Fidelity turns to quantitative investing … how this approach has helped generate the strongest returns in the market for decades … a special “quant” event with Louis Navellier
It likely went under your radar, but in August, Fidelity poached a big talent from the hedge fund world.
He’s an expert in using data science to get better investment returns.
Fidelity, which now oversees a jaw-dropping $4.2 trillion of discretionary assets, hired Gilbert Haddad away from Steve Cohen’s Point72. Cohen is a hedge fund multibillionaire who owns the New York Mets.
Haddad now joins Fidelity’s quantitative research and investment group, called QRI.
MarketWatch reports that QRI’s goal is “to bring together fixed-income and equity quants, as well as data scientists who work in artificial intelligence and machine learning.”
If you think this sounds a little bit like the book, Moneyball, that’s because it’s exactly like Moneyball.
(The book profiles Billy Beane, the former general manager of the Oakland Athletics baseball team. He used statistical science to sign valuable yet underpriced players to his team. This resulted in the Athletics becoming one of the most successful teams in baseball… while also being one of the cheapest teams in baseball.)
In fact, here’s Fidelity’s head of quantitative research and investments, Neil Constable:
Think of it like playing “Moneyball.” It’s really applying behavioral finance and behavioral science to understand what the portfolio managers and analysts are good at or not.
Fidelity is far from the first investment shop to turn to data and mathematics to improve returns.
In previous Digests, we’ve profiled the unparalleled success of hedge fund manager Jim Simons. His long-term returns have trounced those of better-known investors like Warren Buffett and George Soros.
Simons’ flagship Medallion fund has generated average annual returns of roughly 66%, producing trading gains of more than $100 billion.
How did Simons do it?
He built a high-tech trading system guided by preset algorithms – basically, step-by-step computer instructions.
It was a program designed to digest vast quantities of market data from which it would then select attractive trades. The goal was to remove human emotion and instinct from the investment selection process.
Simons told a friend, “I don’t want to have to worry about the market every minute. I want models that will make money while I sleep. A pure system without humans interfering.”
***If this sounds, familiar, it’s because famed investor, Louis Navellier, shares some striking similarities to Simons
I’m a numbers guy. Always have been. Since I was a kid, I’ve loved math and I knew that math was the right way to understand the world.
Said another way, I depend on evidence for my decisions.
I depend on an objective set of criteria that signals what I should buy, when I should buy it, and when I should sell and collect the profits.
Even in his early days as an investor, Louis used data and computers. As a grad student, he used Wells Fargo’s powerful mainframe – in those days it filled an entire room – to create algorithmic models that outperformed the market.
In the years since, he’s further developed these models, resulting in one of the most respected track records in the investment community.
And for good reason – his models forecasted some of the biggest stock market winners of the past 40 years. They identified Apple at $1.38… then there was Oracle, when it was trading at only 51 cents per share… they even forecasted the rise of Amazon when its price was just $46.
MarketWatch called Navellier “the advisor who recommended Google before anyone else.” And Forbes gave him the title “King of Quants.”
Louis’ decades of experience and the refinement of his quantitative approach to the markets have resulted in a core takeaway: better investing comes through computerized market analysis.
With this in mind, I want to alert you to an event that’s happening Wednesday at 4 PM ET. It’s something Louis calls Project Mastermind.
In short, Project Mastermind is a market approach that uses the predictive power of computers to identify stocks that are on the cusp of price breakouts.
There’s no “gut feel” involved, no room for our emotions to trip us up.
Like the approach used by Fidelity and Jim Simons, it’s an objective approach rooted in cold, impartial numbers along with one fundamental belief – mathematics and computers offer a tremendous advantage in the investing world.
***Better investment results come from a smarter approach
The benefit of Louis’ quant approach isn’t just that it circumvents our human emotions, which often trip us up. A computer/numbers approach also is able to perform analysis on a far more robust scale than any individual investor would be able to do on his own.
Let’s take a peek at what goes into Project Mastermind to see how this works.
Every public company has millions of data points that are related to its business and its stock price. There are data points related to its fundamental business, then data points related to the macro environment, then there’s timing – are we looking at data that’s more relevant to shorter-term price movements or longer-term movements?
Frankly, the volume of information that could be analyzed is dizzying.
Louis’ system sorts through this huge universe of factors and focuses on the select few that are most predictive of the stocks that are most likely to make big moves in a short period of time. We’re talking months – not years.
But to do that, you need superior computing power. And that’s where Project Mastermind comes in.
***Creating Project Mastermind and the massive edge it gives
Louis created Project Mastermind based on his four decades of investment experience. This informed his understanding of which factors make the biggest difference in short-term price movements.
With his team, he then tested and refined his model, focusing on a handful of inputs – the essential metrics that best-predicted a major jump. These are now the foundation of Louis’ algorithms.
Here’s Louis on the power of this degree of data mining:
In our modern world, vast oceans of data are being created every day…
Opening up new worlds of insight…
And folks with the tools to make sense of it all… can see things that were once invisible.
Nowhere is this more true than in the stock market.
And that’s what Project Mastermind is all about—using data-driven research, powered by cutting edge technology to find the market’s most explosive stocks…
Join Louis this Wednesday at 4 p.m. ET to learn more about this data-driven approach and what it can do for your portfolio.
Just for attending, you’ll get Louis’ #1 stock pick for 2022. It’s yours free, no strings attached.
I’ll let Louis take us out:
On Wednesday, October 20, at 4 p.m. ET, I will unveil Project Mastermind and reveal the stock I’ve rated number-one based on insights from Project Mastermind – ticker symbol and all…
I can already tell you with confidence – this recommendation has the potential to double your money or more in the coming months.
If you’re interested, sign up now to reserve your spot. I look forward to seeing you there!
Have a good evening,