The Alethea Difference

1. ACTIVE MONEY MANAGEMENT

We believe in active money management, but with an unconventional approach.

Refusing to actively search for alpha guarantees mediocre returns. We believe markets are not perfectly priced, because humans are on both sides of every transaction. The predictability of human behavior creates gaps that can be exploited to extract outsized investment returns. As more investment managers automate and seek passive benchmarking strategies, their behavior becomes predictable, creating opportunities to generate alpha for our clients.

2. INVESTMENT CYCLES

We believe in active money management, but with an unconventional approach.

Cyclical behavior is present in all scientific and mathematic disciplines. Sinusoidal waves, Fibonacci patterns, and wave movement in light particles demonstrate this universality. The growth and decline of asset values is no different. We devote significant resources to taking advantage of the inherent cyclical behavior in all asset classes.

3. PROPRIETARY INDICATORS

We have our own proprietary Indicators (Asset Cycle Indicator, Risk Regime Indicator, Macroeconomic Indicator, Asset Volatility Indicator)

Fundamental, Technical, and Quantitative. We construct indicators from these three prominent investment schools of thought. When measuring the health of economies, each of these orthogonal disciplines has strengths and weaknesses. When combined, individual faults are mitigated by the other disciplines, providing top-down guidance for what to expect in major global asset classes.

4.GAME THEORY

We study Game Theory

Since all assets are purchased and sold by humans, understanding human decision-making processes is essential to predicting future price behavior. Game Theory is a fundamental school of thought that informs our investment processes to anticipate extreme public emotional swings and utilize them to our clients’ advantage. Understanding whether people should buy or sell securities is only an academic exercise; understanding whether people will buy or sell securities gives us the advantage.

5. PORTFOLIO CONSTRUCTION

We believe in Portfolio Construction vs. Individual Stock Selection.

The most valuable benefit of portfolio construction is the interaction between the individual holdings. We know that a portfolio constructed of “good” companies that interact in an uncorrelated way to produce low volatility with unmitigated return will outperform a portfolio of individually researched “great” companies. Beyond seeking high returns, mitigating risk in all business lines and investment activities is the backbone of growing assets wisely.

The Alethea difference is not singular, but a combined result of our team, our strategies, and our informed decisions that mitigate risk and seek opportunities that are undetected by others.

“The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”
~Babe Ruth

* All performance figures are net of management fees; potential negotiable performance fees, trailer fees, and custodial commissions are not taken into consideration. Performance figures include the reinvestment of dividends and other earnings. Past performance is no guarantee of future results. Indices are unmanaged and include the reinvestment of dividends and distributions but do not reflect fees, transaction costs, or other expenses of investing. Individuals cannot invest directly in an index. Alethea Capital Management, LLC (“Alethea”) began offering the Domestic Equity Fund in January 2013, and the first client investment entered the strategy in January 2015. These graphs and tables do not present actual account performance. These figures show the performance of a hypothetical portfolio of proposed investments and are not necessarily indicative of future results. Hypothetical performance is blind-tested and differs from actual performance because it is achieved through the retroactive application of the strategy with the benefit of hindsight. Results may not reflect the impact that material economic and market factors might have had on the decision-making process if investment decisions were actually being made during the blind-tested time period. Data for Large Cap Managers pulled directly from Bloomberg data. The proposed investments and their corresponding compositions are subject to change at any time and without notice. Alethea is an SEC registered investment adviser. For information pertaining to the registration status of Alethea, please contact Alethea or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). The information contained within this presentation is from sources believed to be reliable, but Alethea cannot guarantee the accuracy or completeness of such information. Additionally, the success of an investment program may be affected by general economic and market conditions such as interest rates, the availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities prices and the liquidity of a portfolio’s investments. There can be no assurance that the investment objectives will be achieved or that an investment strategy will be successful. Investors should consider the objectives, risks, and charges of an investment company carefully before investing.