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Making it simple, we can state that markets go through different times:

  1. bull markets, when indexes go straight up for months without big drops and with low volatility
  2. choppy periods where the markets go nowhere for months, no defined direction
  3. bear markets, or big corrections, where markets lose most of their value and recession affect the economy

During bull markets, to be honest, there is nothing better than a Buy&Hold strategy (B&H): you buy a stock (or - better - a leveraged ETF to magnify the performance), then sit and watch it growing

But who knows for sure if we really are in a bull market? During that time you keep hearing that "the bull market is over", but you hear that during the entire bull market.

Who can you trust, who can tell if we are really going into a bear market or a correction? In those times, B&H strategy is very bad, and can destroy your capital, if you own leveraged ETFs.

 

So, here's the thing: we need a model which

  • get the most growth achieved during the bull markets (magnifying yields with leverage)
  • jumps out during corrections and bear markets, reducing your damages and losses

 

During Bull markets

Let's consider the year 2017, which has been a spectacular phase of a Bull Market, with indexes growing in a straight line, and low volatility

The HST Model was IN the market for most of the times (Aggressive Long), and replied the path of Nasdaq quite well, granting very good performance:

  • Yield:                     Nasdaq B&H: 28.24%    HST model: 72.00%

  • Max drawdown:   Nasdaq B&H: -3.67%     HST model: -4.11%

 

The HST model makes a very significant difference here: this is because it applies a 3x ETFs, which magnifies the returns of a simple model B&H on Nasdaq.

 

 

During Bear markets

But there are times when the difference is even more evident.

Year 2008 has been a catastrophic period, due to a bad Bear Market, with indexes going down sharply, and very high volatility

The HST Model has been CASH for 168 trading  days on 263, while the indexes were falling:

  • Yield:                     Nasdaq B&H: -40.54%      HST model: -14.16%

  • Max drawdown:   Nasdaq B&H:  -73.93%     HST model: -36.41%

The HST model really made the difference here, staying cash for most of the time and aving the investor from a very big loss.

 

 

We have never found anybody who can really predict this times, so we prefer to let the data talk: Tech Analysis and Fundamental Analysis.

The HST model is based on maths, not emotions. No "gut feeling", no predictions, no trades based on latest news.

 

 

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Who is Hari Seldon

(from Wikipedia)

Hari Seldon is a fictional character in Isaac Asimov's Foundation series.

In his capacity as mathematics professor on the planet Trantor, Seldon develops psychohistory, an algorithmic science that allows him to predict the future in probabilistic terms. On the basis of his psychohistory he is able to predict the eventual fall of the Galactic Empire and to develop a means to shorten the millennia of chaos to follow. The significance of his discoveries lies behind his nickname "Raven" Seldon.

Our team decided to dedicate this work and this model to this amazing character, creating the even-more-fictional character of "Hari Seldon Trader".