About Sigma Point Capital
Sigma Point Capital was founded by Matt Kerkhoff with the goal of helping investors earn higher risk-adjusted returns by keeping their portfolios in tune with changing economic and financial market conditions.
Matt has a unique understanding of the behavior of financial markets due to his diverse and storied background. With roots in data analytics and statistical modeling, he found an early passion for equity options trading. While working in the corporate world, developing algorithms for a multi-billion dollar company (and trading options on the side), he finally recognized where he belonged – analyzing the financial markets.
The switch was not easy, but Matt was fortunate enough to land a position studying beneath Richard Russell, the legendary publisher of Dow Theory Letters. Richard watched and wrote about the stock market and economy on a daily basis for over six decades. The amount of wisdom he was able to gain, and share, is immense. Theory is one thing, but actually watching how the markets behave each and every day is another, and provides insight that few people have the opportunity to glean.
During Richard’s final years, he passed much of this knowledge, and his general approach to reading markets, on to Matt, and another colleague, Jon Strebler. Both Matt and Jon feel extremely lucky and blessed to be able to have learned first hand from such an experienced investor. Richard always considered himself a lifelong “student of the markets,” and that humble philosophy resonated with Matt, who continues to follow in those footsteps.
As time went on, Matt’s background in psychology and statistical modeling began to influence his approach to reading markets. At the same time, the field of behavioral finance was evolving dramatically and pointed toward a rather unexpected conclusion: Rather than investors always acting rationally, as was previously thought, behavioral finance suggested that investors consistently made suboptimal decisions as a result of “heuristics” or behavioral biases.
It was also discovered that these natural tendencies toward irrational behavior play out in systematic and predicable ways, and can actually be exploited for financial gain. This seemingly contradictory paradox: that behavioral biases work against us as individuals but for us in terms of predicting crowd behavior, led Matt down an unexpected path.
He joined forces with the team that eventually launched Model Investing – an investment service geared 100% towards data-driven investing, where the individual (and all tendencies toward irrational behavior) are completely removed from the decision making process.
Recognizing that there was a good chance this “algorithmic” approach to investing would outperform even his own decision making (Matt is human, after all, and subject to the same behavioral biases as everyone else), left him with a big dilemma … Should he continue to write about and analyze the markets and economy? Or should he turn everything over to computer driven analysis and continue to refine that approach?
In the end, Matt recognized that he had a true passion for studying and writing about the markets, and so he decided to straddle both sides of the fence. Sigma Point is now the outlet for Matt’s market analysis (beginning October 1st), and over the next year, the company will be formalized and begin to offer algorithmic-based investment management as well. In the meantime, those looking for portfolio management are encouraged to explore Model Investing.
Matt has written continuously about the economy and financial markets for the past five and a half years. He has published over a thousand articles across a diverse range of topics and has gained influence among a wide range of well-known investors. If you think you might benefit from his analysis and perspective, consider signing up for Sigma Point’s weekly market analysis.