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Our Investment Philosophy

The investment philosophy of QuantCore is based on the debunking of the two most ingrained myths in financial economics.

Myth #1: Markets are Efficient.

According to the proponents of the Efficient Market Hypothesis, stock prices reflect all available information about companies and investors can’t beat the market indexes by stock picking. This is true in theory, however, reality tells a different story. First, investors are far from rational - history is replete with investors that have made huge fortunes, but also created disasters through their greed, anxiety and so forth. Secondly, even if all information could be accessed by all investors simultaneously, investment decisions would still not be homogenous as the information is processed differently by different investors due to different skills, knowledge, attitudes and mentality. Warren Buffet put it very elegantly once by saying that "If markets were efficient, I'd be a bum on the street."

Myth #2: A buy-and-hold strategy will beat any other strategy in the long run.

Due to the efficient market hypothesis, proponents of it believe that any other investment strategy than buy-and-hold is futile since the index cannot be beaten anyway. However, when looking at the S&P500 index over the last twelve years, it becomes obvious that as of 2012, we are exactly where we were right before the burst of the dot-com bubble. This is not acceptable. We believe that active investing combined with adequate information processing is far superior. For instance, we have demonstrated this through backtesting through the financial crisis 2008-2009 where a buy-and-hold-strategy in S&P500 e-mini future resulted in a loss of -1,500% whereas our algorithm managed to generate a profit of +210% - a clear indicator that active investment is worthwhile and rewarding.