Winning the Powerball Jackpot 45 times in a row!

By Guy Cramer

(Vancouver, B.C., July 19, 2023) I correctly forecast the direction of two ETF’s (exchange-traded funds) with a win/loss of
more than 2:1 over 100 trades each, the odds of doing this if the markets are not predictable are the same odds as
winning the Canadian national lottery 85 times in a row or the Powerball Jackpot in the U.S. more than 45 times in a
row. This was done after the fact, back testing with two new trading algorithms using a phantom portfolio (simulating
trades).

On Friday July 14, 2023, I released Part-4 in my series of papers on my two back testing stock trading algorithms where I
focused on just six Casino stocks, within the paper I demonstrated how these stocks performed with my two algorithm’s
and compared them to the six top large hedge funds from 2020 to the end of 2022, spoiler alert I outperformed those
hedge funds in most cases. https://hyperstealth.com/Beating-the-House.pdf

I also looked at the entire history of those six casino stocks to a maximum of 31.5 years and I discussed the win/loss ratio
of my trades with DraftKings Inc. (DKNG) which resulted in Algorithm-B with a win/loss ratio of 1.5 on all trades, both
longs and shorts, meaning that I was correct much more than I was incorrect at the predicted direction. If I just looked at
the long orders, I achieved an even higher 1.63 win/loss ratio. If the market is efficient as per the efficient market
hypothesis, then predicting market direction is like predicting a coin flip with a probability of 0.5 for a fair coin.

Yesterday I ran the algorithms against a few ETF’s from my list of 286 stocks and two of them in a row were above a 2:1
win/loss ratio on over 100 trades each. This may not sound all that impressive but if you were to flip a coin your odds of
achieving this with one of the ETF’s are 1 in 10^65 (1 with 65 zeros after it). The odds of doing this two times in a row (2
separate ETF’s) are 1 in 10^130. Every zero added increases the overall number by multiplying by 10.

To put this into perspective, the odds of winning the Canadian national 6/49 lottery 85 times in a row is approximately 1
in 10^130. This is calculated by raising the odds of winning the lottery once (1 in 13,983,816) to the power of 85.

For my U.S. audience, the odds of winning the Powerball lottery are 1 in 292,201,338 if you were to play only one set of
numbers. The probability of winning the Powerball jackpot 45 times in a row is 1 in 10^117 and to do it 46 times in a row
is 1 in 10^136.

Index funds often go up so doesn’t that skew the results? These two ETF’s have increased in value but when comparing
gain/loss from the previous day, one of them gains 55% of the time and shows a loss from the previous day 45% of the
time. While the other ETF has a 54% gain / 46% loss from the previous day. Remember we are only looking a frequency
of the trades here not the amplitude of the gain or loss.

According to a machine learning engine that analyzed 60 years of raw data, the chances that the S&P 500 will rise by
+5% or more over 20 trading days (roughly a month) is about 11% and the chances that it will drop by -5% or more over
20 trading days (roughly a month) is about 8%, however, the machine learning engine shows, chances that the S&P 500
will rise by +10% or more, over 20 trading days (roughly a month) is about 1.2% the chances of a drop by -10% or more,
over 20 trading days (roughly a month) is about 1.5%. In this case, the chances of a 10% drop are slightly greater than of
a 10% rise. Machine Learning Engine Says S&P 500 Is 8 Times More Likely To Drop 5% In A Month Than To Rise 10%
(forbes.com)

I did find a stock with our algorithm that has a 2.3 win/loss ratio on both the long and short orders combined. The actual
value of this stock has a 49.45% chance of a gain from the previous trading day and 50.55% chance that it will show a
loss from the previous trading day, this similar to coin flipping odds. So out of 66 trades, my algorithm correctly
predicted the direction 46 times, if my chance should only be 50/50 as this stock actually preforms then my 46 correct
versus 20 incorrect (win/loss trades) turns out to be 1 chance in 9.59763558352602 x 10^89" in full form with all the
zeros added on, you would express the number as: 1 chance in
9,597,635,583,526,020,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,0
00,000,000
You would need to win the Powerball jackpot approximately 3.22422870264975 x 10^89 times in a row to have a
probability equal to "1 chance in 9.59763558352602 x 10^89." This number is far beyond any practical meaning and is
simply a mathematical representation of an astronomically improbable event. Winning the lottery even once is a rare
occurrence and winning it tens of billions of times in a row is beyond comprehension.

These are not just rare anomalies with my algorithms as can be seen from my casino paper: Ceasars Entertainment Inc.
achieved a win/loss ratio of 1.78 on just the long orders over the 8.7 years. MGM Resorts International (MGM) had a
win/loss of 1.44 on just the long orders with my Algorithm-B from January 1992- June 2023 (31.5 years of trading). With
Wynn (WYNN) I have a win/loss ratio of 1.47 from all the long orders over 20.68 years

So, either the market direction can be predicted with some reliability, and they are not as efficient as expected or I
should go buy a lottery ticket.

These are simulated trades back tested on the historical stock market results, none of the trades are compounded or
leveraged, they are straight long/short trades. Brokerage fees and taxes are not considered in my back testing.

Below are my annualized algorithm results for the history of these 286 public companies (or ETF’s) going back to a
maximum of January 1992. I am now working on a better comparison with these hedge funds which will compare them
to the same three years (annualized) as the hedge funds.

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)

Part 3 Ghost-Patterns-Identified.pdf (hyperstealth.com)

Part 4 Beating-the-House.pdf (hyperstealth.com)

© Copyright 2023, Guy Cramer, All Rights Reserved.