Investment Principles

Business Cycle conscious

We're constantly monitoring leading economic indicators to ascertain where we are in the Business Cycle (Expansion -> Boom -> Recession -> Recovery). Asset allocation and sector selections always depend on the phase that we see ourselves in. As an example, in terms of sector selection in the early stages of a business cycle we'll prefer Tech, Consumer Discretionary and Industrials and in later stages Health Care, Consumer Staples and Utilities.

Systematic

Investing should be about maximizing returns, but also about being able to enjoy life past your investments. As such all of Pergamon's portfolios are 100% systematic. Trading signals generated by the systems are followed without human intervention. Automating trading also allows one to avoid overtrading, which both amateur investors and professional managers have a tendency to do.

Fully invested

Being out of the market at the wrong time can be incredibly costly. If you'd missed out on only the 25 best trading days since 1970 your returns would have gone from 1,910% to 371%, or 6.7% a year to 3.4%. You can see the damage done on the chart on the right. To take part in as much of the growth of the U.S. economy as we can, we seek to stay invested except in times of maximum uncertainty.

Active

Our systems draw upon a vast array of economic, market and sentiment data every day, constantly re-evaluating its outlook for the US economy. Furthermore we're always generating new trade ideas, evaluating, coding and testing them to further improve portfolio returns.

Loss-averse

As humans we are loss-averting creatures -- not losing $50 feels better than finding $50. Some studies have even suggested that losses are twice as powerful, psychologically, as gains. As such many trading systems get abandoned during the worst possible time, during periods of large drawdowns (i.e. the opposite of buy low, sell high). As such we intently focus on the metric of "maximum drawdown" and try to keep equity charts going from bottom left to top right in as smooth a manner as possible.