We are a leading provider of intelligent, systematic portfolio management solutions to investors.
In 2004, MIT professor Andrew Lo posited a theory known as the Adaptive Market Hypothesis. The crux of Lo's theory is that people are mostly rational, but quickly descend into irrationality as a reflexive, adaptive response to heightened volatility. It is in these moments of irrationality that markets ignore investment fundamentals and are driven instead by investor sentiment.
The market collapse in 2008 taught investors a very valuable lesson: you need to be in the right place at the right time. Being 100% invested in equities at that time was disastrous. Having the foresight to get defensive was paramount to protecting your assets during the downturn; having the ability to adjust your portfolio when markets are advancing is also crucial. We believe that knowing when to reduce risk and when to take risk is possible, and have designed strategies to aid our clients in achieving superior performance.
Now more than ever, investors need to adjust their portfolios according to market conditions.