Dear investors,
January was a great month for the AEX, with a value increase of +3.99%.
RVM Strategy gained +0.38% and RVM Retirement gained +3.22%.
Both systems reached a new all-time high.
At the end of January 2024, the AEX index was not far below its all-time high from 2021.
THE PROCESS IN JANUARY
It was another very difficult month for trading, this time due to the sharp rise in the AEX index.
For much of January, the index was rather sluggish. For more than a month after the rise at the end of 2023, the Dutch benchmark struggled downward. It finally bottomed out at 766.66 on January 17, 2024, at which point there were all kinds of technical short-term sell signals.
But from there, a significant recovery began, and a week later, ASML's figures caused an explosion in the value of that share. And because ASML is very important to the AEX index, it rose as well.
ASML's figures were therefore crucial for the AEX in January, dragging the index from a short-term sell signal to a buy signal.
The system had no problems with this enormous upward surprise. At RVM Strategy, the algorithmic calculation effectively indicated the sentiment for the index on a weekly basis after the fact, which was also the case with the momentum component of RVM Retirement.
RVM Retirement continued to benefit from a favorable monthly trend for the fixed underlying assets.
THE OUTLOOK FOR THE STOCK MARKETS IN 2024
The AEX closed January close to its all-time high, and as we write this, on Tuesday, February 6, at 1:30 p.m., the AEX's intraday all-time high has already been set a little higher.
Was this unexpected for us?
Well, in this relatively short term. From 766, it is still no less than 65 index points, and the year is still young.
In one of the webinars on RVM Strategy and RVM Retirement held in December 2023, we already indicated that, according to our calculations, the AEX would reach a new all-time high, but we also stated that we had no idea when that would happen.
It could have taken a year, or even longer, to get to that point, so to speak.
Our price targets are never about time, only about price.
We had already 'systematically' identified significantly higher prices for the AEX at the end of July 2023. The index then fell for months until October, but that did not change the higher price target we continued to maintain for the AEX.
Setting higher price targets (or lower ones, of course) is done mathematically, and you can never say that this method will be 100% accurate. But the probability calculation for it is good, and so it is an important element in our system.
After all, if you know that long-term price targets are higher and the underlying value is falling, then the upside potential increases as the decline continues.
I like to make this point often: inexperienced and even experienced investors tend to focus too much on returns or NAV value. However, the current value, the current NAV, is a snapshot that in no way indicates the potential of an investment or an investment account.
What is very important, however, is that once certain price targets have been calculated, especially higher price targets, and they are achieved, the trading position should from that moment on be more focused on potentially locking in profits or partial profits. This is only unnecessary if even higher price targets can still be calculated. In that case, the potential is still good, and profit-taking is not the first priority, unless leverage products are involved.
Why is this constant disciplined forward thinking, rather than looking back or focusing on the here and now, so important?
INVESTMENT EASE
The answer is: the greatest ease of investment lies in long-term positions, without leveraged products, in a particular underlying asset that continues to meet all kinds of investment conditions. And that ease of investment must always be sought. It means that an investor can hold certain investments for a very long time. Statistically speaking, economic cycles can sometimes last half a lifetime, so it is not at all unusual for someone to hold an investment for forty years, and perhaps even longer.
Such investments naturally fluctuate in value every day, but investors must teach themselves not to pay attention to current returns. These only really matter when a position is closed.
Once again, the outlook for 2024
Now that a new all-time high has been set for the AEX intraday, can we expect even more for 2024, or will it stay at this level?
Of course, no one can say for sure, but our long-term calculations for the AEX index continue to indicate higher values. Whether these will be achieved in 2024 or in later years is something that probability calculations cannot tell us.
SUBSCRIBE TO OUR SYSTEMS; MANY HAVE GONE BEFORE YOU
If you are not yet a follower of RVM Strategy or RVM Retirement, you are welcome!
Most investors who ever decided to follow have never left.
Sincerely,
On behalf of Van Megen Systematic Trading,
Ruud van Megen