Strategy Alpha - Chicago Global

Exotic beta is your alpha, in the words of our mentor John Cochrane. Markets function better when investors step in as prices diverge from intrinsic value. However, gathering and processing information is costly. Investors must be compensated for their troubles or they would not be willing to step in. Research shows a link between the quantum of inefficiency and the required incentive to restore equilibrium. To zig, while others zag. Instead of trying to outguess and navigate the market tick-tock, we focus on creating an all-weather portfolio at the intersection of multiple, uncorrelated return drivers. Taking the long view puts us in position to buy and hold off-radar assets in a format that helps investors stay the course. Our goal is to combine advanced technology and data analysis with timeless strategies, which take advantage of structural impediments, human error, and artificial intelligence. In this context, human behavior creates renewable supply of pricing anomalies and distortions. We design cost-efficient ways to uncover and harvest them. We then let compounding do the rest.