January 2, 2024

This was 2023! What ‘s next?

Last Updated on January 2, 2024 by The New Belgian Dentist

This was 2023! What ‘s next?

Strategy Returns (in Dollar) 2023

StrategyReturn 2023BenchmarkReturn Benchmark 2023
DMI15,45 %Nasdaq44,52 %
SMI15,19 %S&P50024,73 %
CCPI Start To Invest10,08 %S&P50024,73 %
TopMomentum R1n253,91 %S&P50024,73 %

In 2023 the returns table shows only positive numbers.

For the benchmarks 2023 was a grand cru year. S&P500 gained almost 25%. Nasdaq got spectacular results with a rise of almost 45%.

Although all returns were positive, our strategies underperformed relative to the benchmarks. DMI and SMI gained 15%. Our defensive CCPI Start To Invest rose 10%.

In contrast to the benchmarks and the other strategies, TopMomentum R1n25 had only a small positive return of 3,91 %. Due to the weakening of the Dollar price, the return in Euro was as low as 0,25 %. Variants of the strategy with longer rebalancing periods performed better. With quarterly rebalancing and 25 TopMomentum Stocks, return was 10,03 %, half yearly rebalancing resulted in a gain of 13,63% and yearly rebalancing in 5,48%.

The construction of this portfolio and the 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. In line with these observations, even in this bad year for the strategy, we had a positive return. In the backtests the strategy underperformed relative to the S&P500 index in only two years (out of 36). When there was underperformance the difference was small; in contrast, when outperforming, the difference was often much higher, as it was in 2022. In 2023 we saw underperformance of the strategies, which was not in all cases small, especially for the TopMomentum R1n25 variant.

We still warn, 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.

What ‘s next?

We don’t even try to predict the evolution of the stock markets in 2024.

Although users did not see posts from our website in 2023, behind the scenes we did a lot of analysis to further improve our strategies. We realized that with adaptations we can further improve the return/risk ratio’s. Besides that, we expanded our investment universe from the American market to the World markets (with MSCI World as benchmark).

We hope in 2024 we will be able to publish the results of these adaptations to our strategies.

Figure 1. YTD return TopMomentum R1n25 (in USDollar) in comparison to S&P500. December 29, 2023.
Figure 2. YTD return TopMomentum R1n25 (in Euro) in comparison to S&P500. December 29, 2023.
Figure 3. YTD return SMI in comparison to SPY (S&P500 tracker). December 29, 2023.
Figure 4. YTD return DMI in comparison to QQQ (Nasdaq tracker) and CEF (Physical Gold and Silver Trust). December 29, 2023.