INVESTMENT STRATEGY

In Jesse Livermore’s classic book on the stock market, Reminiscences of a Stock Operator, he wrote:

“There is nothing new on Wall Street or in stock speculation. This is because human nature does not change, and it is human emotion that always gets in the way of human intelligence. Of this I am sure.”

This was written in 1923 and it remains as true now as it was then.

Indeed, fear and greed rule most investors’ emotions – which often results in irrational market levels, especially in the short term. This opens up numerous investment opportunities in oversold and undervalued securities. But without a systematic approach and sound, risk management tactics, profiting from these opportunities – consistently and over the long term – can be difficult to achieve.

Indeed, fear and greed rule most investors’ emotions – which often results in irrational market levels, especially in the short term. This opens up numerous investment opportunities in oversold and undervalued securities. But without a systematic approach and sound, risk management tactics, profiting from these opportunities – consistently and over the long term – can be difficult to achieve.

This is where Pilot House provides investors with a unique advantage. We have tapped into decades of successful portfolio management experience to create a proven, rules-based investment strategy. We apply the principles of behavioural finance and quantitative analysis to a proprietary set of algorithms which replicates our thinking and turns our investment philosophy into a decision-making system.

Just how effective is this system? To test our algorithms, we applied them to over 3,000 price histories and balance sheets of individual U.S. equities. The result: we were able to uncover more than 20,000 trading opportunities. Further back testing of the system showed significant out performance to the S&P 500 going back to 1999. We have gone on to refine the system with similar algorithms for short positions.

This rules-based system can lead to superior performance, regardless of changing market conditions.

Just how effective is this system? To test our algorithms, we applied them to over 3,000 price histories and balance sheets of individual U.S. equities. The result: we were able to uncover more than 20,000 trading opportunities. Further back testing of the system showed significant out performance to the S&P 500 going back to 1999. We have gone on to refine the system with similar algorithms for short positions.

This rules-based system can lead to superior performance, regardless of changing market conditions.

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