Dear investors,
October was a terrible month for the AEX, with the index falling 3.95%.
RVM Strategy was +0.73%, RVM Retirement +0.55%, and RVM Analysis –0.01%.
All systems therefore outperformed the index and also posted positive results for the month, with the exception of RVM Analysis, which broke even.
RVM STRATEGY SHOWED THE STRONGEST PERFORMANCE
RVM Strategy once again performed well in October. The system is designed to be market neutral, so even when the stock markets fall, this system still offers a good chance of a positive return. RVM Strategy and the underlying algorithm are the cornerstone of all RVM Systems.
RVM Retirement was also higher in October, which is attributable not only to momentum trading based on the RVM Strategy model, but also to the fixed positions in the portfolio. These holdings outperformed the AEX index.
The RVM Analysis portfolio is by far the most comprehensive of the systems offered and has by far the most fixed positions. Momentum trading is also used here, and it was even more profitable than that of RVM Strategy and RVM Retrement.
Why, then, are the results here not quite positive for October?
This is caused by a decline in value of the fixed positions, which make up the largest part of the portfolio. Overall, these fixed positions were lower in October. However, thanks to strong performance in active trading, the amount of cash at RVM Analyse increased again, as has been the case for months now.
BITCOIN
As we write this, we are already in the last week of November. Donald Trump has been elected in the US, and that will bring about economic changes, at least if he implements what he announced during his campaign. Asset managers and stock traders now have to take action, prepare themselves, and it is clear how they have positioned themselves since November 6.
We have mainly seen a rally in companies that are already highly valued, some of them sky-high. Almost without exception, these are companies that are expected to play a role in AI developments. The price-earnings ratio of Palantir, which not long ago was still a loss-making company, is bizarrely high, but since Trump's election, its value has increased significantly.
This also applies to Tesla, for example, a company that is actually showing lower profits. But Elon Musk seems to have a lot of influence with the Trump administration, and so Tesla's value increased. Because Musk also runs SpaceX (not publicly traded), companies involved in space travel saw their value rise.
Bitcoin also rose sharply. Trump has positioned himself as a supporter of cryptocurrencies, as has Musk. The market therefore seems to be anticipating a possible expansion of the possibilities for investing in Bitcoin and paying with Bitcoin.
A trend is a trend is a trend; at RVM Systems, we are primarily statisticians, we believe that measuring equals knowing, but the rise of Bitcoin does cause us concern. Even though Bitcoin has proven to be a good investment over the years, we still cannot assess whether it has any real value. The fact that Bitcoin is scarce does not mean anything. Just because something is scarce does not mean it has value. If you could pay with Bitcoin everywhere, it would be easier to assess.
But Bitcoin could also turn out to be the tulip mania of our time. It is quite possible that future generations will wonder: what possessed people at the beginning of the 21st century? How could they convince themselves that something that only exists when there is electricity has such a bizarrely high value?
Only if we assume that the concept of "money" will take on a whole new meaning, that physical representation will no longer be necessary in the future, could Bitcoin be here to stay.
But it is impossible to say anything meaningful about such developments, whereas we do know for certain what has been valuable as a monetary medium of exchange in the past, over thousands of years: gold, silver, salt, and other commodities.
And so a big risk is currently being taken. Bitcoin is not yet so big that the collapse of the cryptocurrency could bring down the global economy; but the bigger and more widespread Bitcoin becomes, the greater the risk to the global economy if Bitcoin and other cryptocurrencies collapse.
Of course, we sincerely hope that Bitcoin advocates will ultimately be proven right. As far as we at RVM Systems are concerned, we may also seek exposure to Bitcoin, as we are realists. However, we still do not see any significant value in it and therefore prefer underlying assets to which we can assign value.
SUBSCRIBE TO OUR SYSTEMS; MANY HAVE GONE BEFORE YOU
If you are not yet a follower of RVM Strategy, RVM Retirement, or RVM Analysis, you are most welcome to join us!
Most investors who ever decided to follow have never left.
Sincerely,
On behalf of Van Megen Systematic Trading,
Ruud van Megen