An independent investment firm that manages portfolios with strategies backed by academic research
Investment portfolios have to adapt to survive. Most investors have a fixed allocation to stocks and bonds. This is both an industry norm and an inflexible approach that has failed in the past. The chart to the right shows investment performance in the 1970s, a period defined by high inflation and low economic growth that resulted in massive undperformance by stocks and bonds.
Movement Capital uses models based on two core principles: momentum and value investing. Multiple decades of academic research have found these to be the two most effective strategies at producing above-average returns over various economic environments.1 Movement Capital also recognizes that most investors fall prey to home country bias: investing too much of their portfolio in their local market.2 Our momentum and value strategies span the globe and invest in assets in 35 different countries.
Our approach is custom fit to each client. Be it a younger investor who can tolerate more risk or a retiree seeking portfolio stability, Movement Capital has a solution for your unique needs.
Why? Simply because they're human. People fall victim to behavioral biases that trick their minds, and in turn can wreck their investment portfolios. Don't believe me? The graph to the left shows the average behavior gaps among investors in three different academic studies (Sinha, Dichev, and Dalbar).
A behavior gap is the gap between an investor's returns and the returns of the funds in which they're invested. Investors chronically underperform what they invest in because they overestimate their intelligence - they try to time the market, change allocations when they shouldn't, etc.
The tendency of people to "anchor" to a piece of irrelevant information when making a decision
The two inner circles are the same size, but the way in which they're framed distorts their perceived size
People who only seek out information that confirms their existing viewpoint
Leaving investing decisions to systematic models is a way to overcome our behavioral biases. A study conducted in 2000 compared the decision making abilities of simple models against human experts. Some example scenarios included doctors estimating a medical diagnosis, university professors guessing which applicants would be admitted, and CEOs placing a probability of a business failing.
In each scenario a human expert (doctor, professor, CEO) and their forecast was compared to the forecasting output of simple model that took in pure data about the patient/student/business. Among 136 different scenarios, the overwhelming evidence shows that simple models consistently outperform the forecasting ability of human experts.3
All of Movement's models are designed by me, Adam Collins. Each custom client portfolio is rooted in momentum and value investing, two strategies proven by decades of research. In addition to investment management, we also do financial planning for clients that are interested in a more comprehensive solution.
All clients pay a flat management fee. Movement doesn't charge any commissions, performance fees, or withdrawal penalties. Clients can take advantage of daily liquidity if they need it. If you have any questions about Movement or just want to ask me a question about investing, send me an e-mail with the form below.