AI to the Rescue: Beat the S&P 500 With a 24% CAGR
Investing.com | Mar 21, 2024 08:56
1. ProPicks, a feature of InvestingPro+ , utilizes AI to identify stocks with the potential to outperform market benchmarks, offering investors a systematic approach to achieving market-beating returns.
2. With diverse selection criteria and backtesting against historical data, ProPicks strategies refine stock selection processes, ensuring robustness and applicability in real-world trading scenarios.
3. The "Beat the S&P 500" strategy highlights 20 standout performers each month, boasting a staggering 1,076.5% return since January 2013, significantly outperforming the S&P 500 index by 816.3%.
For investors who are directly investing in the stock market, eating the benchmark index should be the goal post, rather than expecting supernormal returns. In fact, most mutual funds are finding it difficult to surpass the benchmark returns.
It is understandable that finding market-beating, high-quality stocks can be a tidy task, especially for those who are new to the market. This is where you can use InvestingPro+’s revolutionary “ProPicks” tool that not only helps you achieve market-beating returns but with almost no guesswork.
So what exactly ProckPicks is? ProPicks Strategies utilizes a blend of AI to identify stocks with the potential to outperform market benchmarks. The proprietary AI model assesses historical financial data, categorizing stocks as underperformance, neutral, or outperformance based on correlations with various metrics. Over 25 years of data across thousands of companies ensures accuracy and mitigates biases.
Diverse selection criteria, including sector, liquidity, and market capitalization, refine the stock selection process, excluding irrelevant options like penny stocks. Each strategy is backtested against historical data for performance evaluation, ensuring robustness and applicability in real-world trading scenarios. The best part? InvestingPro+ users do not have to shell out anything extra to access this new feature.
Image Source: InvestingPro+
One of the strategies is “Beat the S&P 500” which uses advanced AI models to carefully analyze financial data from all 500 S&P stocks, and highlights the 20 standout top performers each month with the highest probability to lead the pack.
From the back-tested date of 1 January 2013, the strategy has delivered a staggering return of 1,076.5% till now, which is significantly more than the S&P 500 return of 260.2% in the same period. That’s an outperformance of 816.3% with an annualized return of 24.7%. Now that’s something!
Because of a monthly rebalancing in this strategy, every month, the portfolio gets rebalanced with some stocks getting out and some getting in. Investors can just replicate this portfolio in their accounts and make use of their personal financial advisor.
InvestingPro+ users can enjoy many other features such as ProTips which gives bite-sized fundamental info about the company, fair value - realistic intrinsic value of a stock, financial health check, etc, all through a limited-time massive discount. to start making profits before time runs out.
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