We at HED examine the interplay of market forces to predict the price movement of many different assets. These forces may be the strong slow pressures that drive multi-year trends or the immediate surges of mood in the trading crowd that push prices up and down over days and weeks. Our methods are built from first principles taken from the physical sciences and use traditional logic combined with modern mathematical tools, some of which were developed by our friends at Parallax Financial Research. We concentrate on interaction, or feedback as it is sometimes known, measure the mood of the crowd as it ebbs and flows using tools of our own devising and then read the results. This is behavioral finance using science, not psychology. Our conclusions are often opposed to those of economists and our predictions are predominantly correct. Our videos explain how we predict markets and how our methods fit the more traditional ways to analyse markets.
We also predict the longer-term using related methods. In 1996 we argued that introducing a single currency for Europe would produce clear winners and losers who would find it impossible to change their performance - this at a time when the world wanted to believe that convergence in Europe would result. We now have a suggestion to cure the serious imbalances that have resulted - see 'Berlin, Brixton and Barcelona'. In 2007 we saw that the US real-estate bubble was bursting and that it would threaten the banking system, picking the top to within a month. In 2009 the same logic showed us that Germany would experience first an economic boom and then a real estate bubble of its own. None of these results came from using the arguments that are common among economists but stemmed from the thoughtful study of the forces that grow and shrink through feedback.
We publish the results here and on Bloomberg for our paying subscribers with a sample trial look for new readers. We use the same results to run trading portfolios, as shown in the fund management section. By adding some trading and risk rules, the trade entries that come from our analysis give rise to a superior hedge fund management method. This is used to advise our clients, to manage investments directly and will soon be the principal method for managing a dedicated HED fund.