Quantitative Research

The Smart Profits Report: Issue #161
Friday, November 19, 2004

Quantitative Research - An Interview with Dean Albrecht
By Karim Rahemtulla
Investment Director, Mt. Vernon Research

What’s in a word? When the word is Quant, the answer is profits! Lots of them and consistently.

In the coming weeks, months and years you will be seeing a new name in your e-mail and regular mailbox. The name is Dean Albrecht. Dean is the newest addition to the fold, and I look forward to introducing him to you.

Dean is a Quant. No, not some exotic animal, but a rare find nonetheless.

Quants don’t believe in fundamentals, technicals or “good” stories. They focus on numbers and quantitative research. They take numbers and they input them into a computer loaded up with proprietary algorithms, which then spit out buys and sells for stocks and options.

A True Rain Man of the Markets

They are the “Rain Men” of the market. Dean has developed a very successful set of formulas that he uses to do short-term trading.

Among his current clients, he counts major institutional investors, hedge funds and some brokerage firms - a pretty nice roster of clients willing to pay well for his recommendations. Currently, Dean is managing director of Quantitative Equity Research.

As a result of my relationship with Dean, I have finally convinced him to join me in the writing business and make his talents available to our readers. I can’t wait for the results.

One of my goals is to have a monthly newsletter that covers alternative investments like options, ETFs, futures and more - from every angle. I want fundamental analysis, technical analysis and quantitative analysis in the same boat.

Come next year, we will be launching such a letter, with myself, Mt. Vernon Research Team and Dean Albrecht as co-editors. I can’t wait!

Quantitatitve Research Q&A With Dean Albrecht

For now, I want you to get to know Dean (Mt. Vernon Research has already been contributing regularly to this report). He will be writing some Smart Option reports for us over the next few weeks. But first, here is an introduction to Dean… I sat down and asked him some questions that will help you get acquainted with both the man and his very profitable methods…

Karim: Can you give us more insights into your background?

Dean: My experience in the financial industry goes back to 1992, when I started my investment management career under famed investor and now multi-billionaire and Global Forbes 400 member, Michael Lee Chin. I worked under Lee Chin’s tutelage for more than two years, and I then moved on to working with and consulting to financial and investment professionals in the stock, option, futures and commodity arenas throughout North America.

Karim: I know of Lee Chin, a real legend, as you say. What did you do next?

Dean: After hanging up my consulting cleats, I then took over the helm and ran one of the most successful high technology financial research firms in North America. While president and CEO of that firm we were named one of the top 100 fastest growing privately held companies in America in Inc Magazine, as well as one of the fastest growing public or privately held high technology firms in North America.

Karim: Then you branched out and launched your own venture, correct?

Dean: Exactly. I founded Quantitative Equity Research in 2002. I created the firm to serve institutional clients in the Quant Research and Algorithm development area. In fact, for the last two years our clients have been exclusively hedge funds, broker dealers, independent financial professionals and sell side trade desks of boutique high-end broker dealers. We now offer institutional-quality Quantitative Equity Research, which we’ll be bringing to Smart Profits readers.

Karim: Give us some examples…

Dean: First, my background, along with finance, has been in professional sports. Pro football, to be exact. No, I didn’t play pro but I was brought up inside the game from day one, and when I say day one, I mean day one. My first word was not Mama, or Dada. It was “WIN,” and I take this same attitude into the trading room and investing arena. No joke. This drove my mother nuts but put a huge smile on my father’s face - at the time of my birth he was with the Dallas Cowboys.

Karim: So did you work in the NFL in some capacity?

Dean: I did. In the ensuing years I became one of the youngest scouts in the game, traveling around the country with my father to scout both pro and college football games, searching for the next superstar or diamond in the rough at the age of 10. One could say that my research, albeit sports-based research, started at a very young age. As I grew older I continued my pursuits in the pro sports arena. And as a freshman in college I started a pro sports representation agency and signed more than 17 clients in my first year.

Karim: Tell us a little more about your quant background…

Dean: Although we are quant researchers and developers of proprietary indicators, expect sports-based and winning-based analogies in our writing. We have been told by many that it gets our point across. Don’t be intimidated by the word quant, either. Our methodologies and strategies are complex, yet we break them down to be quite simple, easy to understand, actionable and most importantly, profitable. We don’t talk about the thousands of lines of code that make up our filter and search and identification algorithms. But from it, we provide specific entry and exit points on options, stocks and a variety of other equity instruments.

Karim: One secret I’ve told me readers is: Have a system. You share that belief… What do you think makes your system work?

Dean: The true test of a robust system or strategy is to see if it works well on multiple instruments, on multiple markets, on multiple time frames. Our indicator does just that. Our research associates have backgrounds in equity research, systems and software development, control systems engineering and trading. We have research associates who are long on experience in testing, trading-system development and quantitative analysis. Our methods provide significant analytical advantages in today’s equity markets to the financial professional and are based on a simple yet proven methodology.

Karim: Thanks, Dean… This was a good introduction… We’ll look forward to your coming insights.

Good Trading,

Karim Rahemtulla