September 2017 ARION Wrap-up 

September marked the return of ARION to a clear month of profits. Several events affecting the Euro the  US Dollar and the Cable contributed for a very nice month and even if part of the profits were given away back to the market towards the end of the month, the 7.4% with which we ended September brought the profit back to close to the all time highs. We are happy to have closed a large part of the marginal losses that had been accumulating in the last few months. Quite relevant also is the that maximum drawdown (DD) of less than 13% since the begging of the year, which was when the strategy started to result in less than satisfying results. The maximum drawdown registered in this period was less than half of the maximum DD planned for the service, which shows the maintenance of a good risk diversification of the portfolio.

Nobody likes to see losses small or larger accumulating for mote than a couple of months and ARION has seen some clients defecting the service. We try hard to fight the natural human behavioral pattern to systematically loose money in the markets. Humans have a natural tendency, shaped by psychological constraints of by buying high and selling low. In fact humans often need confirmation to buy a financial asset and are extremely sensitive to losses. This means that financial products are often bought after gains have been made (confirmation need), so at an high price point, and sold at a low price when a less than good period arrives (out of fear of losses) This behavior is exactly the opposite of what should be the rule to be successful when investing in the markets. We have seen that happen in these last months in Arion, but we are aware it’s really hard to overcome customer’s fears and to convince them to enter the product when it is loosing money, as even one of the best managed funds ever – the Fidelity Investments Magellan fund – managed to have the average customer loosing money on its best 13 year period, despite the fund averaged a hefty annual return of (a positive!) 29% per year over that very same time period! (read more here). 

Anyway, to the customers who decided to stay with us, we are happy to bring them to profits again and strive to continue  to. To the ones who decided to leave in the recent drawdown period we are sorry we couldn’t argue strong enough to convince them to stay and recoup their losses, for some it was just a matter of a couple of weeks.

Currently ARION’s new subscriptions are suspended. The suspension will last until we have in place all the adjustments we foresee and until we a achieve a smooth come back to our long term target of +2% long term average monthly return.