Posted by & filed under Behavioral Finance, Reinventing Finance.

How do investor behavior change according to the reaction time and the investor attitude? Why a systematic analysis approach is much more efficient than a traditional analysis strategy? We are going to explain it by building a link between charting patterns, technical analysis and behavioral finance.

Let’s start with an analogy to introduce you the charting patterns and imagine a crane and all its parts: there are the main cords, the diagonals and the lattices. A big structure, made of small parts connected together, to make it solid and balanced.

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Posted by & filed under Behavioral Finance.

The last financial crisis has hit the market landscape like never before and we believe that financial calibration of models has its share of responsibility in the fueling of Boom & Bust cycles.

First things first, by “no financial calibration” we mean not changing the parameters of a model to better fit the economic context it faces.

What are the benefits? Well, we believe this is the only way to always have a stable benchmark to refer to.

Imagine what would happen if, every now and then, someone at the “Bureau International des Poids et Mesures” in Paris decides to change the length of the etalon meter: the entire metric system would crumble, and people would lose the perception of distances. One day it takes you 500 meters to walk to the baker, the next day that same distance becomes 700 meters, two years later 300, and so on.

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Posted by & filed under Behavioral Finance.

Is Buy & Hold dead? Is the market going to dive underwater? According to the behavioral finance signals the market has recently produced, we have a different view on the upcoming years.

In the last post, I wrote about the key aspects of the current situation within the Financial Industry, and why there will be a need to reinvent finance, starting from behavioral finance and innovation technology.

Now, the time has come to talk about the way we see the future.

Let’s start from a brief introduction to the market, which is made up of 3 main parts:

  1. Smart Money investors.
  2. Institutional investors.
  3. The Public.

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Posted by & filed under Reinventing Finance.

Nowadays, more and more people are talking about the necessity to make bigger efforts to clean and update the image of the whole financial industry, and reinventing finance has become a must in a highly competitive sector.

The key point that highlight this “reinventing finance” need are the following:

  • Financial industry is the last sector to have resisted the “information age”, as automation have improved efficiency without revising the old business model.
  • The present crisis is a symptom of the end of “Vertical Integration”: Financial industry will move from large corporation model to specialized suppliers, more focused on clients’ needs..
  • Investors have lost their trust in large incumbent institutions, and are now looking for high level of transparency and control.
  • New markets are showing up: Emerging economies will also consume more financial services, most probably bypassing traditional channels.
  • The huge fiscal pressure is irreversible and will eventually open an age of  “financial transparency”, so online financial services will become as common as online shopping sites like Ebay.

These are just few examples to show you the growing importance and value of companies like Quantesys, independent from large Institutions and focused on providing clients unbiased suggestions, based on proprietary technologies, through new digital solutions.

So, how can the “reinventing finance movement” grow? Well, several solution have been adopted by the innovators, giving birth to the “fintech movement”.

Finance + Innovation Technology = Fintech

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Posted by & filed under Behavioral Finance, Rethinking Finance.

Here we are, we have reached the last step in our ”finance innovation crusade” process, the one that gathers all the acquired results and combines them to give the investor the meaningful Trade Signals they crave for: the Rationale.

If you imagine the complete finance innovation process as an enterprise (let’s call it for instance “Rethink Finance Inc.”):

  • Value would be the Chief Business Development Officer.
  • Sentiment would be the Chief Financial Officer.
  • Rationale would be the CEO.

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