A quantitative approach does not necessarily imply a black box. We like quantitative approaches because they help us remove the subjectivity of markets. Granted it helps that we like math:
But we do not recommend a blind, mathematical approach to investing. Covert Analytics is a program that allows portfolio managers to combine personal market views on technical signals, economic data, valuation, liquidity measures etc and to combine these measures into one unified approach. This unified approach allows portfolio managers to evaluate multiple markets in a similar fashion, thus removing the noise and hysteria, the bullishness and the bearishness, and to “stick to the plan”.
As a side note, we wanted to point out that following quantitative rules is something you already do. An odometer is a quantitative tool, it removes the subjectivity of speed measurement and tells you how fast your car is going. You dont leave it up to gut feeling do you? When the officer pulls you over would you say “I wasnt looking at my odometer, I thought I was going around 38 mph!”
What about measuring your blood pressure? If your doctor were to tell you “I think your blood pressure is X” you would not think it was a sufficient measurement, would you? The concept here is that interpreting tons of variables as most portfolio managers have to do is a very difficult task. Breaking it down into quantifiable signals that can be easily digested, interpreted and combined into one cohesive measurement is what Covert Analytics is all about. Simply tracking a few measures (say 5) per market for an Equity portfolio allocated to the G7 is 45 variables!
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor