Our guiding principles are rooted in the well-established field of behavioral finance. As humans, we are subject to cognitive biases that lead to panics, bubbles, booms, and busts. Especially during times of stress, these biases can lead to irrational decisions out of fear and greed. This is one of the main reasons we develop and apply quantitative models based on robust research as part of a process which we describe as scientific investing. This means that we look for identifiable, testable, and repeatable patterns within the data and transform these patterns into algorithms that guide our investment strategies.
Scientific Investing = Hypothesis + Data + Technology
We leverage academic theory, our unique observations, and extensive experience to develop testable hypotheses about market behavior. The validity of each hypothesis is investigated by examining the data to see if the idea holds in reality. Then, we develop rules which are rigorously backtested over historical data in order to provide confidence in our findings.
Financial markets are extremely noisy with a high amount of randomness. It is our job to parse the data for hidden signals that may add value to our clients’ portfolios.
The vast improvements in technology over recent years have allowed quantitative investing to explode in popularity. We stand on the shoulders of giants, but we now have the technology to process information faster and feed more data into advanced models than would have been feasible twenty years ago.
We put great care and thought into the design of our strategies and ensure that we incorporate sound investment principles and follow our investment process. We are always learning and relentlessly striving to innovate new models and improve our strategies. Markets move quickly, and we must move with them to maintain our edge.
Hypothesis