Ghost Patterns Identified
By Guy Cramer
(Vancouver, B.C., July 7, 2023) What is my biggest achievement: tripling solar panel output (Canadian Patent CA
3144672), invisibility (patents pending), splitting a single laser into more than 10 million lasers (patents pending),
creating holographic like videos (United States Patent US 11,343,475, Japanese Patent JP 7242690, Chinese Patent CN
116009347)? These are fascinating and the invisibility material was recently ranked as the 3rd best invention of 2022 by
mrwhosetheboss where he states, “One of the coolest things I’ve ever seen” see his YouTube video here:
https://youtu.be/LAMYke-v8PA?t=813
These are not my biggest achievements by a long shot and most people will not fully comprehend it at this stage, I will
attempt to provide some insight into this unlikely discovery.
Earlier this year, I met with my corporate attorney to discuss a new discovery I had made and to find out from him what
my limitations were in real world applications. I had created two algorithms, simply called Algorithm-A and Algorithm-B,
that when back tested to 286 public stocks over 31 years or less, demonstrated a remarkable correlation to the stock
market movements, so much so that more than 70 of those stock returned more, annualized, than the top large hedge
fund from 2020-2022 annualized and my system does not leverage as many hedge funds do nor do I place any stop/loss
mechanism into the trades. Three years of results annualized, are a common benchmark for hedge fund performance.
In the chart above I combined the results of both Algorithm-A and B and averaged them. Another benchmark that most
in the industry use is the S&P 500 Index Fund (SPY), Warren Buffett even challenged hedge funds to surpass it over a 10
year period and they couldn’t, so the chart above becomes even more impressive when you see how many of the 286
stocks exceeded that and 160 of them are showing annualized returns for 10 years or longer, which would have
surpassed Warren Buffett’s challenge.
My corporate attorney said I needed to better compare my results with these hedge funds and look at the same three-
year period. In my mind I thought the longer comparison I made was a better result, but I understood his point.
I went through my algorithms again this week updating them to include the first half of 2023, I took this opportunity to
also calculate only the 2020-2022 (three years) and annualize them for that more accurate comparison with the top
hedge funds shown in the table below. I am still a few weeks away from calculating all 287 companies, but I was able to
rapidly determine the results for the first 79 stocks as these have all been public for at least 31 years and anything less
than 31 years requires about 10-15 minutes extra per stock to calculate. The orange line in each of the charts represents
these top hedge funds. These 20 large hedge funds represent over $393 billion U.S. dollars assets under management
(AUM) (combined). BlackRock Inc. hedge fund has $2.93 trillion dollars AUM but didn’t make the top 20 list with +9.48%
annualized gain from 2020-2022.
In my chart below I show the results for the top 20 of the 76 stocks tested that have been public for at least 31 years
with Algorithm-A. Mine either double or nearly double the annualized return over the top hedge funds.
In my chart below I show the results for the top 20 of the 76 stocks tested that have been public for at least 31 years
with Algorithm-B. Similar gains (except for the first one) and the companies are not all the same 20 from Algorithm-A
I know these results are much lower than you might expect given the first chart on page 1 but these are not considered
volatile stocks which is where my algorithms do even better. Case in point, you’ll notice that I mentioned 79 stocks
tested but I am only showing 76 in the charts, that’s because the three stocks I left out each have a different story.
The first one I left out was the CBOE Volatility Index (^VIX) which is not a tradable stock. It is a stock index which
measures sentiment in the markets based off option trading. The higher the number the more concerned and worried
the traders are. If I included it, it would have skewed the chart with a +71.13% for Algorithm-A and +167.68% for
Algorithm-B. The annual return below is the actual stock (or index) performance annualized averaged gain/loss.
Company Years Annual Return All Trades A Longs Only A Shorts Only A All Trades B Longs Only B Shorts Only B
CBOE Volatility Index (^VIX) 3 25.61% 71.13% 87.40% -14.72% 167.68% 131.53% 36.15%
The second one that I didn’t include was Bed Bath and Beyond which recently went bankrupt, in 2021 and 2022 the
stock trading became very volatile and that led to a +82.97% gain for Algorithm-A and +207.90% gain for Algorithm-B.
Company Years Annual Return All Trades A Longs Only A Shorts Only A All Trades B Longs Only B Shorts Only B
Bed Bath & Beyond Inc. (BBBYQ) 3 -31.27% 82.97% 57.29% 10.46% 207.90% 120.85% 87.05%
The third company I left out was Koss Corporation (KOSS), as Reddit users pushed the stock up in 2021 from around
$2.30 a share to over $64.00 in just a few weeks then dropping into the $13-$40-dollar range and by the end of 2022
was trading in the $5 range, this made it highly volatile over that time period and my results showed an annualized gain
of +716.66% for Algorithm-A and +601.03 for Algorithm-B. While I could have left this one in, it would have scaled the
chart so much that every other stock would have been almost unnoticeable.
Company Years Annual Return All Trades A Longs Only A Shorts Only A All Trades B Longs Only B Shorts Only B
Koss Corporation (KOSS) 3 101.47% 716.66% 686.53% 30.37% 601.03% 656.29% -55.26%
Jim Simons, Renaissance Technologies employee only Medallion Fund averaged an unprecedented 63.3% per year
from 1988-2018, many Medallion trades are leveraged to achieve this. Simons is not interested in typical financial
analysis, but his company collects troves of data to look for patterns in the markets. He doesn’t care what causes these
patterns which he refers to as “Ghost Patterns” he only cares that the fund can capitalize from these movements.
I believe I have identified what these Ghost Patterns are and my results are indicative of that discovery.
I have included in the charts on this page all 76 stocks and their annualized results over the three-year period 2020-
2022. As you can see on the right of each chart, there are stocks that have lost over this period, and they aren’t
necessarily the same for each algorithm.
Algorithm-A Long and Short Orders
Algorithm-B Long and Short Orders
On the following page I removed all the short orders, short orders are very risky and some hedge funds stay away from
short orders entirely as you can lose more than the entire order if the stock goes up and surpasses 100% loss in the case
of Koss when the stock went from $2 to $64 in a short on the $2 at $4 you’ve lost 100% at $6 you’ve lost 200%... Long
orders can only lose up to 100% unless you are leveraged. Even Warren Buffett says one wrong short order can ruin your
entire investment or your career if you’re a money manager.
While my algorithms do not show the same gains when removing all the short orders (see next page), they still beat the
top hedge funds and the losses on the bottom side are not as big as the losses with the shorts on this page. Personally, I
would probably take less risky lower gains/losses over potential catastrophic losses that short selling can bring about.
Algorithm-A Long Orders Only
Algorithm-B Long Orders Only
As someone who has been involved with the defense community over the past 20+ years I do pay more attention to
their stocks then other companies. I have set those 8 companies aside to compare them. Long and Short Orders,
Algorithm-A on the Left and B on the Right. Halliburton Company (HAL), Northrop Grumman Corporation (NOC),
Lockheed Martin Corporation (LMT), General Dynamics Corporation (GD), L3Harris Technologies, Inc. (LHX), The Boeing
Company (BA), Raytheon Technologies Corporation (RTX), Honeywell International Inc. (HON)
Defense companies Long orders only - Algorithm-A on the Left and B on the Right
Hedge funds typically don’t trade one stock at a time so the fact that so many of these individual stocks did so well in
comparison to these top hedge funds is going to be concerning to financial analyst, hedge fund managers market
makers… How is this possible? What does he know that we don’t? The markets are supposed to be random!
Imagine what these algorithms could mean to a fund like BlackRock Inc. with close to $3 trillion dollars under
management as 37 of the 76 companies I tested for 2020-2022 with Algorithm-A surpassing BlackRock’s annualized
return of 9.48% and 38 of the 76 companies surpassed BlackRock’s return with Algorithm-B.
Or other large fund managers such as Warren Buffett with an annualized return of 12.35% for 2020-2022, Bill Gates
5.42%, Carl Icahn -5.31%, George Soros -12.91%, Bill Ackman 4.02%, David Einhorn 12.26%, John Paulson-3.83%, David
Tepper 8.07%, Daniel Loeb -2.57%, Ken Griffin 0.57%, Paul Tudor Jones -12.61%, Steven Cohen 5.98%, Jim Simons 7.46%,
Michael Burry 22.64%… these funds manage millions or billions of dollar and their investors expect the best return they
can achieve.
It will be interesting to see how the remaining stocks perform over this 3-year period as many of those are much more
volatile than these. It will take me several weeks to run those remaining stocks through the algorithms.
There is much more here than meets the eye and I will get into that over the next few months.
These are simulated trades back tested on the historical stock market results, none of the trades are compounded, they
are straight long/short trades. Brokerage fees and taxes are not considered in my back testing.
For background on these algorithms see these two papers. Links Below
Part 1 Predictable-Stock-Markets.pdf (hyperstealth.com)
Part 2 algorithms-versus-stocks.pdf (hyperstealth.com)
© Copyright 2023, Guy Cramer, All Rights Reserved.
