APPLE – SPY : Backesting Risks & Returns

APPLE is a more volatile investment than the S&P 500 (SPY), but it typically generates higher returns. To measure risks and returns, it is useful to perform backtesting.

You will always find up-to-date data on APPLE and SPY at the following link:

Before analyzing 2023, we evaluated the 5-year period between the beginning of 2018 and the end of 2022.

In two of those years (2018 and 2022), the market (SPY) registered declines (up to 20%), and in the remaining years it grew (up to 29%)

APPLE had its highest extremes in 2019 (+89%) and 2022 (-26%).

Let’s watch the video, looking not only at the returns but also at the risks (volatility).

As you may have noticed, we added an additional investment to the analysis, which we call AL JOBS. It is the result of applying aggressive and defensive strategies to the portion of our portfolio that we allocate to APPLE.

Each of those strategies was converted into a set of 12 algorithms, designed to get better risk-return ratios than the market, the S&P 500 index.

The maximum we can invest in APPLE is 100% of the amount we decide to invest in this asset.

When market trends tell us that prices are falling, we adopt defensive strategies.

What do they consist of?

Very easy, to sell a part of our position in APPLE and leave it temporarily in Cash. Until the market tells us to be more aggressive.

But we don’t buy or sell 100% of the portfolio based on price changes over a given timeframe.

We divide our decisions.

The percentage of Cash is determined by tiered decisions, based on market conditions over different timeframes.

That is the function of each of the 12 algorithms that make up AL-500, whose application to APPLE we call AL JOBS.

Risk control is automatically generated by the tiered buy or sell decisions produced by the 12 algorithms.

Only when we have 100% of the portfolio invested in APPLE do we share its risk.

The rest of the time, our position in Cash, whose volatility is zero, ensures that we invest with less risk than the investor who always keeps his investment in APPLE.

The data for the last year (2022) is very illustrative. Down 19% and 26% in SPY and Apple, AL JOBS fell less, down 13%.

And what about the volatility? SPY and AL JOBS had similar risks (19% and 20%), while APPLE’s figure amounted to 29%

When we look at 3 and 5 years, the results are surprising. AL JOBS far outperforms SPY’s returns, with similar risks.

Then, when we check how it works in 2023, we again find much higher returns, with similar volatilities.

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