1 / How are the signals generated?

The signals are generated based on pricing data of all assets in the portfolio. From this data, sophisticated algorithms infer quantities like expected risk, expected correlations and expected returns and build an optimal portfolio. A major factor that is taken into account is the current trend of an asset. There is ample scientific evidence that assets that are in an uptrend will continue to rise for a while and vice versa for assets that are in a downtrend. However, many other factors are also taken into account to make the portfolio robust to sudden shocks or downturns in the market.

2 / How much can the algorithm invest?

The algorithm can invest at most 100% of your money (i.e. it never uses leverage) and it can never go short an asset (i.e. bet on falling prices). Therefore, you will always have a long only ETF portfolio with no leverage. The allocation to each asset class depends on its current risk (volatility), correlation with other assets and expected return.

3 / How fast do I need to implement the signals after a signal change?

The signal implementation is not extremely time critical. New signals will be calculated and sent to you every day at 11 o’clock Eastern Time. It is recommended that you implement them within 1 hour but even a delay of one day every now and then should not lead to significantly worse performance. Furthermore, to reduce trading costs, we recommend that you only trade if our recommended allocation differs by more than 3%-5% from the current allocation in your portfolio. Remember, a deviation can be due to changing signals but also when you add or remove money from your trading account.

4 / Can you also generate signals for ETF XYZ?

In principle we can generate signals for almost all assets in the world. However, the portfolio that we selected for Dynamic Resilience is appealing because of its very compact size while at the same time offering a lot of diversification. Larger portfolios usually come with higher minimum requirements for your capital and we wanted to include as many people as possible to be able to benefit from these signals. That being said, we are always open for suggestions and always consider adding larger model portfolios in the future.

5/ How much can I expect to earn?

It is very important to have realistic expectations of what can be earned. Usually, many services overpromise and underdeliver. Investing is a long-term endeavor and only compounding over a time horizon of 5 to 10 years or more will lead to satisfying results. If you plan to double your investment overnight, you are at the wrong place and should better go to the casino. That being said, the expected return per year for Dynamic Resilience is 3-4% over the risk free rate over the long run (10+ years). This return is achieved with a historically very low volatility of 3.5% and a maximum drawdown of 5% versus more than 50% for an investment in the stock market. These numbers were achieved in the past and are no guarantee for future performance, however, from them we can gain an insight into the risk profile of Dynamic Resilience which can be classified as a very safe and conservative strategy.

6 / Can I combine your signals with a different or my own approach?

Yes, of course. If you slowly want to build confidence in our signals, you can start by only allocating a small part (e.g. 10%) of your portfolio to them. In this case you would just have to multiply the signals with the allocation that you chose.

7 / How much do I need to invest?

An account of at least 5000 USD is recommended.

8 / How do I trade the signals?

Let's assume you have an account of 1000$, and the current signals are:

SPY: 50%
TLT: 0%
GLD: 10%
DBC: 0%

You would now invest 500$ into SPY, 100$ into GLD and keep the rest in cash. Holding cash is an active investment decision. If the algorithm expects uncertain markets it will invest less and keep more cash to be able to profit from opportunities that arise during large market moves.
Also keep in mind that with most brokers you cannot invest exact amounts into an ETF (brokers with fractional shares allow that). So if the algorithm tells you to invest 500$ into an ETF that costs more or less than that amount, you would need to round your allocation to the closest number of shares that you can afford.

Now, if the next signal looks like the following and your portfolio is still worth around 1000$, you would invest another 100$ into SPY (50% -> 60% signal change), sell all of your 100$ in GLD (10% -> 0% signal change) and buy 100$ of TLT (0% -> 10% signal change):

SPY: 60%
TLT: 10%
GLD: 0%
DBC: 0%

Your portfolio can also increase in value if you add external money to it. Assuming you get your paycheck and invest another 1000$ into your portfolio. It is now worth 2000$, so the optimal to allocation to SPY would be 1200$ (and 200$ for TLT), however, you only have 600$ and 100$ invested at the moment. In this case you need to increase your SPY and TLT position by buying another 600$ in SPY and another 100$ in TLT.