Inside Our Technology
Running Alpha™ is your smarter way for seeing investment opportunities before they arrive and get noticed; helping investors be first at exploiting high-impact performance trends with confidence.
Why We Exist
Every Investor Needs a Way for Best Expressing What They Know, while having Equal Access to New Opportunities for Growth. That’s Why We Built Running Alpha.
To play a leading role in helping investors and business executives have pain-free experiences on their journey toward better decision-making.
To see ourselves as part of a story for rethinking the way we can collaborate with nature, to better exploit uncertainty, and compensate for the human condition and machine biases that get in our way of both perceiving world events in high-definition and making bold decisions with attention to detail.
Running Alpha™ is designed for helping you expand your idea-generation and build intelligent portfolios that know where the global influencers will be tuning into next.
We are your all-access pass to seeing — in all directions — the future price impact of sentiment breaking news from around the world. We expose actionable, below-the-radar alpha investment opportunities from your favorite market and trading ideas, and instantly self-organize them on a grid by strength and sustainability of forward sentiment bias.
How many times have you seen good news ignored by the market, only to watch other stocks or alternative assets that you do not own climb higher. This is precisely the problem the AlphaIdeaGrid™ — Grid 100™ and Focus 15™ — attacks head on;
so by augmenting your current knowledge of the prospects for positive corporate announcements and economic reports, you should start finding yourself pleasantly surprised by the degree to which positive events surrounding Running Alpha opportunities’ translate into highly favorable asset price performance outcomes.
To this end, Running Alpha’s actionable business intelligence is currently being successfully deployed by North American retail investors and leading boutique fund managers in the Bay Street area for narrowing the gap between discovering great ideas and making money on them.
Exclusive to Running Alpha, the Grid is powered by machine intelligence that endows it with the ability to intrinsically know what it’s like to be inside the muti-dimensional momentum and volatility perception space of both your future self and tomorrow’s versions of today’s global marketplace.
[ Imagine a giant liquid soap bottle ( the market ) in which every bubble and droplet contains particles ( individual decision-maker perceptions ) that have been encoded with the product’s manufacturing history ( security market price and volatility behavior ) — from how it was made; the order its particles ( active market players’ ) were mixed; and to what factory ( marketplace ) they were sourced and when — sort of like a digital footprint of human perceptions & machine trading activity. ]
This is what Powers the Alpha Idea Grid™.
By rendering visibility into the architecture of human perceptions that define our individual biases of market trends across all time-scales, and their relationships with the collective biases of the global decision-making audience, we are helping our clients anonymously capture insights into the movement of people and capital in world financial markets; and the reflexive impact that these organic predispositions have on the forward facing development of economic and market moving events.
This enables the Grid to apply a new category of diversification that selects component securities on the basis of reducing the overlap among their current and future perception spaces. This matters to you because when combined with your existing asset mix, it it can serve to lower your total portfolio volatility and elevate your risk-adjusted returns.
This would not be possible without disrupting the way you can access “Dark Data” — hidden insights and perceptions of the world around you, held by future versions of today’s global decision-making brain-trust.
To give you an idea of just how significant this new class of intelligence can be on your pocketbook, it is important to understand that in today’s modern markets:
Decisions to buy and sell are made by people and machines, based on filtering for news events and other fundamental and technical information that correspond with their individual perception biases of unfolding world trends; while
Prices are set by markets through matching up these orders;
So why are we still measuring the pulse of market prices, instead of
“Listening to the Beat of the Global Decision-Making Perception Audience.”
This is a big problem, because information without such human context is inherently meaningless, thereby rendering virtually all of today’s conventional strategy framework’s blind to the ambiguous nature of their hard data inputs.
The problem with placing so much emphasis on such data is compounded by the fact that the mind-space and perceptions of today’s decision-makers are actually different than those that played a leading role in creating the data we are analyzing.
To address this challenge and convert information uncertainty into meaningful intelligence that you can act on, Running Alpha’s founder, Efrem Hoffman, has invested nearly two decades combining two analytic technologies — Crowd Physics and Quantum Encryption — that have never been mixed before in just the right proportions for illuminating insights into human perceptions yet to be revealed to the world of social media and the marketplace at large.
This is a game changer because traditional media sources can only access visible data — those insights and questions that people have chosen to share with the public.
In pursuit of true north investment outcomes that shrink your emotional footprint on your P&L, Running Alpha is on a mission to leverage these insights for helping you decipher when markets will be climbing the great “wall of worry” or descending a steep “slope of hope.”
To this end, Running Alpha’s insights-building platform has been applied successfully for helping private equity investors and financial & commodity market traders thrive into today’s marketplace, and better navigate around market noise and volatility storms — erupting in the Energy, Currency, and Global Equity Markets.
To give you a glimpse of what it’s like to see through Running Alpha’s window into the future, here are a few epic watershed events that matched up squarely with our actionable research guidance.
These include the anticipated magnitude and duration of market activity surrounding the 2008 Mortgage Meltdown, the May 2010 Flash Crash, and recent Crude Oil Crash and US Dollar Meltup; all identified week’s to month’s in advance with high specificity —
revealing early insights that plugged our clients into the quiet and subtle moments of decision-making leading up to crisis and opportunity during these fearful and greedy episodes of mass panic and mania.
What is most actionable about this intelligence is that this new class of insights are discoverable before asset prices initiate their descent / rally from market peaks / troughs; and even before smart money influencers start expressing unusual patterns of trade activity.
That means, as a subscriber, you will find a large percentage of highly ranked security components on the Grid simultaneously making frequent and persistent appearances on the top performers and unusually active list — across multiple time scales from intra-day, daily, weekly and monthly investment horizons. At the epicenter of Merger and Acquisition ( M&A ) activity, on many occasions, these opportunities turn into successful take-out candidates with premium valuation recognition.
The technology is also being deployed for exploiting information inefficiencies that arise when agencies and market participants do not accurately factor in the potential collateral damage that inappropriate timing of IPO releases, corporate, financial, and economic announcements have on the forward sentiment structure of market prices and social media activity.
By anonymously filtering for investment opportunities with sentiment and perception dynamics that are not only insensitive to future timing windows of such information releases, but also designed to enhance the favorable price impact of positive news flow,
Running Alpha also shrinks your digital foot-print and time-to-action for turning your favorite ideas into Alpha faster.
By studying markets as human and machine networks of disparate ecology, and combining this rich structure with conventional fields of visible data, Running Alpha is opening new ground for economic and financial decision-making, that makes better sense of the context of the world around us, and how you can better prepare for fast and disruptive change in today’s complex competitive business and financial market environment.
How Do We Do It?
Standard theory misguides us into falsely assuming that manias — episodes of rapidly rising prices — are caused by excessively bullish optimism and “irrational exuberance”; but under closer examination, over 80 years of modern stock market history tells us otherwise.
Running Alpha researches have uncovered a blind spot in our measurement of market momentum that gets in the way of seeing how specific outbursts of pessimism and downside volatility are actually the root sources that uniquely tune our perception fields of market trends — across a wide range of historic time-lines ( look-back intervals ); in such ways that:
When these perceptions collide in the market-place, their sum non-linear bias tends toward persistent periods of positive sentiment — ultimately driving capital inflows and higher prices. The opposite applies during bear markets.
To help you visualize how this can all play out, imagine yourself at a political demonstration surrounded by a large crowd of tens of thousands of protesters in what starts out to be a peaceful procession, much like the orderly sequence of a one way trend. Now all of a sudden, a riot erupts, seemingly out of the blue, as people start getting pushed around aggressively and trampled on.
You would think that it was either the actions of unorganized mobs that instigated the aggression; and/or stampeding herds of tightly packed pedestrians trying to escape the congestion by intentionally forcing themselves through the crowd as it thickens.
What you might be surprised to learn is that new scientific investigations into the dynamics of crowds show that it’s not atypical for none of these “usual suspects” to factor into these disruptive actions, but rather, there are special situations whereby if the people are clustered into certain pockets of arrangement, with just the right time delay and sequencing of movement, the toppling effect and stampede-like response can start resonating throughout the mass of people and get amplified over time.
These configurations often do not occur in the presence of any one or combination of individuals orchestrating the movement, and cannot be revealed by simply assuming that humans behave as sets of repulsive particles, that tend to move out of the way with increasing momentum when surrounding patrons are getting “too close” for comfort”;
but rather are predisposed by the way humans are hard-wired to avoid collisions, particularly by anticipating when the velocity and trajectory patterns of neighboring bodies pose a clear and present danger.
The study of these dynamic processes of self-organizing behavior and turbulent flow is known as Crowd-Physics, and has relevant applications across all scales of trend observation, for charting out the migration patterns of financial market participants.
Building on the founder’s patented Big-Data Analytics technology ( Patent # : 6,278,799 and 6,035,057 ), and over 18 years of thought-leadership in Hunting Down the “Architecture of time” — and the human-machine perceptions that live inside its boundaries — we can now identify previously unseen tipping points between ordinary events and unusually extreme outcomes.
Running Alpha’s Grid 100™ and Focus 15™ are the first Sentiment-Aware Portfolio Heat Grids™ that are plugged into the physics of how these financial measurement observations are made, and interact in hyper-real-time among the wide-ranging perspectives of future versions of today’s global decision-making audience — both human and machine.
We call this Crowd-Physics 2.0.
To give you an idea of how this scientific framework parallels in the financial markets, you need not look further than to situations where investors start feeling threatened — when they start anticipating that critical prices levels are at risk to getting violated or too close for comfort; they stand aside and wait for weaker hands to temporarily drive down prices to levels that are deemed attractive from either a valuation basis or supply and demand perspective. Because every group of investors have the freedom to apply a different set of observation viewing scales for making critical judgments of when these perceptions collide, it’s paramount to cast as wide a net as possible, by simultaneously accounting for how each group of decision-makers will be perceiving changes in sentiment momentum.
Tractability constraints of mainstream analytics simply forces current decision-making practices to aggregate and compress these potential points of view onto singular price-event time series axes;
thereby, not only blinding us to how diversity and network interconnections among market participants play a key role in decision-making outcomes, but also making a statement that the context of:
“How Decision-Makers Disagree on Value for Arriving at an Agreement on Price” doesn’t matter. It does.
You may be asking yourself, “Why should this Matter To Me?”
It matters because it elevates your game from responding to what people have already reacted to in the marketplace and talked about in the social-sphere, to how both people and machines are going be perceiving, interpreting, and working in concert for putting new spins on upcoming news events and social buzz, that are driving tomorrow’s most relevant trends.
No other sentiment intelligence sources available today have yet addressed how the torrents of emotional expression, residing in today’s social-data stream, can be put to work for accurately and unambiguously seeing when “good news will be “descending a slope of hope,” and when “bad news will be climbing a wall of worry.”
At best, standard models, such as Monte Carlo Simulations and Random Matrix Analysis are still limited to drawing statistical correlations between future stock returns and combinatorial sequences in historical patterns of social mood, embedded within tweets and blog messages, and other digital sources. This only speaks to one-side of the sentiment equation.
What they fail to address is how the changing ecology and non-linear context of market player interactions, playing out each trading day, comes to bear on the way current events and social-media chatter get perceived and interpreted in the marketplace and greater public arena.
They are designed for optimizing performance by either over-fitting or over-generalizing data from a finite universe of past outcomes, instead of capturing the underlying symbiotic relationships among decision-maker perceptions and marketplace reactions to current and forward-facing exogenous events.
It’s not just these types of sentiment modeling that fall short on these counts, but virtually every technical, behavioral, and fundamental indicator ever created runs into these bottlenecks. That’s because the sources of their inputs are all founded on two recurring errors in logic, namely:
(i) guestimating how rational minded and behaviorally biased people would be expected to respond to positive or negative events, without taking into account how the individual perceptions of traders, observing trends on different time horizons, could braid together in highly complex, dynamic, and counter-intuitive ways to produce responses that no one group of decision-makers would be expected to make on their own or even in the midst of a crowd; and
(ii) falsely assuming that outputs of hindsight — events that have already occurred — can be interchanged with inputs for mining meaningful patterns of change from price, volatility, and social sentiment behaviors.
Without knowing the root cause of why these output patterns present themselves, our judgments are being distorted by how standard models are measuring and perceiving time-delayed changes in momentum from dis-jointed perspectives.
Rising above these challenges, Running Alpha’s Sentiment Heat Maps do all the heavy lifting in working out the physics surrounding the interactions of these inseparable perceptions of market trends; foremost by accounting for the how the measurement biases inherent in our current paradigms are inconspicuously interfering with:
(i) the way the global investing audience are observing momentum change; and
(ii) the presumed role that group-think and animal spirits play in turning rational-minded and independent thinking decision-makers into irrational speculators.
Our research and history of market calls indicate that the most profitable opportunities arise when it appears as though these phenomena are causing outbreaks of irrational excess;
where in reality they are born out of the resonance of supply and demand pressures of independent market players, often acting out in error based on what history has fooled them into believing is trustworthy, namely,
measurement observation mirages and skewed perceptions of world events around them, caused by not seeing how other market players, similarly acting out on their perceptions, are constantly creating illusive states of feedback; thereby altering the expected path of the initially observed trend, and ultimately eroding the psyche of the trader, as they begin to call into question what they know, believe, and trust.
(iii) the causal chain of market contagion; although there are times when: (a) investment charter mandates on sector/position limits calls for automatic portfolio rebalancing; (b) market regulatory mechanisms, such as forced margin call liquidations; or (c) even failures of prime brokers unleash a blizzard of order flow in a singular direction, there are countless other instances, where the internal demand factors play a more prominent role in buffering the specific portfolio elements from the otherwise capricious effects of contagion. Wouldn’t it be great to know which of your portfolio components and those among the equity universe would offer the safest harbor against such disturbances?
Without demanding a framework for seeing the world in a way that pierces the veil of “Why the Context of What We See Matters,” the wisdom of markets and natural sciences will never expose the truth that the light of apparent reason ( ephemoral patterns ) that lands on our eyes is not only inherently meaningless, no matter how fast our processing power or large our data-centers, but also disruptive on all three counts above.
What makes Running Alpha different boils down to three elements, namely that:
(i) Over years of research & development, the Founder built a framework that directly answers this need from the ground up; applying these principle each trading day to guide his own actions as well as those of his clients in markets and business life;
(ii) We don’t abhor uncertainty; We embrace it by constructing portfolios’ that are designed to respond most favorably in aggregate to random external event triggers, regardless of their novelty or the context of their current market regime — i.e. even when exposed to periods of market correlation breakdown — where virtually all sectors move in lockstep; and traditional diversification practices do not work to protect your portfolio assets. That does not preclude Running Alpha from identifying idiosyncratic endogenous factors in the network structure of human-machine perceptions, to reveal special instances, wherein the market has the effect of amplifying positive news events, while at the same time attenuating the impact of negative external triggers.
Why It Works?
(iii) Unlike most opportunistic arb models that have short half-lives for profit-making, Running Alpha’s framework of logic is virtually one of the few exhibiting exploitable market inefficiencies that cannot be arbitraged away, even with knowledge of position-level transparency. That is because, unlike alternative arbitrage opportunities, which disappear when explicit rules of thumb ( heuristics ) or patterns of output events, such as observed price, volatility and/or sentiment, are discovered,
Our research framework is based on a new foundation of meta-logic and higher-order gauge geometry that cannot be extracted from the vantage point of a specific market view or set of observable market sentiment patterns, without proprietary knowledge of the physics ( residing outside of our pattern-seeking minds and the market tape, and inside our measurement devices, and the inherent logical ambiguities and incongruencies of their standard observation ) that underlie the bending of our collective perceptions toward the market reality.
That’s why we are so confident that Your Alpha Advantage is sustainable in all market environments.
The Alpha Idea Grid™ ( the Grid 100™ and Focus 15™ ) raises the bar in leveraging Predictive Analytics and Mathematical Gaming Strategies for re-claiming your vision of these otherwise invisible biases and recurring arbitrage opportunities, so that you can:
(i) Start Capitalizing on Market Uncertainty, while Managing your Expectations with Peace of Mind; and
(ii) Start Maximizing Your Efficiency of Capital by Accessing a Level of Market Timing Insights Not Found Anywhere Else.
What makes Running Alpha’s insights most unique is that unlike many of our industry peers that focus on timing the market — i.e. getting the timing of entry/exit events right occasionally, or even the general magnitude of the overall trend, we fine-tune our intelligence for consistently timing, with high specificity, the dynamic roles that market participants will be playing during a given inning of the forward trend.
This distinction alone is important because it redefines what timing the dynamics of the market can do for you, namely, telling you just how fast and persistent the unfolding of events can play out; thereby:
Transporting you in front of the line, so you no longer have to be kept waiting for an order to fill when the train has already left the station;
Allowing you to stop missing opportunities; avoiding frustration; and preserving your confidence, energy, time, and money for making bold decisions.
In concrete terms, What Does this Mean To Your Pocketbook?
It means that if you followed just one of our market intelligence calls on September 12th, 2014, you would have had early insight into the magnitude, velocity, and uninterrupted one way descent of Crude Oil, starting from October 7th, 2014 into the week of January 16th, 2015, where it’s price started falling off a cliff from near $90, before leveling off into our expected interim target near the mid $40s.
While the frequency of such events in a given market are somewhat unevenly distributed, Running Alpha is especially committed to searching the world over for regularly putting you in front of the next great investment opportunities, among the thousands of US and International companies, exhibiting similar characteristics of big, fast and sustainable trends.
Armed with this breadth of information, you will be better prepared on three fronts, namely, knowing when it’s time for:
(i) putting together your investment shopping list;
(ii) adjusting your conviction levels and portfolio weightings in a given industry, or company; and
(iii) shifting to/from an active-aggressive management style to simply a passive buy-and-accumulate approach.
In plain English, here is How We Do It in Steps, Least Traveled:
First by Anonymously Tracking the Movement of Capital, Ideas, and Emotions across Global Financial Markets; and then
Displaying Future Hot-Zones Of Sentiment Perception Insights that Underlie Decision-Making of the Market Influencers;
the ways they will be Interpreting and Reacting to News Events, and Shaping Social and Consumer Trends.
Rather than trading on past outcomes and news events, Running Alpha takes a giant leap forward beyond rear-view thinking, and differentiates itself by simultaneously exploiting two unique properties that are constant among markets, geographic regions, time-horizons, economic cycles, and across the evolution of trading exchange instruments, infrastructure technology, and the regulatory climate:
(i) Digital and emotional footprints left in the wake of previous transactions and attendant volatility events, to go to where people will be before their future perceptions of the marketplace tell them to go there; and
(ii) Special market state transition switches ( Self-Organizing Tipping Points ) in the Sentiment Perception of the Investor Universe, that allow you to benefit from unknown variables and market news-flow uncertainty; thereby helping you protect your portfolio even as you act on these windows of opportunity.
At the core of Running Alpha’s Idea-Grid is a powerful new class of Heat Map Technology that embraces these benefits, and offers you a smarter way for Expressing, Prioritizing, & Intuitively Displaying High-Impact Alpha Ideas with Confidence, Precision, and Speed.
Navigating around hidden vulnerabilities from among the 6700+ equities in the Wilshire Total Market Index, including Global Companies and ETFs listed on the deeply liquid US Exchanges, the Grid 100™ short-lists and illuminates the Next 100 Biggest and Brightest Trading and Investment Ideas, that are in the pipeline for being ignited by future hot zones of sentiment activity.
There are regularly from 300 to 400 high-grade opportunities that make the cut annually, with a minimum of 100 high-conviction names in our active universe at any given time. What our clients find most interesting is that even when broad market sentiment turns down during bear market intervals, the capital flows into these opportunities get more pronounced; particularly so as the investor community starts taking notice of the oasis of green among the rising sea of red. When more money starts funneling into fewer and fewer names, market demand begins outstripping supply, and prices rise more rapidly. To accommodate investing even during the darkest hours of market turmoil — like the eve of the Lehman Brothers Collapse and the Flash Crash of 2010 — the founder’s sentiment perception technology, that is now at the heart of the Heat Grid, has been re-formulated to make it easy for you to seek safe harbor in these green-light havens.
Unlike most investment analysts and fund managers that typically have at most 5 to 10 great ideas dominating their portfolio performance, Running Alpha sources its 100+ active opportunities from among the most promising, undiscovered, and overlooked investment themed motifs and industry groups, that show not only the strongest signs of upcoming capital flows at the early stages of sustainable business spending cycles, but also emerging social sentiment built around them for the duration of the portfolio opportunity window. This allows for large AuM capacity to be built at strategic price levels over considerable periods of time, and removes the risk of offsetting the contribution of a few great ideas with a large number of mediocre performers.
As elaborated below, these benefits are a result of a unique source of Alpha intelligence that is not currently available in the wealth management industry.
Inside the Idea-Grid is a powerful Predictive Analytics Engine, founded on Patented Machine Intelligence; serving as a precision-crafted time-piece that not only wakes you up when it’s prime-time for making critical decisions, but is also calibrated for telling history from the perspective of tomorrow’s versions of today’s decision-makers.
To implement these functions, we created a Heat Map for classifying and color-coding opportunities across 4 Sentiment Dimensions — (i) Magnitude (ii) Intensity, (iii) Leadership Momentum, and (iv) Sustainability of Positive Sentiment Dynamics; formulated for telling you when the forward impact of future News-Flow — both scheduled announcements and unexpected events — is most likely to be tilted in your favor through synchronized volatility feed-back cycles of social, consumer, corporate purchasing, and M&A Activity trends.
In plain English, for each featured equity, the colors’ lighting up on the Heat Grid doesn’t just show you what investors are going to be looking at before they arrive at their conclusions in the future, but also when and to what degree “bad news will be climbing a wall of worry and “good news will be descending a slope of hope.” We are not just talking about short term investor biases to one-off news events, but sustainable widespread investor reactions to new-flow that supports longer-term sentiment trends.
This innovation also has huge implications for transforming the way digital media enterprises anonymously capture consumer interest trends — without infringing on personal privacy rights — for helping companies sell more “stuff” in a targeted way.
For further details, you are welcome to review some of our recent article posts on the Founder’s LinkedIn Profile or by linking directly to: Is Your Investment Strategy Smarter Than Mother Nature; Start Mapping Out the 2015 Sentiment Jet Stream; and Future-Sourcing Perceptions’ of Tomorrow’s Versions of Today’s Global Decision-Making Influencers.’
By employing these time-relevant insights, Running Alpha™ has engineered a new Equity Valuation Framework that can anonymously measure and display human and algorithmic perceptions of market momentum and volatility from the context of their forward-looking versions of reality. This enables Running Alpha to Precast the emotional response to momentum changes in decision-maker sentiment biases across multiple information channels and investment time-lines, before actualized as transactions in the open market; thereby, telegraphing when upcoming perceptions of market opportunities and capital flows will get absorbed, broadcast, and amplified in your favor through the marketplace.
We hope that with our company, we can play a leading role in helping investors and business executives have pain-free experiences on their journey toward better decision-making;
We really want to see ourselves as part of a story for rethinking the way we can collaborate with nature, to better exploit uncertainty, and compensate for the human condition and machine biases that get in our way of both perceiving world events in high-definition and making bold decisions with attention to detail.