Our Research

Many firms and analysts see the market in one way, through one lens. We are different. We understand that the market is a dynamic, ever-changing landscape, and that the challenge is finding consistency within this ever-shifting current.

We also know that no magic formulas exist and that success depends, to a large extent, on disciplined application of a verified process. We believe that, to consistently outperform, it is necessary to recognize paradigm shifts and to apply the right tools at the right time. Consistency of results demands both consistency of process and flexibility to respond to shifting market regimes. Essentially, the challenge is understanding what changes and what does not change.

We draw from the best of many disciplines. While our approach is rooted in technical analysis, we work hard to correct many of the errors of traditional technical analysis which can be highly subjective and untestable. However, a technical process with an enduring edge brings many strengths, one of the most important of which is that it forces us to confront the reality of the market as it is. Assumptions, projections, biases, and emotion take a back seat to the message of price action.

Understanding when macroeconomic factors and fundamentals can identify critical shifts in behavioral context can transform a reading of the news and current events. Emotion, noise, and confusion can be clarified within a process that identifies significant inflections. Our data-driven approach has proven effective over decades of practical application.

A few key points in our investment approach and philosophy:

• Markets are very close to efficient. It is exceedingly difficult to make money trading. To do so, it is essential to have an edge in the market, and to apply that edge with discipline.
• Risk is the ever-present companion of opportunity; there is no opportunity without risk. The first job of any trading methodology must be effective risk management.
• Behavioral factors are very important. On a large scale, investors have had similar reactions to risk, opportunity, and volatility in markets since, literally, the beginning of recorded market history. On a smaller scale, individual traders, asset managers, and even firms are vulnerable to emotionally-driven errors. The importance of discipline and psychological balance cannot be underestimated.
• We believe that intuition and discretion have a place in the investment process, but they must be tempered and informed by a rigid statistical framework.
• Any analytical approach can only give a probabilistic tilt to the future direction of prices and/or volatility. Fundamental analysis, macro analysis, economics, models, technical analysis, and any other analytical tools only work within the framework of probability. Nothing is certain in any market at any time.
• Most things that most people believe work in the market simply do not work. It is vitally important to have a disciplined process that has a verifiable edge.

Though there are many paths to investment profits, our unique approach is a blend of technical, fundamental, quantitative, and statistical analysis and human discretion. We face modern markets fully aware of their capacity to innovate and evolve, but we also understand what elements of human behavior in markets have not changed for hundreds of years. We tie the core concepts of our methodology to those enduring elements of price behavior, and have no reason to believe our methodology will cease to be effective anytime in the next hundred years.