The term sentiment or momentum piece of our portfolio strategy is the key to the entire process. The quant looks to sell and go into cash before the correction gains momentum and likewise, tries to signal a buy trade once the upward momentum is confirmed.

All of our portfolios are actively managed using our term sentiment or momentum trading algorithm. Further, this algorithm initiate buys and sells signals; this takes human emotion out of the portfolio management and allows for the process to be repeatable. This also seems to add significant alpha, particularly during market corrections.

Due to our emphasis on being risk averse the one anomaly that occurs is that the number of “losing” trades normally outnumber the number of “winning” trades. Where we have found our success is the fact that a “winning” trade has had considerably higher returns that the losing trade’s losses. Think of a teeter-totter seesaw with risk on one side and return on the other; most models have these two factors balanced. What we do is move the fulcrum point toward the returns side; although it takes greater factors to produce a trade each trade then causes higher returns over less than half the transactions. Our portfolios reside in the top left quadrant (higher return / less risk) on the typical Risk Reward benchmark scatter graph.