AJ Giannone, CFA, Chief Investment Officer at Allio Finance, joins us to discuss modern macro investing and how to best navigate the uncertainty of today’s financial landscape. The answer lies not just in investment philosophy, but also in the tools that support it.
In the aftermath of the post-financial crisis, the investment landscape experienced a profound transformation, created in part by the US Federal Reserve, that experts believe created a “buy the dip” mentality. AJ Giannone, CFA, Chief Investment Officer at Allio, emphasizes how this mindset led to the popular belief that risk could always be leveraged.
Giannone explains, “There was an entire generation of investors who were brought into the industry with the lesson that taking as much risk as possible poses no threat.” The notion of permanent capital loss was essentially dismissed, fostering a culture where one could “ride the investment tide and ‘buy the dip’ all the way into retirement.”
However, the financial landscape has evolved significantly over the last three years, marked by the onset of COVID, elevated interest rates, and supply chain disruptions. This transformation directly impacted investors’ market expectations, forcing them to reconsider their investment approach – which may have only worked due to the relatively calm macro environment of the post-crisis and pre-COVID period.
Many digital trading platforms have only exacerbated this problem. Granting unfettered access to the stock market, without granting users the institutional tools that established financial players simply can’t live without, helps nobody. As macro factors become more important by the day, many are left in the dark to climb the learning curve alone.
Giannone underscores this approach’s tremendous value in the current market environment, referencing Oaktree founder Howard Marks’s observations on a “sea change” and a growing consensus among industry experts that this environment has the potential to be more
In Giannone’s eyes, these factors have made a systematic approach to macro investing all the more necessary, positioning it as the new standard required to achieve success. He advocates for using a wide lens and a disciplined, data-driven approach to identifying opportunities.
“You can look out across the landscape of failed discretionary macro funds, and the list is a mile long. If you look at who has raised money in this environment, in the hedge fund space, it’s predominantly systematic funds,” he says.
The range of possible outcomes in modern investing has widened significantly compared to the more predictable post-crisis period. This expansion is a result of the many uncertainties in our world, things like geopolitical tensions or shifts in the economy, all of which collectively reinforce the need for a new approach.
Such an approach needs two things: the philosophy and a framework for execution. It’s one thing just to tell people that they need to think about the macro climate and another to provide tools for doing so.
If you want to compete in these markets or if you want to capture opportunity, you need to take advantage of the modern tools that are available. That includes the massive amounts of data, the analysis styles and tools, and the advances in machine learning and artificial intelligence. With these tools, work previously done by multiple researchers on Excel can now be done by one.
Such resources can be found in Allio, an app that helps modern investors keep up with the shifting macroeconomic climate. Allio is a highly personalized robo-advisory platform that empowers investors to take control of their investment process with institutional-grade tools. Choosing from over 4,700 stocks and ETFs—which span sectors, industries, and strategies—users create Dynamic Macro Portfolios™.
It is one of the only robo-advisory platforms in the market that allows investors to customize their portfolios and automatically rebalance them to keep them aligned with their investment goals. The Dynamic Macro Portfolios™, are powered by ALTITUDE AI optimization, which incorporates machine learning in the portfolio construction process.
Users of Allio also have access to Market Reader and Morningstar data, news, and analytics, the tools that institutional investors have been using for years to better understand macro influences on the economy.
All these tools support the work that Allio’s team is doing to keep their clients on top of the market.
Giannone joined Allio in November 2023 and previously worked at leading investment firms like Forefront Analytics and Alden Investment Group, acquiring over a decade of experience in the investment management industry. His expertise highlights the shifting dynamics in the investment landscape and the need for investors to adapt to the ever-evolving market conditions.
To delve deeper into Chief Investment Officer AJ Giannone’s strategies and insights, or for a more comprehensive understanding of navigating the urgent needs of today’s financial climate, explore Allio’s website today.
