Stock Picking: 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.

Stock Picking: Mix Stocks and Sectors Strategy

The following trading strategy was developed using I Know First’s AI Algorithm daily forecasts from January 1^st, 2020, to May 15^th, 2024, with a focus on S&P 500 stocks selected based on the predictability 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 GICS level 2 ETFs based on the majority direction. While, the Level 1 Sectors include broad segments of the economy, such as technology, healthcare, finance, and consumer goods to provide a high-level view of the market. Level 2 Industries goes deep into specific industries. For example, within the technology sector (Level 1), you might find industries like semiconductors, software, and hardware. These industries offer a more detailed perspective on the market.

The strategy involves constructing a tier-weighted portfolio with 40 stocks from the S&P500 index with monthly rebalancing, achieved through the implementation of the predictability filter. Moreover, the strategy controls the majority direction. The term “majority direction” refers to our predictions for stocks, upon which we base our positions. 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.

For this strategy, if the majority direction is long, we construct a monthly tiered weighted portfolio based on the signal filter and go long in the top 40 stocks at 90% of our portfolio and go long in the two best level 2 industry ETFs at 10%. If the majority direction is short, we go short in SPY at 80% and keep 20% in cash. If a short majority direction switches to long, we close our short positions and go long in the SPY at 100% until the next rebalancing period.

The strategy provides a positive return of 198.81% which exceeded the S&P 500 return by 137.11%. Below we can notice the strategy behavior for each year.

The I Know First strategy has an impressive Sharpe ratio (which compares the return of an investment with its risk) of 1.01 and a Sortino ratio (which compares the return of an investment with its given level of downside risk) of 1.38.

Based on this strategy we have recently launched the first AI-powered mutual fund in Israel, and we are planning to launch additional investment AI-powered investment products.

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 Mix Stocks and Sectors strategy during the period from January 1^st, 2020, to May 15^th, 2024. Based on this strategy we have recently launched the first AI-powered mutual fund in Israel, and we are planning to launch additional investment AI-powered investment products.

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