January 2, 2023

2022. Annus horribilis but not for TopMomentum-investors!

Last Updated on January 12, 2023 by The New Belgian Dentist

2022. Annus horribilis but not for TopMomentum-investors!

Strategy Returns (in Dollar) 2022

StrategyReturn 2022BenchmarkReturn Benchmark 2022
DMI-24.55 %Nasdaq-33.89 %
SMI-11.21 %S&P500-19.95 %
CCPI Start To Invest-8.3 %S&P500-19.95 %
TopMomentum R1n254.84 %S&P500-19.95 %

In 2022 the returns table shows mostly negative numbers.

Along with the market, our first three strategies (SMI, DMI and CCPI Start To Invest), show negative returns ranging from -24.55 % for DMI to -8.3 % for CCPI Start To Invest. As can be seen in the table all of the strategies had less negative returns than their respective benchmarks (S&P500 and Nasdaq).

In contrast to the benchmarks and the other strategies, TopMomentum R1n25 had an enjoyable positive return of 4.84 %. Due to the strength of the Dollar, the return in Euro is an amazing 11.85 %. The construction of this portfolio and the excellent and reliable returns in backtests can be found here. The backtests show that the TopMomentum R1n25 strategy had negative returns in only one out of 36 years. It underperformed relative to the S&P500 index in only two years. When there was underperformance the difference was small; in contrast, when outperforming, the difference was often much higher, as it was in 2022. We must warn though, that however rare, negative yearly returns are possible. And, since the strategy is concentrated in only 25 stocks, which are often highly correlated, investors in the TopMomentum strategy must accept a very high volatility. This high volatility can clearly be seen in Figure 1 and 2. All necessary information for the daily use of our TopMomentum strategies can be found in the Premium Section.

Figure 1. YTD return TopMomentum R1n25 (in USDollar) in comparison to S&P500. December 31, 2022.
Figure 2. YTD return TopMomentum R1n25 (in Euro) in comparison to S&P500. December 31, 2022.
Figure 3. YTD return SMI in comparison to SPY (S&P500 tracker). December 31, 2022.
Figure 4. YTD return DMI in comparison to QQQ (Nasdaq tracker) and CEF (Physical Gold and Silver Trust). December 31, 2022.