In the investing world, there are two very distinct styles of investing.
- Fundamentals based investing.
- Quantitative investing.
Fundamentals Based Investors
Those who are Fundamentals based investors believe in the strength of a business both within the balance sheet as well as within the “invisible” edges of the business.
Such investors pay great attention to the intangible benefits of a business itself – more commonly known as a business’s moats.
The most famous example of a fundamental investor is of course, everybody’s favorite uncle, Warren Buffett.
These investors typically aim to buy “great companies at fair prices.”
Quantitative Based Investors
Quantitative based investors on the other hand, ignore intangible benefits entirely. Rather, they focus on the numbers.
Whatever metrics have proven to historically, consistently delivered returns are the metrics they will use. From there, it is a measure of adjustments, leverage, and focus on which metrics can be best adjusted to derive the best returns.
All of these people are successful investors in their own rights. And their major strategy (asides from Ray Dalio’s Risk Parity) is to buy “companies with some quality, at fantastic prices.”
As the name implies, quantamental investors are those who are a mix of both.
To be exact, and in the case of our factor-based investing course as well as who we are as investors, we are 80% quantitative investors and 20% fundamentals based investors.
We have a larger focus on numbers and a smaller, but more laser like focus on the essentials of any business foundation which are intangible.
Why do we practise Quantamental investing?
To put it bluntly, we believe all things are about balance.
- We are more numerically driven – but we know that we cannot operate in absolutes.
- Numbers drive returns, yes, but intangibles confer business advantages that cannot be ignored.
- We believe business advantages should be prevalent when you view a balance sheet.
- And thus we look to confirm hypothesis (A company has a better low cost production) in its balance sheet (lower operating expenses).
- Thus, while we allow numbers to drive us, we are not blind to intangible benefits.
In short, while we allow ourselves to focus on what has worked in the past and try to extrapolate that into the future, we are always on our toes for changes in the system. The world is a dynamic, fluid, ever changing landscape and the stock market reflects this.
So while we remain rooted in what has worked, we are willing to bend the leaves to the sway of the win so that we will never break.
On the 4th of March, we’ll be doing a demo of our quantamental investing methodology. Inside the talk, we;ll be covering:
- Market Updates
- likely coronavirus market impact
- are we headed to a crash, what do the economic indicators say?
- What is factor based investing?
- Why do we focus on value/growth investing?
- Why are we focusing on China?
- Which portions of China are we looking at?
- What are we especially wary of?
- Demonstration of company valuation: how we calculate for value in a company to see if the share price is indeed undervalued and should be bought
- Sample case studies
If this interests you, you can register here for a seat.
Behavioural Psychology fanatic. I like good food, movies, intelligent conversations and logical reasoning. I also dabble with options, factor-based investing, and data analytics.