Satellite to a million - MSCI World Momentum Champions - Update for May 2026

@Banana_Millionaire First of all, thank you!
I'm right there with you. I've always wondered why people "still go in there". For me, apart from Bitcoin, it was never understandable and to a certain extent rightly so.
But ever since I saw the S&P 500 Top 2 Momentum from @Krush82, something clicked for me. And in the following way:

If I always hold the craziest stocks for exactly 1 month, then there is a high probability that the trend will continue for another month. At the same time, I accept that there will be regular sharp drops. I believe that the system ensures that my average probability of profit is higher than with a world ETF and at the same time that there is a 90% probability that I will not experience a deeper drawdown in the next 15 years than a world ETF.
The only "fear" I have is "rolling a 1 10 times in a row".
So imagine I hold my 5 shares now and lose 10% in May.
Then there are probably 5 new stocks that I hold and they happen to have their trend reversal exactly in the following month. Again -10%.
And if I cash in on this unlikely event once and it occurs several times in a row, I have a certain risk of bankruptcy, which a world ETF does not have in this form at all.
That's why I have to adjust my risk properly. In discussion with my wife, I decided that we would go in with 16k over 4 months and then save up to 30k over the next few years.
But that's far less than 10% of our total assets. I want the thing to pay for itself quickly. And that also requires a bit of luck. Now we've already had a bit of a buffer from a rough month.

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@Wealth-Accelerator gg very good month. I'm pleased that things are going so well with your Momentum model. It would have gone even better with SanDisk in the bag, wouldn't it?

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@Krush82
Thank you. I wouldn't have expected such a start. But it's simply impossible to predict. My gut feeling tells me that May should be good too. But my gut feeling wasn't the best with Bloom Energy either 😅
And fun fact about SanDisk. I had hard coded them out of the draw at the beginning of last month because I knew I wouldn't be able to buy them.
In the meantime, I opened a deposit with which I could buy them, only to realize my faux pas. I thought that if they were now in the S&P500, they would also be in the MSCI World. But according to my research, obviously not yet. At least they don't show up on Ishares yet.
But if I remember correctly, they actually pushed Bloom Energy to the back in April, so it wouldn't matter. But I'll be interested to see when they appear in my investment universe, as they're currently blowing everything away.

I've seen that you've adjusted your negative signal rule. Do you now check weekly or every six months in the negative case?

I have also defined a safety anchor in my model after some trial and error to find a good signal for the really dramatic months.

My pot 3 checks whether the momentum score is -40 or lower and if it is, the pot goes into the money market with 35% of the total capital.

I identified a good threshold at -40 in the backtest (beware of potential overfitting), but I was also able to explain it to myself quite clearly.
For example, if we are in a sideways market and run -10% on a 1M view. Then the signal takes effect at -40 and I find that appropriate. Again, gut feeling, but consistent with 19 years of "capital market research".

Will you also be producing an April report or do I have to look at your Wikifolio feed?

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What exactly does the -40 momentum score refer to? There is still an April update here. I just have to fiddle it all apart a bit, as I had two parallel investments with different assets in April. How exactly I will deal with the "ignoring" of the negative spy momentum signal in the future and how often I will check and then re-enter is not yet 100% certain. It could also be that, at least for me personally, I am still invested with a certain amount, even if the signal for the wiki is out of market. The SanDisk problem will remain for the time being either way and I won't be able to include it in the wiki 😫 I might also try this approach in an S&P global 1200 momentum project.

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@Krush82 the -40 refers to the entire investment universe.

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@Wealth-Accelerator So the average momentum score of all MSCI World stocks or how do you calculate that?

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@Krush82
1M/3M/6M/9M month-end values from the MSCI World. Use an Ishares ETF as the basis for calculation.

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@Wealth-AcceleratorDo you then look every month to see which stocks have the best performance and then possibly switch every month or do you always compare the performance over a year?

How and where do you find out which stocks have the best momentum?

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@Cyonix
Hey, that's right. At the end of each month, I update all the stocks that are currently in the MSCI World (I use the current composition of an MSCI World ETF for this).
I put them in Portfolio Performance and give them their 1M/2M/3M/4M/5M/6M/7M/8M/9M/10M/11M performance.
Then I pull the entire universe into Excel and add the market capitalization of the individual stocks and then divide them into 10 deciles.
I also create certain momentum scores. For example, I add up the 2M/4M/6M/8M performance of all stocks and sort them in descending order by this value. The top stocks end up in the portfolio.
There are still a few subtleties and details that I do, but basically that's it.
I want to act according to rules and be as little active as possible myself, because I believe that humans and emotions are more harmful than useful.
A small example:
At the March/April month change, the algorithm flushed Bloom Energy to the top and told me that Bloom Energy had to be number 5 in the portfolio. Based purely on my gut feeling when looking at the chart, I would not have taken Bloom Energy. What happened in April? Bloom Energy outperformed everything by over 100%.
This is still far from statistically relevant, but it encourages me to intervene as little as possible.

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@Wealth-Accelerator Thank you for your detailed explanation. Do you now trade completely according to this scheme and do you still have savings plans on the side?
If completely new shares are suggested to you at a change of month, then you sell all your shares and reallocate, right? In what proportion do you then invest in the individual shares?

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@Cyonix I would not recommend anyone to invest their entire assets in such a model. If it works in the medium term, the model itself will ensure that significant portions of your assets are allocated there. My wish is to achieve a sustainable 2% per month after tax.
I have most of my assets in all-world ETFs. I have brought these to a level where my retirement provision is complete.
With this satellite, I am now ready to gradually invest 30,000 euros, with the aim of being more than finished with my wealth accumulation at 45 and then being able to withdraw steadily. I have currently paused my savings plan in the All-Worlds for the short term in order to expand my satellites a little: Gold, BTC and rule-based single stock momentum.

Back to the model:
The model is designed so that I expect an average of just under 2 switches per month (switches cost money...). On average, 5 shares are held, at least 4.
But it can also happen that everything has to be changed.
And if a share has to be changed, the "outgoing" share is exchanged for the "incoming" share. So there is no monthly rebalancing (this eats up too many costs and does not have a positive effect on returns).

My model currently accounts for around 4% of my capital market allocation. In my last posts you can see what I hold in the overall portfolio.

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12Min

@Wealth-Accelerator or simply invest in your wikifolio, then you can save yourself the work 😜

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@Wealth-Accelerator So you leave the stocks that are still doing well in your portfolio, even if they no longer have the top momentum, and then add the stocks with the top momentum?
By loser do you mean that the worst stock goes out even if the return is positive and the momentum is still there?

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@Wealth-Accelerator can you please tell me why you chose the msci world and not the S&P global 1200 or something similar? I am going to start a small S&P global 1200 project

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@Krush82 Yes, I am happy to do that.
I think the S&P Global is an excellent choice and would have liked to start my model with it. But in my backtests I actually despaired of the historical data and then found the best data basis for 19 years of MSCI World. That's why I made the switch. You are welcome to try it out with the S&P Global. If you get the chance, you can help me if I start a wikifolio for the MSCI World 😅
What are you planning, an S&P Global wikifolio too?

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@Wealth-Accelerator I don't know whether it will end up being a wiki portfolio. I would first have to roughly check whether the entire investment universe can be traded on wiki etc pp. It should also only be a relatively small part of my overall portfolio. Since I don't have a backtest for this model yet, I'm taking a more cautious approach and getting my skin in the game - and experiencing live how much the model will differ or resemble the US Momentum Leaders model.

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@Krush82 Sounds good, then attack and good luck 💪🏼
How do you estimate the overall risk of having to change shares several times in a row over 10 years and "accidentally" catching bad moments? Let's say the worst-case scenario is that you end up with a losing streak of -80% or something similar.
I want to do a larger Monte Carlo simulation on this over the course of the year.
I see this as the only real danger with trend following.

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@Wealth-Accelerator I estimate that if you install an airbag - you won't even come close to the figure you mentioned in a crash. I don't know your model well enough and I don't know whether you have installed something like I do with the US Momentum Leaders

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@Krush82
I don't mean during a crash, but when you have statistically bad luck for a few months in a row. In other words, even in normal market phases.
In poker, this is called a downswing if you collect a number of bad beats within a shorter period of time than would have been statistically expected. In other words, 2 aces perform completely unpredictably over 100 hands compared to their probability of winning. On 10,000 hands, there is still a noticeable deviation from downswings and upswings and only on 1,000,000 hands do you hit the winning expectation exactly.

Edit:
So my point is: no matter how good our strategies are, we are not protected against statistically unlucky periods with 100% investment without a buffer. So it seems to me that the only solution is to counteract obvious periods of weakness with fresh money or with rebalancing from other (e.g. all-world) strategies and to cushion drawdowns. Just a thought for the future 😉

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Valentin H.@valentin28

Hey, great month - congratulations! 🎉

I have to say that your system has inspired me quite a bit. I looked at it when you posted the other day, took it as a model and then built a momentum agent myself that identifies the top stocks from the MSCI ACWI universe (~900 stocks) on a monthly basis.

And the funny thing: For April I came out with almost the same stocks as you - LITE, CIEN, BE, WDC. Since I only started it at the end of April, I haven't invested yet. But I'm currently setting up a test wikifolio for myself to see if that might work. The 4 stocks are very interesting. Independent of each other, the same logic.

This has pretty much confirmed to me that the approach works.

My system currently only has a single pool without market capitalization layering - your three-pot approach actually sounds much more mature, especially pot 3 for mid-caps is pretty nice. This is something I definitely want to look at for a next version.

One more question: Which data source do you use for the price data? I switched to EODHD and work with Total Returns (adjusted close) - but there are limitations with Japanese stocks like Kioxia, I would be interested to know how you solve this.

I would be happy if we could exchange ideas! 🙌

And thank you very much for the inspiration, I hope you won't take offense at me "recreating" this in a similar way to you 😄

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@valentin28
Hey, first of all, thank you very much. I don't take offense to anyone retrading this. That's why I share it here.
I use Portfolioperformance for the monthly closing prices.

How did you come up with 900 shares? That should be a lot more, because I also started with the ACWI in December/January and then ended up with the MSCI World via the S&P Global 1200.

And if you use the ACWI, there should also have been strong stocks from South Korea and Taiwan for April, right? I seem to remember that quite a few were ahead of Bloom Energy.

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Valentin H.@valentin28

@Wealth-Accelerator Thank you for your reply.

The 900 shares are due to the fact that Japan shares are unfortunately excluded from the EODHD data (for certain reasons that I can't explain to you exactly). Otherwise I think it would be exactly 1080 shares. There were also about 50 error messages due to other things (which I haven't gotten to the bottom of yet). This brings me to approx. 910 shares, i.e. 170 fewer than in the ACWI.

That's interesting about South Korea and Taiwan - I'll look into that.

Are you planning to make your portfolio accessible to others via wikifolio or similar? But you probably want to test it first, just like me 😅

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