Do you believe in predictions ... or systems?

On impending macroeconomic doom and your investments  

The older ones among the readers, remember him: Wim Kan. Together with Wim Sonneveld and Toon Hermans, he was once one of the three great cabaret performers of the Netherlands. Wim Kan hosted the New Year's Eve show for years and one of his famous sayings is: "Predicting is so difficult, especially when it comes to the future." And that's exactly what I wanted to talk to you about today. About the future and especially about the developments in our society and their effects on the economy and the stock market.

Nobody knows for sure. There are no certainties at all in economics and stock market prices. That apparently leaves only "My feeling". And that feeling of mine is not so positive. I think we have begun the long slide downward. The next generations of people will not have it as good as we have had it(!).

Now I also know that feeling is a poor counsellor, but fortunately I can trace my feelings back to a number of things, which I will briefly mention here.

The biggest debt crisis ever. How can countries like Japan(238% of GDP), Greece(193%), Italy(151%), France(113%), USA(121%) and many others ever pay back their debts? And the interest to be paid, how?

The biggest demographic upheaval ever 2. (Too few children in the rich West to cover the pensions of the aging population. Too many children in Africa and Latin America). Too few workers.

3. The seemingly unlimited printing of money by Central Banks resulting in global inflation.

Russia-Ukraine war 4. What if Russia wins? What if it loses?

The geopolitical struggle for world power between the USA and China 5.

6. The implications of the climate neutral policies deployed.

7. The uncontrollable flows of refugees that are now over the heads of the USA and Europe as well.

8. skyrocketing inflation, which De Nederlandse Bank forecasts at 4.9% and 5.0% for 2023 and 2024. Brrrr.

The expected global recession 9.

Economist Nouriel Roubini discusses these and other crises in his latest book Megathreads. In it, he concludes that these partially overlapping threats are having an irreversible negative impact on the global economy. And this "super crisis" should erupt in not too long a time. Unless.... Yes, unless what? A Russian withdrawal from Ukraine would help, though. But whether that will happen...?

But also by others, doom is predicted based on the simple observation of global growth slowdown. Importantly, the three major economic power blocs, the USA, the EU and China all simultaneously experienced a major decline in growth in 2022. The IMF's top woman in Washington, as well as Dr. Jaap van Duijn - the former ROBECO Investment Funds Board member - predict a further deterioration of the economy in 2023. Van Duijn must be elated to finally be proven right, because back in 2011 he published "De schuldenberg, hoe de wereldwijde schuldenlast gaat ons allemaal raken" at the Bezige Bij.

Of course, a little investor has long seen that the Amsterdam Stock Exchange's AEX fell nearly 14% in 2022. The US indices fell even more sharply.

So it is not surprising that Vermogensbeheer.nl which publishes the average results of over 70 asset managers shows that those results for the first 9 months of 2022 are thickly negative. For an offensive portfolio, that figure was -16.5% and for a neutral portfolio -14.1%. Congratulations to all!

Remarkably, more recent figures are missing. So I also consulted the websites of 5 large well-known Dutch asset managers. And guess what, because that is also remarkable... Nowhere, not a word or number, can be discovered what returns they have made for their clients. Why would they withhold that information anyway...?

An investment system with Futures has the advantage that in principle there is just as much to earn from a fall as from a rise. By the way, the same applies to a rise in the stock market. With a smart algorithm, you can determine when to bet with futures on a rise and when on a fall. And that's what we do; trade based on an algorithm. The results? Since 2016, our return on actual trades traded averages +32.96% per year. And the year 2022 just ended with a plus of +36.57%. This puts the WS907 investment system at a new all time high. And is thus the oldest and best performing system in the Systems2Follow family. Our system WS908 is incidentally the second best system with an average return of +23.28%.

Yes, and as you know, you should always spread ... And that has nothing to do with feeling good or bad about the economy. I do trust that our systems will stand their ground in both falling and rising stock markets. And traditional investors will be in for a treat in 2023... Or do you feel differently about all these predictions?

But economists are known for their poor predictions of the economy. That includes me. So again, things could turn out differently. So it is wise to invest in systems that have the potential for profit in both falling and rising stock markets. And there are...

Despite all kinds of doomsday scenarios, I wish you a happy, healthy and financially prosperous 2023. So the latter is now partly in your control.

At least, if you take action.

Jan. 4, 2023

Martinus van Dolder