December 11, 2018

“Our trading routine is continuous and rigorous. We’re constantly monitoring and revising our return expectations based on a steady stream of analysis. The recent market volatility has moved our average gain/loss ratio up five-fold. As a result, our return expectations going forward are much higher, but the type and number of trade-setups are crucial in this environment (at times it feels like we’re playing with fire). Although we’re optimistic we’ll turn volatility into profits, thus far the markets have forced us to wait. October and November were difficult to say the least, with 65% of the 44 trading days available being down-days. Furthermore, making money in November was nearly impossible, with only 6 of the 21 trading days posting gains, and each sizable up-day was followed by a large down-day. All we could do was preserve capital and wait for a fat pitch. While it’s easy to be disappointed with recent performance, we’re pleased with the risk/reward trades executed by the fund in...

November 9, 2018

“The market action made October a wild ride. Although most of the volatility was downside, we traded heavily, exploiting discrepancies in each big up-move. Unfortunate for October, our pre-trade alpha was wiped out because trades were followed by large down-days. Forcing us to exit positions without profits and wait for the next discrepancy to set up. The month did give us a good opportunity to see our risk management approach in action. Heads we win, tails we break-even (or lose a little). Which is key to ensuring we have the same, if not more, capital at play when the next pitch is thrown. Although October was a disappointment in terms of returns, we’re pleased with higher volatility. More volatility means higher average per-trade profits, and trades with higher average profits means higher average returns going forward.”

August 29, 2018

"An important component of our modeling is the way we monetize risk by exploiting the exponential property of capital growth. Exponentials trump risk."

Riskmaticians know that exponentials trump risk, or at least they should, mathematically speaking that is. This is what led us to develop a sophisticated technique to harness the power of exponentials to exploit market risk. In fact, the optimal position size results in the highest compound return over time: low enough to avoid too much damage to our portfolio if our edge doesn't materialize, but high enough to benefit from exponential growth. Position sizing to the "mathematically optimal" ensures that over time exponentials will trump risk, leading to higher absolute returns."

February 6, 2018

Click below to learn why being excellent is not an act.

January 9, 2018

Click below to view Actuarial's December Portfolio Manager Interview. Questions are based on December's Investor Letter.

December 4, 2017

In this interview, find out how Actuarial evaluates and manages risk.

January 13, 2017

Can the stock market be beat? According to most, not unless you’re extremely lucky. But if investment performance is a matter of luck, it must be that the chances of winning or losing is random. In other words, investors have a fifty-fifty chance of winning or losing. Similar to flipping a coin, you could get ten heads in a row if you’re lucky. However, as you increase the number of times you flip the coin, it's almost impossible to get all heads.

But what about the investors who have exceptional track records? Some argue, if you have enough monkeys randomly hitting the keyboard, one of them will almost surely type the word "Shakespeare". Similarly, if there are enough investors in the market, then some of them must be able to do exceptionally well… simply by luck. This argument is mathematically proven to be true, but one question remains, how many monkeys do you need to get the word "Shakespeare"? The answer is always, a lot of monkeys. By analogy, if you have a lot of investors there...

October 17, 2016

The financial services industry spends millions each year in Washington D.C. to prevent laws requiring them to “Act in the Best Interest” of their clients. And now, one battle has been lost. The new fiduciary rule makes it illegal for financial advisors to swindle clients in certain situations; ones that involve retirement money. The change will drastically improve the industry’s ability to serve the public and I’m extremely excited about it. I’m passionate about the topic of “Acting in the Best Interest” because I used to develop the very products that allow financial advisors to exploit their clients, such as Life Insurance, Annuities, and Mutual Funds. While creating these products I struggled with the morality of engineering them for an industry I knew had lost its way. Now, under the new law, many of the products I once created will be illegal in many situations, and rightfully so.

The bulk of the problem is attributable to commissions and kick-backs built into the products that cr...

Jonathan, an actuary who has worked in the past for large insurance companies designing financial products, discusses his presentation at the NAAIM Conference on the subject of his recently designed financial product that protects the investment on the downside while receiving a large portion of the growth on the upside. 

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