Report of the investment and analytical agency Era of Change for 2024 on fulfilled forecasts (statement)
In the first four months of 2024, taking into account all closed deals, it amounted to 100% p.a., in the second - 143%, and in the last four months, taking into account 4 unclosed deals - 178%.
Why annualized? Because if the deal was profitable, it is important to release funds for new investments as soon as possible. If a deal brought a 10% return in 5 days, it is much more effective than in 2 months. Because that's the time the money is closed in a profitable but overextended idea.
The same applies to losing trades. If you make a lot of trades with short stop closes, like -1%, every other day, you will lose half of your portfolio in 50 trading days. But if the stop is triggered after 5 days, you will lose half of your portfolio in 250 trading days.
Why are there so many stops? Because the manager's task is to limit losses and let profits flow. Many trades closed by stops were profitable in the end. But we can't let money get stuck in those trades for long. Because that reduces the average return on investment (see first paragraph).
Notice the large skew in the returns of profitable trades versus unprofitable trades. That's what we're working on. The average return of profitable trades is 6.4% (278% p.a.), while the average loss of unprofitable trades is 1.7% (119% p.a.). At the same time, the number of profitable deals was higher than the number of unprofitable ones. Thus for 2024 there were 136 (54.8%) profitable deals and 112 (45.2%) unprofitable ones.
Is it much 140% per annum in rubles? Yes, it is a lot. For example, since 28.12.2023 the dollar has strengthened against the ruble from 88.496 to 105.736. I.e. the strategy "rubles under the mattress" brought a loss of 16.3% in dollars and zero return in rubles. Our forecasts, taking into account ruble depreciation, could bring about 123.7% in dollars.
The Moscow Exchange Total Return Gross Index (MCFTR), which reflects the change in the total value of Russian stock prices included in the calculation of the Moscow Exchange Index, including dividend payments and excluding taxation of income in rubles, declined from 7004.18 to 6802.4 points, i.e. showed a negative return of -2.7% in rubles.
The only instrument that could bring income was the ruble deposit, which we, among other things, recommended as an alternative to riskier investments during half a year. However, if invested at an average 2024 rate of 17.4% p.a., it would have been 8.0 times less profitable than our forecasts and would have only slightly outpaced the ruble's depreciation against the dollar.
Disclamer. Past performance does not guarantee the same return in the future, which may differ both downward and upward. Also, the analytics presented here are designed for people who have at least a basic understanding of the Russian financial market. If you have difficulties with the practical implementation of our recommendations, you can use the services of our specialists with the package "Portfolio Consultant" at the link: https://eraperemen.info/priobresti/
