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January was a weak month on the stock exchanges. The AEX index in Amsterdam lost - 5.36 %; the S&P 500 in the US - 5.26 %, in dollars.
RVM Strategy did better, with + 0.99 %.
RVM Retirementcame out slightly higher, at + 1.20 %.
The latter return is particularly special, as RVM Retirement also includes equity interests. These were slightly positive in January, in contrast to the S&P 500 and the AEX index, so a good outperformance.
Nevertheless, it was a far from easy trading month. That a trend is negative on the stock exchange is not a particular problem for a system which, like RVM Strategy, is market neutral. But a lack of trend and wild swings up and down as several indices have shown for months now, that is very troublesome indeed. And it is psychologically difficult. Stock prices are not made so that we all understand them and know where they are going; unfortunately, nobody knows for sure. So every day it is a surprise where the prices will be at the end of the trading day, how the positions will develop, and whether profit targets will be met or not.
HIGH VOLATILITY
In any case, with the price formation and high volatility we have seen in January 2022, it is impossible to be in profit all the time. The RVM Strategy and RVM Retirement systems therefore only show profits at the close of a position, not always during the life of a position. At present, RVM Strategy has largely avoided losses, for which we are very grateful. And we are proud of it. The loss that you see in the chart in October 2019, was actually not a loss trend either. At that time, the strategy was still executed in a slightly different way; the same algorithm but a different market position. The market position that was there at the time was very profitable in September 2019, started to lose profitability in October, and so a profit stop was taken then in accordance with trading rules. So the + 12.25 % profit in September 2019 must be added to the loss of - 10.06 % in October, if you look at the return chart of RVM Strategy. This was in fact one market position. The only loss so far at RVM Strategy was in December 2019, at -0.22 %.
Experienced investors are familiar with volatility and know how completely different market conditions can be. But there are many new investors every day who are only used to a savings account. They can react very surprised to the volatility in the market at the moment.
All in all, we can once again be satisfied that the algorithm is proving to be reliable in 2022, under very difficult trading conditions.
Many investors like to read what experienced stock market traders expect for this month of February.
From the way we work, the answer at the moment is that we have not yet been able to calculate clear monthly targets, in our case on the Dutch AEX index. Because that is where our focus lies at the moment. We need more price formation to get that clearer. However, the fact that we do not yet have any targets for February does not in any way hamper our trading opportunities. We continue to adhere strictly to our risk management, and the return must follow from that.
We hope you find our systems interesting and reliable enough to want to invest in them.
Many people have gone before you.
You are very welcome!
Sincerely,
Ruud van Megen