How PortfolioAI gives you an edge trading the stock market today

Investing can be tough. AI can help make it easier. It isn't magic, but sometimes even a little help goes a long way. We built the models in PortfolioAI to make our own investment lives a little easier. We think they can help you too. Our four complimentary models can help you gain exposure to assets that typically move somewhat independently of each other. Read on to see if our work sounds like a good fit for you.

Market Risk On / Off System

Some blame the Federal Reserve, others blame high frequency traders and algos, whatever the cause it seems that markets have taken on a more binary Risk On / Risk Off nature in the last ten years. This boom/bust cycle has caused larger than normal realized volatility and provides nimble investors with opportunities to outperform. The trick of course is one of timing.

That's why we developed the Market Risk On / Off System. It uses AI signals on both the S&P 500 and AGF's Market Neutral Anti-Beta ETF to attempt to capture and profit from both the Risk On and the Risk Off regimes. We do this by holding the broad market index when the index is trending higher and then exiting the index and taking shelter and a security that tends to rise when volatility spikes and the index falls, the AGF US Market Neutral Anti-Beta exchange traded fund (ticker BTAL). To understand this product you need to understand Beta.

Beta (β) is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole, usually the S&P 500. (source) A portfolio with high beta moves more than the market (both up and down). When the market declines, stocks with high beta typically fall much more than stocks with low beta (and vice versa). BTAL is a market neutral fund that seeks to generate negative beta. It does this by shorting high beta stocks and longing low beta stocks. This means that BTAL should rise when markets decline. This makes BTAL a useful hedge during market declines. Unlike trying to trade volatility ETN's like VIXY. BTAL has no negative roll yield making it more appropriate for holding for longer periods of time. BTAL is a superior hedge to holding long treasuries particularly during periods of rising interest rates.

Our goal with the Market Risk On / Off System is to preserve and grow capital even during difficult market conditions. Investors should be aware that their will likely be times when this model trails the performance of a buy and hold strategy - perhaps substantially so. This is most appropriate for investors who are attempting to reduce the risk of substantial drawdowns. It's historical worst drawdown is only 12.73%. Investors are cautioned that the backtested results illustrated are a backtest and past backtested results are no guarantee of future results.

Best of Big Tech & Friends Trading System

Chocolate and peanut! That's the concept behind our Big Tech and Friends Trading System. While we love Big Tech, we worry about concentration risk especially during market corrections or bear markets. Our goal is to help you grow and hold onto your savings. in order to accomplish that investors sometimes need to consider Big Tech's friends. Large cap commodity companies, consumer staple and healthcare names round out the list of friends. We even include long bonds (TLT) as a safe haven. Here's the current list of possible holdings:

• Apple (AAPL)
• Amazon (AMZN)
• Chevron (CVX)
• Freeport-McMoRan Inc (FCX)
• Alphabet Inc (GOOGL)
• Meta Platforms (META)
• Microsoft (MSFT)
• Newmont Corp (NEM)
• Nutrien (NTR.TO)
• Nvidia (NVDA)
• PepsiCo (PEP)
• iShares 20 Year Treasury (TLT)
• Tesla (TSLA)
• United HealthGroup (UNH)
• Exxon Mobil (XOM)

The objective is to hold the top three names that our machine learning models label as "Optimal". If you look at the list of names you'll see that we have assembled a small universe of large companies in diverse industries to compliment our core exposure in Technology. The backtest suggests that adding these names would have materially reduced downside - delivering our goal of high risk-adjusted returns.

We believe that a curated list of securities that will benefit from the energy transition and continued build out of AI and technology is likely to outperform the broad market over time. By limiting the universe to truly exceptional companies we hope to reduce unproductive trading. We also hope that including some premier companies defensive companies and long bonds that we can protect capital during bear markets.

Investors are cautioned that backtests are prone to "curve-fitting" and that in this instance we have used "hindsight" to select this portfolio. This has very likely inflated the historical returns beyond what an investor would have experienced. From time to time we will continue to curate this portfolio, updating it as we deem appropriate. Also keep in that past performance is no guarantee of future performance. 

Best Two Commodities Trading System

At PortfolioAI we are big believers in portfolio diversification. Most investors have little to no exposure in commodities. We view this as a lost opportunity. Commodities tend to exhibit low correlation with stocks. What Is Correlation?
Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other (source). Our goal as investors is to assemble portfolios that have low correlation between each other. Commodities fit the bill!

Commodities also provide an important characteristic for portfolios - they act as an inflation hedge. During past periods of inflation gold, oil and other commodities held their value or increased in value in inflation adjusted terms. Many other asset classes fell in "real" returns.

We generate machine learning signals on many of the largest commodity exchange traded funds (etfs). Our Model classifies commodities as being either "Optimal" or "Non-Optimal" and we own the top two optimal etfs ranked by volatility, (lower is better). Our hope is to generate a series of returns that provide an inflation hedge to our other strategies.

Investors are cautioned that commodities are highly volatile, that the returns in this model are those of a backtest and that past returns are no guarantee of future returns.

Bitcoin Trading System

At PortfolioAI, we are techno-optimists, but not crypto-bros. We find the opportunity of crypto hopeful but we cringe with the hype. So our model is designed to capture most of the upside of Bitcoin while cutting off some of the downside. By definition this means that we will probably underperform a long term buy and hold strategy if Bitcoin fulfills the expectations of the Bitcoin Maximalists. So be it. If you're interested in trading Bitcoin but want to limit your losses during bear markets our model might be a good place to start.

Our Bitcoin Trading System uses multiple machine learning models to classify Bitcoin as "Optimal" or "Not Optimal". Since Bitcoin trends so well, we are able to participate in bull markets while exiting during protracted bear markets. Our model is "long only" and uses Canadian-based exchange traded funds for execution. In time we hope to offer a "long-short" model. At the time of writing execution remains challenging on the short side.

Disclaimer

Investors are cautioned that the results illustrated are those of a backtest and that past returns do not guarantee future returns. These models are offered for your information and entertainment. This is not investment advice. Please discuss all investment decisions with your investment advisor.