Stock Market Forecast: I Know First provides investment solutions for both individual and institutional investors, utilizing an advanced AI self-learning algorithm to gain a competitive advantage. We offer a personalized approach to our institutional clients, assisting them in their investment process based on their specific needs and preferences. For more details about I Know First solutions for institutional investors, please visit our website.

ETF Portfolio Strategy

The following trading strategy was developed using I Know First’s AI Algorithm daily forecasts from January 29^th, 2020, to November 15^th, 2024, with a focus on S&P 500 stocks selected based on the signal filter. This strategy is available to our institutional clients: hedge funds, banks, and investment houses, as a tier 2 service on top of tier 1 (the daily forecast).

The strategy involves trading the Level 1 Sectors including broad segments of the economy, such as technology, healthcare, finance, and consumer goods to provide a high-level view of the market. A sector ETF is a pooled investment vehicle that invests specifically in the stocks and securities of a particular industry or sector (XLK – Technology, XLF – Finance).

The term “majority direction” refers to our predictions for stocks, upon which we base our position. This decision is guided by a number of long and short stock forecasts. Therefore, if the count of long stock forecasts surpasses the count of short stock forecasts, the majority direction is to go long and we construct a long portfolio. Conversely, if the count of short stock forecasts is higher, we assume a short portfolio.

Firstly, we identify the majority direction. If it is long we construct a bullish portfolio by selecting the top 3 ETFs based on the signal filter with the maximum exposure for each sector no more 25%, the rest part fo to SPY. If the majority direction is short, we buy SPY and hold it until the next rebalancing.

The strategy provides a positive return of 141.14% which exceeds the S&P 500 return by 57.79%. Below we can notice the strategy’s performance over each year. The strategy outperformed the S&P 500 in 30 out of 54 periods or in 56% of cases (without considering 6 cases when the strategy had 100% positions in the SPY). In yellow, we can notice sectors where we had open positions for a time period.

Below we can notice the strategy behavior for each year. The I Know First strategy has a high Sharpe ratio (which compares the return of an investment with its risk) of 0.82 and a Sortino ratio (which compares the return of an investment with its given level of downside risk) of 1.03.

I Know First Algorithm – Seeking the Key &  Generating Stock Market Forecast

The I Know First predictive algorithm is a successful attempt to discover the rules of the market that enable us to make accurate stock market forecasts. Taking advantage of artificial intelligence and machine learning and using insights of chaos theory and self-similarity (the fractals), the algorithmic system is able to predict the behavior of over 13,500 markets. The key principle of the algorithm lies in the fact that a stock’s price is a function of many factors interacting non-linearly. Therefore, it is advantageous to use elements of artificial neural networks and genetic algorithms. How does it work? At first, an analysis of inputs is performed, ranking them according to their significance in predicting the target stock price. Then multiple models are created and tested utilizing 15 years of historical data. Only the best-performing models are kept while the rest are rejected. Models are refined every day, as new data becomes available. As the algorithm is purely empirical and self-learning, there is no human bias in the models and the market forecast system adapts to the new reality every day while still following general historical rules.

Conclusion

I Know First offers investment solutions for institutional investors, leveraging our advanced self-learning algorithm to gain a competitive advantage. We provide a personalized approach for our institutional clients, enhancing their investment process according to their specific needs and preferences. In this context, we have evaluated the performance of the ETF portfolio strategy during the period from January 29^th 2020, to November 15^th, 2024.

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Please note-for trading decisions use the most recent forecast.