User:Peteragregory/sandbox

The Bloodhound System
The Bloodhound System is an architecture for equity investment and portfolio management. It is based on investment by following a rules-based strategy to add discipline and confidence at all levels of proficiency. Integrated and systematic, it utilizes Fundamental and Technical tools, simulation and database technology.

The investment environment that it creates is applicable to medium to long term equity investors, and is not intended for options or ‘day-traders’.

The Bloodhound System architecture comprises:
 * A user interface that defines the rules that comprise an investment strategy.
 * A market-wide historical database of daily Fundamental and Technical information.
 * A simulator that evaluates the consequences of following a strategy over time.
 * A research database of evaluated strategies with their results.
 * A portfolio creation and management system that facilitates the creation and management of portfolios based on a strategy.

Strategies
Strategies are fundamental to The Bloodhound System architecture. They comprise:
 * Screening rules. By expressing the user's preferences based on Fundamental parameters, and Technical and Custom analytics, strategies select candidates from the market for portfolio selection.
 * Ranking rules. These order acceptable candidates for selection into portfolios.
 * Trading rules that determine the level of investment, and the stock purchase and sale process.

The architecture makes no distinction between the execution of a strategy in the past, and the management of a portfolio going forward. Both are based entirely upon daily analysis of the state of the portfolio, the stocks in the market that are available for consideration, and on the rules of the strategy.

Stocks are selected for portfolios by applying the screening and ranking rules to stocks present in the market, at points in time determined by the trading rules. Once selected, stocks in a portfolio are analyzed, every night, using the latest closing prices and current financial data.

Simulation enables portfolios to be evaluated over many years, reflecting the performance of a consistent investment strategy to be evaluated in a wide variety of market conditions. The analysis is meticulous, based on following exactly the same investment process year after year. This requires that the company database be devoid of historical or restatement bias, and that the simulation accurately reflect dividends, splits and mergers.

Once a portfolio has been created it is managed by the same rules that were used to select it. The user has the confidence of knowing that ongoing portfolio management is consistent with the strategy that they selected after reviewing many years of past performance. Because the simulation is specified in detail, it enables exhaustive analyses to be created over time, both at the level of portfolios and individual stocks. At the micro level, individual stocks can be traced, and at the macro level, portfolio analyses include a wide range of both high-level industry-standard, and unique metrics.

Investment Strategy Selection
Investment strategy selection is crucial. Experienced investors have a range of options. They can build their own investment strategies using all of the parameters and methods available, and can create their own custom functions. In addition, The Bloodhound System architecture includes a research data base of pre-computed combinations of strategies and portfolios. These are available through a search engine that allows users to look in progressively greater detail for strategies that have specific performance, and other characteristics.

Less experienced investors have access to an available library of investment strategies that represent a range of investment styles and expectations. Several of these have been based on rules suggested by well known industry experts; the remainder have been created by using the system's own tools.

Portfolios discussed so far have been created from a strategy, but investors can also add legacy portfolios, or legacy stocks to a strategy-based portfolio. The investor can assign an investment strategy to each portfolio, against which its performance can be measured. Stock trades to be based on the recommendations of the investment strategy are notified automatically.

Other Features
The Bloodhound System architecture is open-ended to accomodate a wide range of integrated tools. These include: Stock Screen, which has the ability to set both screening and evaluation to arbitrary dates, so that the effectiveness of a screen can be seen immediately. Stock screens can be imported into strategies. LifePlan, which allows a user to ask the question “what level of return do I need to secure the lifestyle that I plan?” It includes career and housing changes, multiple forms of investment, variable costs and expenditures. The solution that LifePlan defines becomes the input to the search engine so that strategies matching the required return can be found. Research Tools, which include charting, news feeds, and tabular Fundamental data for each company in the system. This is presented in a standardized format for easy comparison; with data going back, in some cases, to 1972.

Initial Implementation
In the initial implementation of The Bloodhound System architecture, more than 1400 Fundamental values and a more than 100 Technical methods are available for investment strategy definition. Custom functions are created following the Metastock convention. The market database includes Fundamental and pricing information on more than 13,000 companies over a period of 25 years, allowing strategies to be evaluated over time and through a variety of markets.

The data currently available allows analysis from 1987, which includes six Presidential terms, Black Monday, and the market crashes of 2002 and 2008.

The research data base currently holds more than one million strategies whose performance has been evaluated in great detail over the last 25 years.

The advanced search engine allows strategies to be identified in the research data base based on portfolio size, return and risk measurements, trading parameters, screening parameters and sectors. It also allows an investor to name companies and search for strategies that currently hold these stocks. The simulator evaluates investment strategies at high speed. Investors can create an investment strategy, evaluate it, modify and re-evaluate it while their train of thought is fresh. Complex strategies are evaluated daily, over the last 25 years, in an average of 5 seconds.