For prediction, we aggregate those individual company ratings up to the market and sector levels and have found that they are consistently our most important machine learning features for understanding and responding to current market conditions.
In regards to design optimization, we created a Strategy Designer that is a hybrid of expert rules and machine learning. With the strategy designer any investment manager can develop trading strategies, in a point and click fashion, with the AI guiding users through the process.
Hortz: What role does that leave for the asset manager? How does Valspresso’s indicators empower subscribers to “design and deploy their own persistent alpha-generating strategies”?
Nosegbe: Our goal is not to replace asset managers, but to provide them alpha-generating indicators and signals that can serve as input to their strategies. For example, value, growth, large cap, small cap, or ESG managers can significantly improve the outcome of their strategies by incorporating our fundamental and sentiment indicators into their portfolio design and execution.
Hortz: What feedback and applications are you hearing from advisors and other money managers on your investment technology?
Caspe: To be honest, many say “I already have that data in my feed, I believe that my models should find the same correlations that you found. Prove to me that I don’t.” The proof is in the testing, but the rub is that these same quants and analysts have lost confidence in back testing. The key for them to appreciate is that our methodology is not a fit to historical data, but rather an invariant process as defined by the accounting industry in how one analyzes a company’s health and stability. Most quants are trained in mathematics, not accounting.
Hortz: As a systems engineer, inventor, student of economic history, and passionate advocate for investors trying to build and protect their investments, are there any other thoughts or recommendations you would like to share?
Nosegbe: The investment approach that we discussed in this interview provides asset owners (individuals and institutions) tools designed to empower them to significantly reduce their risk of investing in the stock market while improving returns.
We invite advisors and investment managers to visit our website to learn more about our indicators, explore some of our technical research white papers, and see how to apply our investment technology to your investment process, helping you reshape risk to capture alpha.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation, and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors—Pershing, Ultimus Fund Solutions, NASDAQ, Voya Financial, Fidelity and Charter Financial Publishing (publisher of Financial Advisor magazine).