Evaluating The Impact of Major Events or Shocks On Investment Vehicles

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Executive Summary

Shocks are major changes in things like world events that impact investment vehicles.
How well can our mathematical script account for these?

Introduction

When using any type of automated investment timing method, an important question is how well it can account for these shocks. This article covers some testing we did in this area.

*Note

This article is only part of our internal analysis of investing and is to communicate with people we know. We are not writing this to attract investors, and we are not giving investment advice. This is just a convenient way to document our analysis which can then be easily shared and easily updated.

Case Study #1: The Ability to Account for the Russian Invasion of Ukraine

The Russian invasion of Ukraine provided a good test case of how well our mathematical script accounted for this shock.

Asset Category #1: Russian Stock Market

Our mathematical script did not account for this massive change in price. It only picked up on the change and provided a sell signal when one Russian stock market index had lost around 33% of its value, and when another Russian stock market index had lost roughly 60% of its value.

Asset Category #2: The Oil Market

Our mathematical script did account for the increase in the price of oil.

Asset Category #3: The Gold Market

Our mathematical script did account for the increase in the price of god.