QInsight Group - Our Investment Philosophy

Our Investment Philosophy

"There are in fact two things, science and opinion; the former begets knowledge, the latter ignorance." Hippocrates (Law, bk IV, c 460-377 B.C.)

The QInsight Group's quantitative philosophy has resulted in a unique, top-down method of investing that links industry group returns to phases of the US business cycle. QInsight portfolios adapt to the dynamic nature of the stock market. Our portfolios are managed by an experienced team combining the knowledge and skills of a teaching academic and a professional money manager. QInsight has developed portfolios both for individual equities (QEquity) and specialty mutual funds (QSector). Both portfolios share the following features:

A quantitative philosophy and rigorous investment discipline – Our QEquity and QSector portfolios rely on a selection technique based solely upon proven relationships between market and economic data. See our business cycle methodology.

An adaptive methodology – QInsight's method does not rely on the unrealistic steady-state assumptions underlying most current implementations of modern portfolio theory. QInsight uses knowledge of industry group relative performance in each of (five) phases of the US business cycle. See the five phases of the US business cycle.

An alternative to traditional investment styles and diversification practices – Portfolios based on investment styles may under-perform broad market indexes for long periods of time if the current macro-economic environment is different than the historical periods used to design the portfolio. QInsight's portfolios are designed to perform well in all economic environments and types of markets. See returns of the top performing industry groups by phase.

Proven results and real track record – QEquity and QSector portfolios were extensively tested using rigorous backtests with "out-of-sample" testing. However, both QEquity and QSector now have multi-year actual performance results. See the industry group performance page.

State-of-the-art risk assessment – QSector and QEquity use a ratio of return-to-downside risk to rank the top 20 performing sectors during each business phase. Downside risk measures the risk of an industry group or specialty fund under-performing a target rate, rather than its total variability.
Downside risk is considered superior to standard deviation as a measure of risk because downside risk more accurately represents investors' observed behavior. Investors are far more sensitive to potential losses then they are to potential gains.

What QInsight Portfolios are NOT

Not investment style based: QSector and QEquity are designed to work during all phases of the business cycle, shifting in response to the changing economy. Both portfolios emphasize different investment styles and sectors in different phases of the business cycle.
Not earnings or price momentum-based: Neither QSector nor QEquity use an earnings or price-based momentum model. They differ from other sector approaches that actively trade the highest momentum sectors using technical indicators.
Not a predictive model: Neither QSector or QEquity anticipate economic changes. Both shift investments in response to the real-time, actual behavior of the US economy. The business cycle follows a definite sequence through its phase changes. QInsight has identified that sequence along with a set of economic variables to determine when phase changes occur. Therefore, there is adequate time for QInsight to invest in the industry groups most likely to outperform the broad market indexes.
Not a market timing model: Markets are chaotic. Phase changes are not periodic and they result from small (non-linear) changes in underlying economic and market forces. Neither bull nor bear markets may be accurately predicted, therefore, with few exceptions, QSector and QEquity portfolios remain fully invested at all times.

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	A quantitative philosophy and rigorous investment discipline – Our QEquity and QSector portfolios rely on a selection technique based solely upon proven relationships between market and economic data. See our business cycle methodology.
	An adaptive methodology – QInsight's method does not rely on the unrealistic steady-state assumptions underlying most current implementations of modern portfolio theory. QInsight uses knowledge of industry group relative performance in each of (five) phases of the US business cycle. See the five phases of the US business cycle.
	An alternative to traditional investment styles and diversification practices – Portfolios based on investment styles may under-perform broad market indexes for long periods of time if the current macro-economic environment is different than the historical periods used to design the portfolio. QInsight's portfolios are designed to perform well in all economic environments and types of markets. See returns of the top performing industry groups by phase.
	Proven results and real track record – QEquity and QSector portfolios were extensively tested using rigorous backtests with "out-of-sample" testing. However, both QEquity and QSector now have multi-year actual performance results. See the industry group performance page.
	State-of-the-art risk assessment – QSector and QEquity use a ratio of return-to-downside risk to rank the top 20 performing sectors during each business phase. Downside risk measures the risk of an industry group or specialty fund under-performing a target rate, rather than its total variability. Downside risk is considered superior to standard deviation as a measure of risk because downside risk more accurately represents investors' observed behavior. Investors are far more sensitive to potential losses then they are to potential gains.