Our Global Macro Process
How do we thrive in today's markets?
We aren't your typical investment management firm. We do things a lot differently. Most financial advisory firms or investment firms provide a spectrum of investment models catered to your investment tolerance. These models leave a lot to be desired. Many models are based on a single factor and do not consider the risk of the individual components. A "diversified portfolio" may hold more risk than anticipated as we saw in the 4th Quarter of 2018 and the 2nd Quarter of 2020.
Humans evolve and adapt. As we receive new information we make adjustments that allow us to survive and thrive. Among the many reasons for our survival, we can adapt to the environment that surrounds us. Our strongest instinct is to survive to live another day.
Our investment process has evolved and adapted to the investment environment we were provided. Single factor models do not. We must play the cards that we are dealt. We have to base our decisions on probabilities and numbers, not on how we “feel” about this stock or that stock. It’s our job as risk managers to embrace the change rather than fight it. It’s not about being right, it’s about making money. Investing in how you feel is a fool’s errand.
Our Global Macro Risk Management process takes into consideration history, math and behavioral psychology. Most firms, including Wall Street, take a different approach. They base their decisions on economic theory, feel, valuation, and a “This time is different” philosophy. We don’t “feel” anything with regard to the investment decisions we make. We contextualize everything with math. If we can’t use math to provide answers, we simply don’t have a view. Thus, we focus on those facts and invest accordingly.
We provide an opportunity for investors to place their hard earned assets with a firm that uses modern day risk management tools. Forecast Capital Management has created a way for individuals and families to access a hedge fund strategy that was typically only available to the ultra high net worth. Our risk management tools allow us to make high probability investment decisions prior to major market moves. Obviously, nothing is certain, but our goal is to be more right than wrong, provide consistent gains, compound returns, and preserve your hard earned capital. Let us explain in a little more detail on how we do that.
Our Risk Management Process
We are full cycle investors. All of our investment decisions flow down from our GIP Model. GIP stands for Growth, Inflation and Policy. We measure and map the rate of change for growth and inflation across 50 different countries. We then look at the data and decide whether growth and inflation is accelerating or slowing on a year-over-year, rate of change basis. This allows us to frame our fundamental outlook going forward and decide what economic environment we will fall into.
Based on our GIP model outlook, we then look at what specific asset classes and factor exposures do well in that type of economic environment. Our ideas are typically expressed through an ETF or individual equity. These factors and asset classes are rigorously back-tested so we are positioned appropriately for optimal returns.
The end result is an intelligent, high-octane investment process that draws on insights from over 40 fundamental research analysts. These analysts cover everything from Global Macro and Retail, to Energy, Restaurants and Washington Policy research.
Obviously, fundamental analysis is only part of our process. We have a multi-factor, multi-durational model that provides insight into where we should be buying or selling specific securities. This quantitative model attempts to front run "The Machine." Our multi-factor model is based on the price, volume and volatility of a public traded security and the interplay between these three factors across immediate, intermediate, and long-term time horizons. This signal of an individual security must line up with our GIP model in order to invest in an individual security.
The goal of any investor should be to successfully risk manage and preserve capital when markets become increasingly volatile while compounding positive returns when the market provides opportunity. Let us help you Create, Grow, and Preserve your wealth.
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