In this month’s update…
December Performance
What 2024 Taught (Reminded) Us
Reasons to Be Optimistic About 2025
Research: Optimal Time To Start?
Portfolio Diversification Tips from a Wall Street Pro
January 15th Webinar: Get Your Questions Answered
Performance Review
The S&P 500 equity index (SPX) struggled in December as uncertainty crept back into the markets. The index finished down for the month -2.6% but gained over 23% for the year - impressive after climbing 24% in 2023. The combined two years are the best back-to-back years for the S&P 500 this century. As stocks rallied, volatility declined and the Volatility Index (VIX, aka “the fear gauge”) spent about 90% of the year under its historical average. It was the ideal environment for “buy and hold” investors.
The iQ Autotrading programs can perform well in bull markets and did so in 2023 by averaging +25.5%. However, as we’ve shared many times before, the most challenging conditions for our statistically-driven, bi-directional strategies is when the markets persistently rise with little volatility (a la 2017 as our long term clients recall) and that is similar to what we had in 2024. As a result, 4 of InvestiQuant’s 7 autotrading programs finished the year positive, with Meta 50 leading the way and generating +17% in gross gains, while Max 500, Max 150, and Select 150 eked out single digit gains.
It was a difficult year for our smallest and oldest programs. After generating +89% in broker-verifiable gains since going live late 2021, Meta 30 gave back 16% in 2024. Following back-to-back 30% return years in 2022 and 2023, Trader 50 declined 26%. For anyone who missed their multi-year run-up it was frustrating. Since they are also components of our larger programs, they dragged the results down across the board.
On the bright side, the markets that sometimes challenge our algos are the same ones that are great for stocks and most investors’ assets. Even better, the high volatility markets that occur when equities decline are typically the same conditions that are optimal for autotrading. That’s why the combination of both can generate the best risk-adjusted performance and smoothest (least stressful) returns for investors’ portfolios long term.
* Returns based on live and simulated results since 2018, using suggested funding. Does not include license fees - which start at $3,900 - see pricing below. View full performance & disclaimers here. Source for S&P 500 Sharpe ratio is Morningstar based on past 5 years as of Dec, 2024. Past performance may not be indicative of future results.
What 2024 Taught (Reminded) Us…
Doing the right thing for your portfolio (being well-diversified) rarely feels like it. But, it beats being “all in” on stocks during a market crisis like the dot com crash (that took the QQQs 16 years to recover) or the 2008 financial crisis / bear market.
Even the best investments have “off” years. For example, the Max 150, which averaged +35% annually for clients over the last 3 years, only managed a meager +.6% gross gain in 2024.
iQ Autotrading programs have proven asymmetric return potential and the ability to recover from drawdowns quickly. Over the summer we saw volatility spikes resulting in strong performance for all programs, some gained as much as 40% in just 3 months. This was not a fluke; see research below.
Reasons to Be Optimistic About 2025
This is my 17th year of writing annual reviews for our clients and followers and I don’t recall being more optimistic about the upcoming year more than this one. There are several different, but important reasons I believe 2025 could be a great year for iQ autotrading.
Our algos have never been smarter due to an adaptive technique we innovated in 2013 (with the help of Duke University’s Center for Quantitative Modeling). Anything that happened in 2024 that was new or unusual and may have hindered performance is now known by our database and will be considered in the future.
More volatility is coming. Elevated daily trading ranges are the fuel that feeds our returns. Love him or hate him, the new President and his policies should boost volatility for years to come.
We are aligned with our clients. Our team of experienced quant traders and developers rely on the same strategies as our clients and we are relentless in our pursuit of alpha. Since the release of our 2nd generation AI/ML engine in 2021, we have spent considerable time, money, and effort on improving signal accuracy. This year, we will be implementing an exciting machine-learning engine enhancement, along with improved execution techniques. Together they should make a material difference in 2025.
Mean reversion bias is real. Not only for our strategies and techniques, but the markets too. We’ve studied the markets extensively and reversion to long term statistical biases occurs far more frequently than not. Why? Because fear and greed drive the markets and extremes are most often short-lived. Unfortunately, fear can be a nasty companion, and as humans our emotions are experts at convincing us “this time is different” - but it rarely is.
(Caution: Reasons to be optimistic should not be confused with reasons to take risk with one’s capital that you can not afford.)
Research: Optimal Time to Start?
New clients often ask when is the best time to start (or add to) an autotrading program. Mathematically speaking, the answer is simple: as soon as able. This is because if the investment has positive expectancy, waiting will most likely just cause you to miss out on profits. However, over the many years we’ve been helping investors it has become clear that most only begin autotrading after a program has enjoyed a sizable runup. While starting during a period of weak returns may feel counterintuitive, history suggests it’s an overwhelmingly successful move.
Here’s what the monthly data (for all iQ programs) in the iQ Portfolio Builder reveals using a simple test:
The numbers don’t lie. Across all iQ autotrading programs, weakness is often followed by significant strength. On average, six months after two consecutive losing months, returns have soared by 18.1%, with positive results in 38 out of 41 instances.
This pattern can be attributed to factors like mean-reversion tendencies, shifts in market conditions, and the adaptive, self-regulating nature of our strategies. Whatever the cause, the takeaway is clear: starting (or adding to) an autotrading program after a losing period is a smart way to stack the odds in your favor for achieving your goals.
Bottom Line: Let the numbers guide you — not your emotions.
Tip: Do your own analysis using the iQ Portfolio Builder to see what we and our long term clients have been observing for years in our accounts.
Portfolio Diversification Tips from a Wall Street Pro
Mike is a 15 year veteran of Wall Street and 12 year client of InvestiQuant. Watch his 10 minute video for his tips on autotrading due diligence, allocation size, and risk management: https://youtu.be/z9_seV5ptxo
Pricing and Discounts
iQ Autotrading programs are licensed annually and fees equate to a small percentage of each program’s Average Annual ROI. Prices start at $3,900. Request details and payment options here. Discounts are available for veterans of the military and law enforcement. Larger programs and volume discounts are available for family offices and investors seeking to invest with greater amounts. Email [email protected] for details.
Client referrals are one of our top generators of new clients. Make an intro and we’ll do the rest. You both will save $500. Contact [email protected] for details.
Want To Learn More?
Check out Answers to Common Autotrading Questions here. If you would like to request a 1-1 call/meeting with Matt, email [email protected]. You can also schedule a Zoom call/meeting with me here. Or, get your questions answered at our upcoming webinar:
Franklin D. Roosevelt
Invest Smarter.
Scott Andrews
InvestiQuant.com
CEO & Co-Founder