At ICM, we believe in a disciplined and systematic approach to investing.  Systematic investing is the implementation of a rules-based portfolio management strategy that has been developed through methodical study and rigorous testing.

A systematic approach

The commitment to a systematic approach eliminates emotion, bias and subjectivity from the investment decision-making process.

Systematic investors are typically more disciplined in following the rules of their strategy than discretionary investors.  Discretionary investors employ general rules or guidelines for deciding which investments to buy or sell.  But they often fail to adhere to those rules consistently and their performance often suffers as a result.

Replacing emotion with discipline

Despite their best intentions, investors often make decisions based on emotion.  Two of the most powerful emotions that drive markets are fear and greed.  Greed drives investors to chase the latest craze and fear pushes them to sell after experiencing losses, which means they often buy at the top and sell at the bottom.

One solution to avoid letting emotions guide your investment decisions is to follow a set of rules when evaluating whether to buy or sell a security.  The discipline of following the rules reduces the role that emotion plays in the decision-making process – a strategy that will separate you from the majority of investors and improve your chances of outperforming.