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Market Beating Design

If the objective is to design a portfolio to beat the market, Ekantik Capital Advisors can help with that design. Just by always being invested and going flat when market conditions are not favorable and re-investing at correction levels and/or if conditions become favorable, the portfolio can beat the market and potentially avoid huge drawdowns. Based on modeling markets for the last 10+ years, signals that indicate that market conditions are not favorable are detectable.

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For example, see the graphic below; it presents an analysis of corrections and potential events that have led to corrections. We are able to probabilistically estimate the level of corrections based on catalysts/triggers. 

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​The above chart is based on an anecdotal analysis of corrections and associated catalysts over the past 50 years. It is not meant to be an exact science but more of a guiding principle to allow us to make decisions to go flat and make a re-entry. 

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Summarizing the design for beating the market is to stay long and go flat at potential correction/crisis conditions and re-entering at different correction levels commensurate with existing catalysts/events so we can have a portfolio that can beat the market.

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The thing to note is that with the above design, we can beat the market but not necessarily generate absolute positive returns; case in point, in 2022, when the market corrected >18%, the above design would have resulted in less loss (beaten market) but still would be negative for the year. On the other hand, in 2023, when the market corrected ~10% twice but came back to previous highs, we would generate more returns than the market as, based on design, we will go flat at highs or because of unfavorable conditions (geopolitical concerns and slowing economy). It would have re-entered close to 5 to 10% correction levels.

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