– Warren Pies, Oil: What story do you tell yourself?
At 3Fourteen Research, we combine expert qualitative insights with true quantitative discipline. Curiosity drives our hypotheses, but data and quantitative rigor keep us grounded.
Our Guiding Principles
We begin with a broad macro viewpoint and methodically work down to actionable recommendations.
The future will not resemble the past
Most analysis and backtests rely on the same ~40 years of market data (1980-2020). During this period interest rates plummeted (12% to <1% 10YR), oil consumption exploded (+60%), and the 60/40 portfolio produced consistent returns. We question whether the next 40 years can replicate this performance and build this into our modeling process (i.e. out-of-sample testing).
Models tested out-of-sample
Our core models are built by training and validating results over out-of-sample test periods. This methodology ensures that our models are not over-fit to a set of historic conditions that are unlikely to occur in the future (i.e. avoid over-fitting).
No matter our initial hypothesis, we test it against objective data.
Pricing & positioning are key to risk management
While we build conviction with fundamentals, we manage risk with technicals. No matter what we believe a market should be doing, we respect price action and use it to create risk management parameters.
In markets, there are no absolutes...only probabilities
As investors, we deal in probabilities. Our views and models are constructed with this reality in mind.