Courses and Webinars
Risk Management is a paradigm shift from traditional investment thinking, with a proven track record. It is helpful to have access to educational resources in order to fully understand the concepts and power of allocating Risk rather than allocating Assets.
Ferrell Capital Management's Chief Investment Officer William G. Ferrell has published numerous articles on portfolio performance optimization. Bill also speaks before major investment firms on ETFs, risk allocation/management and related topics.
Ferrell Capital Management's educational outreach is now accessible online.
The first of a series of webinars on the theoretical basis of the CONCERT funds is now online at Global Risk Academy.
- From Asset Allocation to Risk Allocation provides a conceptual overview of Risk, as well as considerable detail about the application of this to the financial, statistical and computational realization of the CONCERT funds.
Informative Review of William G. Ferrell’s Webinar From Asset Allocation to Risk Allocation
by Mr. Peter Pierce, President of Atlantic Venture Management, Inc.
My key takeaways from this course were the following:
Overall, this course teaches those with allocation responsibilities how risk should be the primary driver in the allocation process, not potential returns or diversification for the sake of diversification. It provides the analytical framework using widely accepted quantitative tools to make better allocation decisions. In addition, it highlights the fact that the character of the market is constantly changing and static allocations offer the potential for greater loss of capital.
Some specific points made in this course are:
First, whoever views this course must have the authority to make allocation decisions and be willing to move to the sidelines (cash) during financial turmoil. The content of the course clearly demonstrates that cash can be an advantageous position when the character of the market has turned negative. At the same time, the course correctly captures the opportunity costs associated with premature defensive positioning. Both of these points are based on proven, quantitative tools in everyone’s analytical tool kit.
Specifically, these tools are correlation, volatility, pace of change, and a different way of thinking about returns in risk adjusted terms by including the Sharpe ratio and the marginal Sharpe ratio when it comes to portfolio allocation driven by risk assessment. It is critical to understand how to use not only correlation analysis, volatility analysis, and marginal Sharpe in assessing expected behavior, but also how they can be used in concert with one another to improve the allocation decision making process. This type of analysis clearly helps not only with the decisions related to defensive posturing, but also with the decision regarding when to once again become more aggressive (less defensive) in one’s allocations to various asset classes.
By understanding that quantitative assessment of risk is the language of allocation and that the market is not a static environment, one can go a long way toward improving allocation decisions and beating their benchmark.
In summary, leveraging his extensive experience and willingness to think dynamically about market behavior, Mr. Ferrell has identified a better way to use existing quantitative tools in concert with one another to improve the allocation process and related returns.
About Mr. Pierce:
Mr. Peter Pierce is President of Atlantic Venture Management, Inc. This research firm's focus is creating tools to help asset managers generate superior risk adjust returns using predictive analytics. The underlying assumption for their work is that the stock market is predictable and they have more than a decade of data that supports that assumption. Software tools range from individual stock selection to overall market direction. Mr. Pierce has published a weekly market related newsletter focused on forecasting trend in U.S. equity markets and investment environment since August 2000. The letter warned of the Dotcom bubble in 2001 and the financial crisis in 2007-2008. In addition, correctly forecast emergence of social unrest across the globe beginning in 2005 as well as correctly forecasting the European debt issues beginning in Greece. Company specific forecast included bankruptcy of Bear Stearns and General Motors.
Currently Mr. Pierce is working with Craig Schulenberg on refining stock market predictive analytic tools developed by Craig Schulenberg , a world expert in software development. The Schulenberg systematic approach which utilizes predictive analytics, offers proof that the stock market and individual components of the market are in fact predictable Since partnering with Mr. Schulenberg, Mr. Pierce has worked to improve the interpretation of the model's output to better balance risk and return.
Craig Schulenberg has been dealing with ‘big data’ for decades, long before it became a fashionable buzzword. The model was created on his own time as he viewed deciphering the code of the stock market as a challenge and the underlying assumption is that if one can understand the code of the market, one can better predict its movement, a notion that is now supported by more than a decade of data. The creation process was a scientifically rigorous one utilizing proven scientific principles and superior pattern recognition.
Mr. Pierce has an MBA from Northwestern University. Mr. Schulenberg has a B.S Math/Physics from the University of California, Berkeley, and an M.S. in Computer Science and Math from the University of Houston.
About Atlantic Venture Management, Inc.
This research firm's focus is creating tools to help asset managers generate superior risk adjust returns using predictive analytics. The underlying assumption for their work is that the stock market is predictable and they have more than a decade of data that supports that assumption. Software tools range from individual stock selection to overall market direction.