Traditional Investing Is Dead

January 15, 2025

Traditional Investing Is Dead

BY KEITH KAPLAN
CEO, TRADESMITH

For generations, the 60/40 investment portfolio – 60% stocks, 40% bonds – was the single greatest wealth-builder for everyday Americans.

At least that’s what they told you. That’s what everyone in the mainstream has been pumping forever.

And sure, it worked well enough… for a while.

But looking back at the last 20 years, it’s clear: the 60/40 is done and dusted.

The “40” is a big part of the problem. Bonds are supposed to give you income and stability while stocks give you the growth. Yet bonds are failing on both counts:

We just exited an era of ultra-low interest rates and low inflation, resulting in negative real yield. Both of them soared, but inflation got so extreme that we’re STILL getting a very low real yield.
At the same time, stocks and bonds lost their inverse correlation. It used to be that long-term bonds would rise when markets sold off. Now, falling bonds (and surging yields) are a big trigger for stock-market declines, too.

Luckily, stocks have held up their end of the deal overall – including 20%+ annual gains in 2023 and 2024 – and the technological progress we’ve made is breathtaking.

Ever since the late 1990s, which I consider to be the start of the modern stock era, we’ve had much bigger, longer booms,

The catch is, they’ve been followed by significant busts. One of which even caused a lost decade in stocks from 2000 to 2009.

We’ve seen lots of volatility. And of course that’s exacerbated by pandemics, social media, elections… Artificial intelligence, as exciting as it is, also promises to create big winners and big losers.

My point to all of this? Traditional investing is dead.

Am I saying you can’t set it and forget it… ever? Of course not. There’s always a place for that with high-quality stocks that have decades of staying power.

And that should be part of your portfolio!

But the real solution? It’s technology…

And that technology doesn’t have to be limited to the hedge funds, anymore.

You can use it, too.

Technology Fixed the Retirement Dream

We have 70 employees and contractors linked to our software engineering, research, data science, security, and so forth.

We spend $8 million a year on the staff, systems, data, and much more.

We strive in everything that we do to have hedge-fund quality research, analytics, and software.

This is what you need to succeed in the new era of finance. It’s the only edge!

TradeSmith’s seasonality-based approach takes advance of the revolution in compute technology and speed.

No two stocks are the same. Therefore, we have developed algorithms that are tuned stock by stock.

By harnessing decades of historical data and these advanced algorithms, TradeSmith’s platform identifies predictable patterns in individual stocks…

For example, did you know that for the past 15 years, Tesla (TSLA) has gone up from May 19 to July 13 100% of the time?

And that the average gain of that span is more than 24%?

That short period holding TSLA stock is worth more than three average inflation-adjusted S&P 500 years put together.

Did you know that Nvidia (NVDA) has gone up 14 of the last 15 years from Jan. 26 to Feb. 20? Or that the average return is more than 9%?

It’s not just in the big tech stocks that we see these patterns. In those same 15 years, insurance company Progressive (PGR) has gone up every single time from Jan. 27 to April 2, with average gains of 10.4%:

These three seasonality windows alone are enough to outperform the market. And not by a little… by a lot. The market’s average real return since 2006 (so, adjusted for annual inflation) is 7.5% - instead, you could make 50%-150% or more if you repeated trades like these throughout the year, as you see with the annualized returns above.

We pored over the thousands of stocks we track in our system and ran quintillions of individual tests using our advanced algorithms.

We knew we could combine all these high-odds seasonality signals into a simple, practical strategy that someone could use to consistently outperform the markets.

And if you’ve been following along with us the last week, you already know that we’ve achieved this.

From 2006 onward, we tested an active strategy that simply bought and held stocks during seasonal windows with a high win rate, adjusting for overbought and oversold conditions.

We didn’t just beat the market. We doubled it. And just as important is the level of volatility: where stocks languished for several years-long periods, our seasonality strategy just kept going higher:

The strategy skipped the 2008 bear market. It didn’t flinch during the pandemic crash. And while 2022 bruised and battered even the best investors on Wall Street, this strategy just kept climbing.

All told, it produced returns of 857% since 2006, more than double the return of the SPDR S&P 500 ETF (SPY). And it did so with zero prolonged downturns.

Why would anyone want to follow a 60/40 portfolio, which was supposed to achieve exactly this but hasn’t in nearly 20 years… when this exists?

Why would anyone want to follow a 100% stock plan, suffering through bear markets and crashes… when this exists?

Again, we can still invest in what I call “forever stocks” for solid long-term growth. But we don’t need to settle for agonizingly slow returns anymore – or painful volatility along the way. We have the technology to find the best pockets of the market, buy those, and ignore the rest.

We can build not just a great, stable retirement portfolio… but one that’s twice as good as the next best thing.

Gain a Seasonal Edge in the Year Ahead

2025 is getting off to a rocky start. The S&P 500 is down 1.6% year-to-date.

I don’t know if this will be a big turn from 2023 and 2024 and we’ll wind up seeing the S&P close the year in the red. I also don’t know if bonds are going to be a proper shelter from that volatility.

But I’m confident that our seasonality strategy will continue to rake in stable, low-volatility gains just as our backtest shows it has for the last 20 years.

Today is the last day to join us as a charter member in Trade Cycles and to start using this strategy in your own portfolio.

After midnight tonight, the offer comes down.

If you’ve been disappointed in the returns from your 60/40 portfolio – and you should: since 2006 it’s returned 6% a year after inflation – you’ll want to check out what we have to offer.

It’s an incredible strategy to keep at your side so you’re always making money even if stocks or bonds disappoint.

Get the full details right here before midnight tonight.

All the best,

Keith Kaplan signature