General Questions
  1. What is Emotomy?

    Emotomy started in 2013 as a web-based technology project managed by Dr. Patrick Beaudan. It was initially designed to help clients of Belvedere Advisors LLC easily build portfolios online and develop a better understanding of expected risks and returns by visualizing market data.

    Emotomy's technology was soon adopted by several independent financial advisors to backtest, optimize, track, and share with clients portfolios of their own proprietary investment strategies.

    Today, Emotomy is a a turn-key client-ready web-based technology dedicated to helping financial advisors build and manage their business cost-effectively.

  2. How much does Emotomy charge for its services?

    Emotomy charges financial advisors a flat minimum monthly fee as well as usage fees for specific functionalities such as trade computation, performance reporting and integration with various service providers.

  3. Is there a setup fee charged to advisory firms to use Emotomy's technology?

    There is no setup fee to use Emotomy's technology.

Custom Investment Strategies
  1. What does it mean to create a custom investment strategy?

    Emotomy's technology enables you to design your own investment strategy. You can select the stocks, mutual funds and ETFs that you wish to include in your portfolio. You can also select amongst a variety of approaches to managing your investments over time. This includes choices of how often the strategy rebalances to the asset allocation goals you have defined, and whether or not to use stop-losses to control risk for instance. You may select your investment philosophy from a number of rebalancing techniques commonly used by professional money managers. For instance you can aim to minimize volatility, or follow trends by using our momentum optimizer, or rebalance to a fixed allocation which results in buying more when prices have fallen and selling when prices have risen.

  2. How do you compute the performance statistics shown on your website for a strategy that I design?

    Emotomy has built a repository of historical market prices for each security in your strategy which is updated each day that the markets are open. The performance of your strategy is computed from the daily closing price of the securities you selected. If you or your firm have uploaded a proprietary investment strategy with monthly price data, performance statistics will be computed based on that monthly data. Our calculation engine identifies the first day when market prices are available for all the securities you selected in the portfolio. It then creates a pro-forma investment account starting on that date, and computes each following day the actual value of the account using these securities' prices and applying the rebalancing and stop loss rules, if any, that you chose. The performance metrics and charts displayed on the website for your strategy are then computed by applying standard financial analysis to the daily value history of your pro-forma account.

  3. How can I track the performance of a custom strategy that I design?

    Emotomy has built replication technology that is available to you for free. After creating your custom strategy, you may save it by opening an online account with Emotomy. This is not a brokerage account, and not an account that holds critical personal information. It is simply an account that enables Emotomy to save the parameters that define your strategy, and to send you a regular email with updated performance information. If and when you eventually invest money in your strategy, you can use that same online account to track the actual positions and values in your brokerage account.

  4. How does Emotomy rebalance custom strategies?

    Emotomy's financial engines offer several techniques you may choose from to manage your portfolio. Once you invest with a strategy you created, Emotomy will automatically trade your brokerage account for you and follow the portfolio management rules you selected. Each of these rules involves two components. The first is to select how often the strategy rebalances its holdings. Choices range from rebalancing daily to rebalancing at intervals of several years. The second is to select the financial metrics the strategy uses to recalculate its target asset allocation. The available choices are as follows.

    1. Reset to initial weights:

      This technique consists in assigning to each security the initial weight that was selected as part of the initial asset allocation. The implication of this approach is that the strategy puts more money to work with securities that lose value, and sells off securities that have appreciated. While this approach can be characterized as 'Buy Low and Sell High', profitability hinges on how long an investor hold securities before rebalancing, and whether an investor has sufficient confidence and patience to stay with the strategy when market reversals occur.

    2. Minimize volatility:

      When using this approach, Emotomy's financial engines calculate the volatility of each security held in the portfolio. By default, volatility is computed based on the daily closing price of each security over the previous six months. When rebalancing the portfolio, securities with the highest volatility receive the smallest amount of capital. Conversely those with the lowest volatility receive the largest allocation. It is important to realize that unlike when rebalancing to fixed weights, the asset allocation selected at inception of the strategy does not influence the asset allocation going forward.

    3. Optimize momentum:

      Our momentum optimizer works from the price momentum, i.e. the profitability, of each security held in the portfolio. By default, momentum is computed based on the daily closing price of each security over the previous six months. When rebalancing the portfolio, unprofitable securities are removed from the portfolio. The remaining securities receive an allocation of capital proportional to their contribution to the total momentum of the strategy. One consequence of this approach is that the number of securities held in the portfolio will vary over time depending on market conditions. For instance in periods when all the securities selected for the strategy are losing value, the strategy will be 100 percent in cash. Conversely when all securities are profitable each one receives capital, which intrinsically diversifies investment risk.

    4. Buy and hold:

      In this approach, the portfolio is never rebalanced. Emotomy's financial engines use the selected initial asset allocation for each security in the portfolio to calculate the value of the strategy over time as security prices change.

  5. How does Emotomy extend the track record of listed securities?

    Track record extensions are intended to provide sensible, longer time histories for specific securities such as ETFs that may have a short track record. A number of ETFs track well-defined market indices, or prices of commodities for instance that are available independently from that ETF. In these cases, it is possible to evaluate what the price history of the ETF would have been, on a pro-forma basis, prior to its actual market inception date. The Chief Investment Officer of each of Emotomy's clients makes the determination of which security to extend and what other security, index or market instrument to use for such extension. Once a security is selected for extension, Emotomy's financial engines automatically create a synthetic security that smoothly and seamlessly combines the track-record of that security with that of its extension. This synthetic security is then used to construct all strategies that employ the original security. Should you have any question regarding extensions of track record, please contact your firm's investment office.

Spreadsheet Uploads
  1. What information is required in an excel spreadsheet uploaded to Emotomy's financial engines?
    1. All information must appear in the first worksheet of the spreadsheet.

    2. The top row contains the strategy name and some optional information described below:

      • First column (cell A1): Enter the strategy name using alphanumeric characters and spaces only.

      • Second column (cell B1): (Optional) Enter the ticker symbol of the benchmark for this strategy. That ticker symbol must be included in Emotomy's roster of available listed securities. The default is VTSMX, a broad U.S. stock market index fund.

      • Third column (cell C1): (Optional) Percentage of equities in the strategy (e.g., enter 30 for 30 percent). The default is 100 percent.

      • Fourth column (cell D1): (Optional) Percentage of bonds in the strategy (e.g., enter 30 for 30 percent). The default is 0.

      • Fifth column (cell E1): (Optional) Duration in years of the bond component of the strategy (e.g., enter 4.1 for 4.1 years). The default is 0.

      • Sixth column (cell F1): (Optional) Dominant asset class. Enter one of the following: Equities, Bonds, Commodities, Currencies, Real Estate, Cash, Futures, Options, Alternative, Multi Asset. The default is Equities.

      • Seventh column (cell G1): (Optional) Dominant sub-asset class (e.g., US Corporate Bonds). The default is Global Stocks.

      • Eighth column (cell H1): (Optional) Dominant economic sector (e.g., Short-term Investment Grade Bonds). The default is Global Stocks.

      • Ninth column (cell I1): (Optional) Dominant economic sub-sector. Enter one of the following: Commodities, Corporate Bonds, Currencies, Equities, Real Assets, Treasury Bonds, Yield, Managed Futures. The default is Equities.

      • tenth column (cell J1): (Optional) Dominant geographic exposure. Enter one of the following: Africa, Asia Developed, Asia Emerging, Australasia, Canada, EuroZone, Europe Emerging, Europe Ex Euro, Japan, Latin America, Middle East, Other, United Kingdom, United States. The default is Global.

    3. Starting on the second row, list dates in the first column (A2, A3 etc.) and values in the second column (B2, B3 etc.)

      • The value data may refer to market values or performance in percentages (e.g., 0.01 for 1 percent).

      • The data may represent daily or monthly time periods. Values are assumed to be at period end.

      • Dates may appear in any order and may be formatted using excel's date format or general format.

      • A minimum number of data points is required. An error message will be displayed in case your time series is too short.

    4. While the resulting price history will be saved, the file you upload is not stored on our servers.

  2. How does Emotomy handle the data that is uploaded via spreadsheets when creating custom strategies?
    1. Emotomy's financial engines automatically check the uploaded data and may adjust it where appropriate.

    2. If several prices are provided for the same date, only the first price is kept.

    3. If prices are provided for distinct days within any calendar month, the data will be treated as a daily time series.

    4. If missing dates are detected in your time series, the last known price will be assigned to each such missing date.

    5. Financial statistics are computed from the starting date of your data through our financial engines' current most recent date of 2022-05-13.

    6. Emotomy's financial engines automatically detect whether the input data is daily or monthly. Financial statistics are then computed on the same basis as the input data's frequency. For instance statistics on monthly data are computed using month-end values, while statistics on daily data are computed using day-end values.

    7. Data prior to 1993-01-29 and after 2022-05-13 is ignored.

    8. All uploaded data will be normalized into a price history that starts at 1000.

    9. If your data is a monthly time series, time-history graphes will be based on data interpolated from monthly prices. The resulting smooth appearance of the graphes is an intentional by-product of that interpolation. It does not affect the financial statistics of the strategy.

    10. If a custom portfolio includes securities with both daily and monthly prices, or just one monthly-priced security that is to be traded according to a specified asset allocation rule other than buy-and-hold (e.g., by incorporating stop losses), the portfolio will be constructed using daily interpolations of each monthly price series. Emotomy uses cubic splines for all its interpolation calculations.