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Posts Tagged ‘Covert Analytics’

Why “Covert Analytics”?

Friday, March 19th, 2010

We wanted to let people know how and why we are called Covert Analytics. The idea initially was that an investment advisor would use our platform as the secret tool to help them navigate markets. The secret tool, you may ask? Yes … secret because most investment advisors would claim that their approach to the market was revolutionary, proprietary, etc. Hey at our old investment advisory firm, we did the same…

So if their asset allocation approach was from an “off the shelf” or in this case “off the web” software, it would diminish the sophistication level they projected. We wanted to partner with our clients (money managers) in offering the “best in the world” product to their end clients. Granted our platform is our perspective, and our expertise and experience in the trenches, in an attempt to better navigate the markets.

Covert + Analytics: a powerful tool used by money managers to arrive at optimal allocation decisions. 

The simple picture is that Covert Analytics is a dynamic asset allocation software that we built because we felt we needed smarter software! It is your secret weapon to manage your client assets and build a dynamic and proprietary model using our platform.

Thanks for listening,

The Covert Analytics Team

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US Stock Market Outlook

Wednesday, January 27th, 2010
 
The S&P 500 today had a shakeout in response to the Federal Reserve announcement.  It has since made a great rally (not shown on the graph!!!).

S&P 500 Intraday

 Regardless of the noise today – please note the 5% correction we have had over the past two weeks. This coincided with earnings season.  It is interesting that 3/4 of the companies that have reported earnings beat estimates, according to Bloomberg.  If you look at an average 4Q earnings report, it is typical to see a 8-10% increase in revenue y-o-y but a nearly 20% gain in earnings.  Shows that companies are being run very efficiently; Gavekal says they are being run even more efficiently than sovereigns!

S&P 500 Intraday for past 15 days

The trend from March 2009 seems still well in place. It is clear the pace of stock gains has moderated since about November, and we are having another 5 % selloff. In the graph below there are arrows indicating the 5% corrections that have occurred since the rally began.  In other words, no need to cry wolf yet.  Markets are trading reasonably well and we believe they are in great shape.  In other words, any further weakness in the broad market would be seen as a short term buying opportunity for those investors who have not entered or have a lower than target allocation.

S7P 500 past 12 months

 

On a similar note, we acknowledge the many tailwinds that are facing investors … they include ( this is a non exclusive list compiled by us ):

  

And the case for the bulls is as follows:

Bulls ...

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Great quote from a NY hedgie

Wednesday, January 20th, 2010
Was speaking to a NY based event driven hedge fund manager yesterday, and he had a great quote:

“Investing is 70% instinct, and 30% homework”

This is no small time hedgie either. He is the founding partner of a $2 billion event driven hedge fund. Reminds us of a great quote from one of our favorite investors, Marc Faber:

“Investing has a lot to do with common sense and personal observations”

We built Covert Analytics to allow investment advisors and portfolio managers to input their views across global capital markets. The framework we initially conceptualized would allow investors to apply a logical methodology to evaluate a varied group of assets, and to see how this methodology would have worked historically.

Here is how we see our platform “mixing” with our great quote:

Your views, our platform

Covert Analytics is a platform, that combined with your views, produces information that helps drive your portfolio management process

Our plaftorm + Your Views = Input for your PM Process

Our platform is not a black box which tells you how to allocate. Our software allows you to input market specific views without the traditional academic mumbo jumbo of forecasting market returns or standard deviations, but instead allows you to build and combine indicators which are consistent with your views. Our proprietary backtest methodology allows you to evaluate how your asset allocation model performs historically, factoring in the portfolio guidelines you set forth, and proposes a recommended asset allocation.

Covert Analytics is a platform which allows you to build dynamic, quantitative asset allocation models that are driven by your expertise, and your views. We are glad our hedgie friend said that, because we could not have agreed more!

The Covert Analytics Team

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How we view market risk

Friday, January 8th, 2010

Risk is alot like rain, and your asset allocation is alot like an umbrella.  Your portfolio (you) always seem to get wet on your feet and the bottom part of your legs, right? Thats because the part of your body most exposed to the rain is your “risk assets” such as Equities and Commodities. These are the more volatile assets which though they have the best chance of giving your portfolio a substantial boost are also the most exposed when “the bear comes a-knocking”. The dry, upper part of your body? Thats the Bonds and Cash in your portfolio. Much more protected from the rain and thus less susceptible to market swings.

Risk and the Umbrella

 Covert Analytics aims to be your bigger umbrella! 

Covert Analytics = less risk

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Posted in Asset Allocation, Bonds, Our Approach, Stocks | No Comments »