Buying stocks is easy. Outperforming S&P 500 index funds is hard.
It's easy for someone to say, let's buy and hold Amazon since 1999. You would have faced a 94% drawdown in 2000, a 55% drawdown in 2009, and a 54% drawdown in 2022.
I can promise you when your lifesavings of $500,000 slices to $250,000, your gut will be wrenching. Or even a more recent example. Let's say you wanted to hold Meta, formerly Facebook, since 2020. You would have needed to hold through an 70% drawdown. Few did.
What if you could know when a stock was going up and when a stock was going down? And anticipate it? Purely executed with code?
These are the backtesting results of WillHeart's algorithm during from January 1, 2020 to May 1, 2024. All results are from this time period unless otherwise stated. The algorithm is proprietary and cannot be shared.
| Company | Buy/Hold Total Return | Buy/Hold Annual Return | WillHeart Total Return | WillHeart Annual Return |
|---|---|---|---|---|
| +129% | +23% | +251% | +37% | |
| Meta | +90% | +17% | +634% | +65% |
| Amazon | +71% | +14% | +575% | +61% |
| S&P 500 | +59% | +12% | +197% | +31% |
These results are insane. If true, these results would make anyone insanely rich. Let's also check out the drawdowns.
| Company | Buy/Hold Max Drawdown | WillHeart Max Drawdown |
|---|---|---|
| -40% | -29% | |
| Meta | -70% | -26% |
| Amazon | -53% | -35% |
| S&P 500 | -26% | -23% |
So great, some decent downside reduction as well as more upside.
But obviously, what about the hard industrials? Financials? How do they perform? Still using backtesting to January 1, 2020.
| Company | Buy/Hold Total Return | WillHeart Total Return |
|---|---|---|
| Vanguard Financials Index | +43% | +259% |
| Vanguard Industrials ETF | +63% | +350% |
| Berkshire Hathaway | +71% | +146% |
| Russell 2000 | +24% | +275% |
Great. But what about in the most horrible financial conditions? Let's check out the S&P 500 in the Great Financial Crisis between 2007 and 2009.
| Company | Buy/Hold Total Return | WillHeart Total Return |
|---|---|---|
| S&P 500 (2007 to 2009) | -35% | +57% |
What about over really long periods of time? Here's the S&P since 2007.
| Company | Buy/Hold Total Return | Buy/Hold Annual Return | WillHeart Total Return | WillHeart Annual Return |
|---|---|---|---|---|
| S&P 500 (Since 2007) | +375% | +10% | +4483% | +25% |
QuantConnect's infrastructure, often used by hedge funds, was used for backtesting to handle the buy and sell orders, time for orders to fill and execute, account margin, and the effects of after-hour movements.
Trades are executed via cloud servers to Interactive Broker, a brokerage that handles computer requested trades for $500B in assets under management.
Live-testing is currently underway with real money. The algorithm is generating great returns.
Stay tuned.
William Halbert
William Halbert
WillHeart