Leave Your Emotions at the Door!
Objectivism asserts that logic is man's means of knowledge, and that truths are absolutes. Emotions and intuitions are not means of knowledge: that you feel strongly that 2+2=5 doesn't matter.
The “Investment Objectivist” believes that investment decisions should be based on facts without distortion by personal feelings (greed or fear) or prejudices. Many consider Rules-Based Investing as the closest movement to Investment Objectivism our industry has to offer.
Rules-based investing is an investment approach that uses a set of unemotional and repeatable rules to identify patterns among decades' worth of stock prices and other financial market data. The ultimate goal is to find investment strategies that have been successful in the past and may be likely to keep working in the future.
Advantages of Rules-Based Investing
Rules-based investing offers the following advantages…
Unemotional. Quantitative investing uses logic and historical facts to drive decisions. American First strategies strip away the human bias that trips up many investors and investment professionals who often buy into market trends at precisely the wrong time and overlook real values.
Back-Testable. A fact-based approach is consistent and repeatable. It is based on historical performance data to help provide results and help manage investment risk. At the heart of every portfolio managed by AFCM is the process of back-testing. A back-test is a simulation of how a real-life investment strategy might have responded to historical markets. The most remarkable aspect of back-testing comes from the ability to see how successful a strategy has performed in the past, so well have a better idea as to what our probability of success may be now and in the future.
The potential for market-beating returns. By examining years of stock returns and other financial data using powerful technology, fact-based investing seeks to identify investment strategies that were previously successful and have qualities that indicate their likelihood to succeed in today’s markets.