My research of the S&P 500’s dividend yields from 1871 to 2022 enabled the discovery that the S&P 500’s real dividend yield (Div/Y) status changes from positive to negative and vice versa being an extremely accurate indicator for when to be in or out of the S&P 500 since the late 19th century. Additional research was conducted to eliminate false positive signal changes which increase asset allocation risk. (View the 4:37-minute video “AlphaCenturi algorithm has Outperformed S&P 500 since 19th Century“, which explains the proprietary research findings detailed within this article.)
Findings from the research resulted in the development of AlphaCenturi, a rules-based algorithm that has been either in or out of the S&P 500 for 365 days per year since 1871. AlphaCenturi reduces asset-class reallocation volatility. Had it been operational it would have disregarded the Div/Y’s January 1966 and May 2014 sell-the-S&P-500 signal changes. From January to February 1966, and from May to August 2014 the S&P’s dividend yield had reverted to positive. Losses from the false positive signal changes were 3.6% and 5.4% respectively. (Please read the following related article “S&P 500’s Bottoms Occur Only When Generational Investors Buy!”, Markowski, June 4, 2022, AlphaTack.com”, which further explains disciplines practiced by the world’s oldest and largest investors.)
Most recently, as depicted in the table below, the Div/Y indicator went from positive to negative indicating to be out of the S&P 500 by the end of February of 2021 with the index at 3811.15. AlphaCenturi’s signal was to be out of the S&P 500 in June 2021 with the S&P 500 at 4297.50. As of June 15, 2022, the S&P 500 experienced a negligible percentage decline. From February 28, 2021 when the Div/Y indicator became negative signaling to be out of the S&P 500. For more about the Div/Y please see “Inflation to Shoulder Blame for 79.95% S&P 500 Decline”, Michael Markowski, June 4, 2022, AlphaTack.com.
AlphaCenturi, has been either long or short the S&P 500 for 365 days per year from 1871 to 2022. The “Alpha” in the algorithm’s name represents high performance. “Centuri” originated from its outperforming the S&P 500 for the last three centuries. Additionally, there were five periods between 1871 and 2022 when AlphaCenturi was either long or short for at least 100 months. (The table below depicts the five periods.)
The algorithm’s most recent buy or long signal was of 30 months’ duration and produced a gain of 83.4%: it began in December of 2018 and ended in June of 2021. The algorithm’s most fascinating long signal, of 162-months’ duration produced a gain of 52.3%: it began in 1920 and ended in 1934. The latter encompassed both of the U.S. Great Depressions ― 1920–1921 and 1929–1938.
Since AlphaCenturi’s long/short signal changes have averaged 3.05 years from 1871 to 2022 a comparative analysis was conducted. The mandate was to determine the returns from selling the S&P 500 short versus investing the sale proceeds into short-term savings accounts, interest-bearing notes, etc., at an average 2.4% per annum interest rate. The gains from following the more conservative interest-bearing instruments instead of shorting the S&P 500 strategy were 101% higher than following a long/short strategy. The chart below depicts that $100 invested into AlphaCenturi’s S&P 500 Long/2.4% strategy in 1871 (hypothetically), increased to $1,079,789.00 in 2021: $100 invested into a buy and hold the S&P 500 strategy, only increased to $96,910.00 for the 147-year period.
The table below depicts AlphaCenturi’s success ratios for its 49 signal changes that occurred during the 152-year 1817 to 2022 period. (The duration of its average signal was 3.06 years.)
It was an amazingly gratifying, experience to have utilized economic and stock market data from as far back as 1871 to develop AlphaCenturi, which:
- Outperformed the S&P 500 in the 19th, 20th and 21st centuries, and has…
- a 79.6% success ratio
The 79.6% success ratio is the highest of any of the algorithms I have developed throughout my career. (An algorithm’s success ratio is equivalent to the percentage of the signals that produced gains.) Another AlphaTack core algorithm, the Bull & Bear Tracker (BBT), which is also either long or short the S&P 500 for 365 days a year, has a success ratio of 55%. To understand the development cycle of an algorithm, and the efficacy of an algorithm’s historical data backtests click here.
PLEASE NOTE: The BBT is an ideal alternative to a 2.4% per annum return for those periods that AlphaCenturi is short the S&P 500. The chart below depicts that the BBT gained 21.58% vs. the S&P 500’s decline of -13.61% during the first five months of 2022. From 2018 to 2022 the algorithm gained 224% vs. 51% for the S&P 500. (Access to the BBT is exclusively available via AlphaTack.com.)
The buy and sell signals for both Bull & Bear Tracker (BBT) and AlphaCenturi are utilized for when investors should be in or out of the S&P 500. Differences between the two algorithms that monitor the S&P, follow:
- Bull & Bear Tracker predicts the short-term direction of the S&P (average 4.5 days)
- AlphaCenturi predicts the long-term direction of the S&P (average 3.06 years)
With algorithms that deliver a one-two punch, AlphaTack.com is the only provider of a comprehensive strategy to enable a portfolio to increase during cyclical and secular bear markets. AlphaCenturi indicates when an investor must be defensive or offensive over the long haul. The Bull & Bear Tracker enables a portfolio to grow by leveraging the short term volatility, which occurs regardless of a market’s macro or long-term direction.
PLEASE NOTE: AlphaTack.com is a uniquely equipped developer of macro and micro proprietary algorithms and strategies that enable its financial-advisor partners and all generational investors ― including family offices ―to preserve and grow capital. For more about generational investors please read “S&P 500’s Bottoms Occur Only When Generational Investors Buy!”, Markowski, June 4, 2022, AlphaTack.com.
The AlphaCenturi and Bull & Bear Tracker algorithms are exclusively available through AlphaTack.com, a provider of cutting-edge intelligence and proprietary defensive growth strategies to discerning individual and professional investors.
Finally, based upon my research of secular markets, the S&P 500 and the U.S. economy face another risk. The secular bull market that began in 2009, ended when a new secular bear market began on January 4, 2022. This bear will be the cause of a 47% to 85% decline for the S&P 500. The decline ranges are based on S&P 500’s peak to trough declines for all of its secular bear markets since 1929, as depicted in the table below.
|Video No.||Secular Bear Market Educational Videos||Run Time|
|N/A||What is the difference between a secular bear and a cyclical bear?||4:35|
|N/A||Why the minimum duration for a secular bear is 8 years||1:15|
|N/A||Secular bull investing strategies do not work during a secular bear market||2:12|
|N/A||Why the worst performing stocks during a secular bear were always the best performers of prior secular bull||1:36|
|N/A||Proven Secular Bear investing strategies||10:28|
|N/A||AlphaTack, Secular Bear Investments Lifeboat||2:03|
To prepare for extreme U.S. stock market volatility, which is inevitable, do the following:
- View 90/10 Crash Protection Strategy video at bottom of page
- View AlphaTack.com’s Secular Bear Market Educational Videos at bottom of the page
- Liquidate all blue-chip shares, mutual funds and Exchange Traded Funds
Cash should be invested in any or all of the following:
- U.S. government 2-year treasury notes*
- Long/short index hedge funds**
- Hedge/Venture capital funds**
- Private technology startup and early-stage companies**
- Select microcap companies and penny stocks**
AlphaCenturi Algorithm Outperforming S&P for Three Centuries ― Short the S&P 500 – AlphaTack