this is.
No drama, no constant trading, just a clear system, checked once a month, and the discipline to follow it. That part alone is harder than it sounds.
Great to hear, thanks! The simplicity is intended. Complexity rarely improves the outcome.
And I completely agree regarding the discipline. The system offers the statistical edge, but it can't provide the discipline needed to execute it.
I like this a lot. It’s really solid work, which in my experience is the only way to be successful in investing. Or in most things for that matter! You put the work in, you get the returns.
Thanks, I appreciate it! And yes, if you put in the work your chances of succeeding tend to increase :)
Have you ever considered using long dated options to mitigate risk and maximize returns? I basically show my trades and how options work in my articles as most investors do short term options which is much more akin to gambling . Options are poorly understood by most investors unfortunately. Also, typically 'systems' don't work. do you trades and holdings?
Systems don’t work is not true. MarketFighter’s system is based on academic research on sectors, factors and momentum. Joel Greenblatt and others have demonstrated that systems can work extremely well. Systems invented by monkeys don’t work. Systems invented by sophisticated, hard-working people do work. Aren’t you using a system with your options trading anyway?
I agree with you. Random systems will not work, but well studied, backtested, proven strategies can make the difference
is there any third party report for audit the result ?
No sorry, I don't have that. The only "proof" I have is the ongoing monthly selections and results that I've been documenting here on Substack every month.