I am now a quant, meaning I use quantitative methodologies to invest. I wasn’t always. My preferred approach was a combination of fundamentals and old-school charting technical analysis. After many years of investment decision making and extensive research, I am convinced that objective, data-driven indicators and models are the best approach to increasing returns and decreasing risk. Why? Because they remove emotion and ego from the investment decision-making process and impose systematic discipline.
Now historical data and verifiable results drive my investment decisions based on a model that determines when the markets are risky and when they are not. And we have developed a number of strategies, which use this risk model as a foundation, that are tailored to our clients’ risk profiles and investment preferences.
One of our guiding principles in developing our strategies was to “question everything,” including all of our existing beliefs. The results of this process led to significant insights and truths that I believe are responsible for the significant outperformance that our strategies achieve. The details of our findings and results are contained throughout this website, but I want to share some of the main ones with you now.
Let’s start with results. Based on historical data, our strategies have produced returns that have outperformed those of common benchmark portfolios, as well as similar competing strategies. While past performance is not a guarantee of future results, our strategies did this with significantly reduced volatility and drawdowns.
In the process of developing and testing our quantitative approaches and comparing their results to widely-used investment strategies and popular funds, it became apparent that the published results of competing offerings sometimes do not offer a complete picture: risk-adjusted measures of returns are infrequently provided or explained. Moreover, the impact of fees, taxes and transaction costs on investment outcomes are often not completely or clearly explained.
In my analysis, I wanted to quantify the impact of risk, fees, transaction costs and taxes for myself objectively. I felt that separating truth from fiction would be of benefit not only to me, but to others as well.
Lastly, and most importantly, I discovered that a new approach, one that breaks with convention, with a total commitment to risk management, was required to effectively reduce risk. Its manta: “Don’t focus on making money, focus on not losing money.” Much more about this later.
My sincerest hope is that the work we have done will be useful to you. If you have been looking for an alternative investment with reasonable fees where you maintain control of your money and your brokerage account, I believe our firm can help you. If you are worried about the impact of the next market melt down on your portfolio, I believe our risk-managed strategies might be of benefit to you. If you are not satisfied with high-fee, low-return mutual funds, our momentum strategies, based on historical data, have delivered much higher returns with less risk. And finally, if the allocation level of bonds in your portfolio and the possibility of losses due to rising interest rates worry you, our strategies might be something that you want to consider to address your concerns.
If any or all of this sounds appealing, I invite you to read on.