INVESTMENT PHILOSOPHY
Duality is at core of existence. We think everything is relative to something else. Price isn’t absolute. Equity prices are relative risk-free rate of return. Lower US Treasury bond will inflate all other asset prices.Nature operates in a basic dual structure. For example, North Pole – South Pole; Proton – Electron; Male – Female; Yin – Yang etc…Fundamental dualities are bonded together by fixed laws. Other dualities share a less fixed relationship but are nonetheless bonded, albeit with probabilistic laws. We ignore all other prognostications, market forecasts, macro environment etc. To be categorical, we think what passes for fundamental analysis (equity research etc) is shallow and superficial, even though due to crowding / momentum effects, they may produce profits.In the capital markets, we find dualities, structure them, and trade them. We call them “Statistically Stable Synthetic Securities®”..
HOW WE THINK OF CAPITAL MARKETS?
We think capital markets, though man made, is a fairly accurate representation of large scale, open, dynamic systems found in nature. Systems like galactic clusters, where gravitational and other primal forces of nature work to shape unpredictable outcomes over eons. Large ecosystems and species evolution, shaping and reshaping outcomes, influencing each other.Note that none of these systems are deterministic and all are probabilistic. Probabilistic outcomes are the only way because all forces are always acting on each other; kind of like everything everywhere all at once.We think trading using quantitative methods and producing consistent profits is akin engaging in a titanic struggle against forces far beyond the strength of a mere mortal.
HOW WE WORK?
A trifecta of skills is needed to work in quantitative investing. We think these are interlinked and all are innate to an individual. These can be developed but cannot be faked.
Curiosity, to continuous acquire diverse knowledge and ability to connect disparate dots is a critical aspect of quant investing. Usually, such knowledge will develop and hone intuition which will indirectly guide you towards asking right questions.
WHAT IS “STATISTICALLY STABLE SYNTHETIC SECURITIES®”?
Imagine a wave (a Sine wave, for mathematically inclined) like price movement. A child will be able to buy low and sell high and vice versa. Unfortunately, in competitive open markets, there is no such price action. So, we make our own wave.
