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Overview:
Risk is not a one-dimensional problem cured by a
single dose of diversification. It's a
multidimensional problem, and diversification’s
passive risk reduction is only just the start. At
least since Markowitz developed Modern Portfolio
Theory 65 years ago, risk has generally been
measured as the standard deviation from average
return. However, Behavioral Economics (and even the
dictionary) say risk is really about the loss of
value. Risk has at least seven unique faces,
including (1) Single-Stock Risk, (2) Market
Volatility, (3) Bear Market Crash, (4) Momentum
Loss, (5) Backtesting Deception, (6) Strategy
Hired/Fired Late, and (7) Retirement Savings Will
Not Be Enough. The elephant in the room for most
people facing retirement is a serious retirement
savings shortfall – making their most serious risk
about insufficient returns. Fortunately, a Royal
Society Fellow, a National Medal of Science winner,
and a trio of Nobel Laureates have laid the
foundation for active risk reduction and better
returns that have forever changed the game. This
book intends to shake the very foundation of the
sleepy momentum monoculture that seems happily mired
in decades-old, simplistic, risk models that not
only fail to treat momentum as the multi-faceted
problem it is, but also fail to consider fundamental
signal processing methods (older than Modern
Portfolio Theory) that reduce the “random walk†part
of the signal and improve the probability of making
a better investment choice. The book’s principles
and methods are described in a manner most ordinary
investors will easily grasp, and while it is
complicated under the hood (like your car), software
tools make it easy to drive. So, buckle up, turn
the page, and let’s go for a ride!
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Description:
This book starts by identifying “the seven faces of
risk†and particularly noting that the well-reported
retirement savings shortfall is the biggest of them
and cannot be addressed by classic diversification –
it’s an investment return problem. The book then
segues into the troubling analysis and revelation
that our financial regulatory agencies, FINRA and
the SEC, provide neither a definition nor a
measurement of risk and yet arbitrarily judge the
client portfolios of defenseless wealth managers
during risk audits. To address these problems, a set
of new tools are developed: A measure called
“Relative Risk†is developed based on a consensus
set of industry-standard definitions that enable
risk category portfolios to be modeled, quantified,
and used as reference standards in assessing and
defending the risk performance of any portfolio; and
mathematics from the cross-disciplinary fields of
information theory and electronic signal processing
(think WiFi, cell phones, and digital TV) is brought
to bear on momentum trading resulting in the
development of Temporal Portfolio Theory. Temporal
Portfolio Theory can be thought of as an extension
of Modern Portfolio Theory that provides a means to
conquer many of the faces of risk through “risk
avoidance,†as opposed to “risk dilution†(a.k.a.
diversification). Finally, the book employs these
principles and tools in numerous example strategies
and portfolios that anyone can personally implement
and manage with a few trades per year. The book is
richly illustrated with over 300 full-color images
and charts.
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Professional Reviews:
“Scott Juds and SectorSurfer have radically improved
the 100-year-old practice of momentum investing. I
found SectorSurfer to be superior to asset
allocation methods and all other investment styles
attempting to manage risk. I also applaud Temporal
Portfolio Theory’s revolutionary effectiveness in
both up and down markets. This book is where to
start!â€
— Dale Van Metre, Ph.D. (Econ.), Ameriprise Financial
Advisor (Retired)
“This book is one of the very few 'must read' books.
For those who have been burned by the ‘diversify and
rebalance’ mantra “Conquering the Seven Faces of
Risk†is sorely needed, and Scott Juds truly
delivers. As a fiduciary, I find SectorSurfer’s risk
mitigation algorithms to be so far superior to the
conventional buy-hold-and-rebalance models that I
cannot justify risking my clients' assets with the
latter. I am impressed with Scott Juds' mission to
educate the retail investing community.â€
— David Yeh,
MD, (Retired Nuclear Physician), Investment Advisor,
Author of “The Busy Doctor's Investment Guideâ€
"Conquering the Seven Faces of Risk does a great job
outlining a variety of momentum strategies rarely
discussed by academic researchers. Scott brings his
strong electronic signal processing background to
bear on momentum investing in a manner that
challenges conventional methods and will surely stir
the pot. Be prepared to think outside the box!"
— Wesley R. Gray, Ph.D., CEO of Alpha Architect, and
co-author of “Quantitative Momentum†and “DIY
Financial Advisor.â€
“I first noticed and started
using SectorSurfer In 2012. Besides making money for
me and being simple to operate, its scientifically
sound trend detection and market crash protection
features lead to a genuinely new framework, Temporal
Portfolio Theory. This richly illustrated book
presents TPT with Scott's deep investment insight,
humor, and élan.â€
— Stewart W. Wilson, Ph.D.,
President, Prediction Dynamics, AI Research
“I
can tell you with certainty that SectorSurfer stands
in a class of its own as the premier tool for
individual investors. It levels the playing field
for individuals against Wall Street. This easy read
shows you how and why.â€
— Richard Erkes, Former Chair
of the State of Illinois Retirement Board, Former
Program Director of the LA AAII Chapter.
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About the Author:
Scott is a Founder, President,
and CEO of SumGrowth Strategies of Seattle; the
developer of SectorSurfer (for individuals) and
AlphaDroid (for financial advisors). He holds an
MSEE from Stanford University, and a BSEE from the
University of Wisconsin – Madison, has been granted
over 40 U.S. and foreign patents, and is a panel
judge for the prestigious NAAIM (National
Association of Active Investment Managers) Wagner
Award. Scott has over 30 years’ experience in both
hands-on and executive-level positions, including
former Founder and Engineering VP of IDX Inc., and
VP of Advanced Engineering at EATON Corporation’s
Opcon division for industrial photoelectric sensors.
Scott has spoken to over 50 investment groups in the
past 3 years.
His published works include:
• “Investment Performance Improvement Utilizing Automated Polymorphic Momentum†(2016 NAAIM Wagner Award winner)
• "Using Asset Class Rotation to Reduce Risk and Increase Return" (AAII Computerized Investing, Feb. 2017)
• "Satisfying the Prudent Man: Quantifying and Defending Risk" (NAAIM Active Manager, April 2017)
• “Better Sector Rotation Performance Through Signal Processing and Problem Segmentation†(AAII Computerized Investing, Aug. 2017)
• “Photoelectric Sensors and Controls: Selection Application†(400-page hardcover, Marcel Dekker, New York, 1988).
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Other Reviews
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By: Ruffina Oserio for Readers’ Favorite
Rating:
5 Stars
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Conquering the Seven Faces of
Risk: Automated Momentum Strategies that
Avoid Bear Markets Empower Fearless
Retirement Planning by Scott Juds is a
book that, in a nutshell, gives readers
the knowledge and wisdom they require to
reduce investment risk and get increased
returns. This is a powerful tool for
investors, one that explores all the
facets of risk and creates a road map
that can give confidence to investors
while helping them make informed and
better choices. Readers are introduced
to the different facets of risk,
including single stock risk, bear market
crash, momentum loss, market volatility,
and a lot more. By understanding the
nature of risk involved in an
investment, the investor can get the
tools required to beat the odds and
raise the returns on retirement
investments.
Scott Juds writes with the confidence of
one who has done his research properly,
a real economist who understands the
nature of investment markets, and his
wisdom is communicated in a simple,
easy-to-understand style that will
appeal to ordinary readers. I found most
of the ideas in this book very revealing
and powerful. In fact, the author gives
readers everything they need to make
intelligent choices related to
investment, from how and where to
invest, to understanding the risk
involved, and to management risk. This
is the book that anyone who is serious
about making significant investments
should read. The author’s voice comes
out powerfully and convincingly and his
strategies are clear and easy to
understand. Conquering the Seven Faces
of Risk: Automated Momentum Strategies
that Avoid Bear Markets Empower Fearless
Retirement Planning is your guide to a
profitable retirement investment. A
must-read!
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By: Christian Sia Reviewed of Readers' Favorite
Rating:
5 Stars
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Conquering the Seven Faces of Risk:
Automated Momentum Strategies that Avoid
Bear Markets Empower Fearless Retirement
Planning by Scott Juds is a powerful
book for both investors and business
owners, a book that brilliantly handles
one of the topics that could determine
the success or failure of any
investment: risk. In this book the
author explores the multifaceted nature
of risk, outlining the seven unique
faces of risk, and how to spot them. The
reader will learn a lot, if not
everything they need to manage risk and
maximize on their investments and
business ventures. Combining traditional
wisdom in the industry with
groundbreaking strategies, the author
offers readers the road map to
navigating risk and staying on top of
their investments.
This is the book you need to read before
you start making new investments. The
book is written in a simple, clear, and
very accessible style, without the
jargon that confounds readers and,
whether you are an ordinary reader or a
professional economist, there is a lot
to learn from Scott Juds. There is no
doubt that the author has done great
research on the subject and that he
writes from extensive experience. This
is evident in the confidence that comes
across in the crisp and exciting prose,
the compelling and authoritative voice,
and the clear examples. The anecdotes
and examples offered are very poignant
and relevant. Conquering the Seven Faces
of Risk is a powerful tool that will
alter the way readers think about risk
and help them to transform every risk
into an opportunity for investment
success.
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By: Gisela Dixon Reviewed of Readers' Favorite
Rating:
5 Stars
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Conquering the Seven Faces of Risk:
Automated Momentum Strategies that Avoid
Bear Markets Empower Fearless Retirement
Planning by Scott Juds takes a detailed
look at all of the risk factors in
investment planning and how to maximize
gain using sophisticated tools and
techniques. The book starts off with an
introduction to Scott himself and his
early experiences and lessons dabbling
in the stock market. He writes from
personal experience that risk in
investment strategy is a complex issue
and can only be solved by looking at
several factors together. The book is
then divided into broad sections that
identify the seven faces of risk:
Single-Stock risk, Market Volatility,
Bear Market Crash, Momentum Loss,
Backtesting Deception, Strategy
Hired/Fired Late, Savings Will Not Be
Enough, a look at traditional investment
risk management, relative risks, various
software tools and monitoring trends,
and finally how to conquer this risk by
taking all factors into account in an
innovative, modern way using modern
tools while creating your own 401K
portfolio.
I found Conquering the Seven Faces of
Risk to be an instructive book, although
a bit technical at times. Although most
of the concepts and language used is
straightforward enough for a layperson
to understand, I also felt that at times
it got a bit technical to the point
where I had to research a few terms on
my own. This was especially relevant
when it came to reading the charts and
data, of which there are plenty, and
understanding the trends and various
statistics. That being said, I think
this can be an excellent book for a
serious investor and some of the
software mentioned in the book that
provides results would be extremely
useful. I would recommend this book to
anyone who is interesting in actively
managing their investments.
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Hi Scott,
I really like your book. I sent a copy
to my friend Mark, We both grew up in
the Wedgewood (mean streets) area. He
just finished the book, and told me it
is the best investment book he has ever
read. He subscribed, his sister and dad
are looking at SectorSurfer, I have two
friends that will join, I will need to
help them. The biggest takeaway for me
is how much you want to help the small
investor. I see it in the way you keep
the costs down, and in your writings. I
have a huge passion for investing and I
think you have created the best platform
that I have come across. I am still
reading your book and I also think it is
the best one I have seen. I am going to
spread the word. Thanks Scott!
Steve Harwood - Seattle, WA
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Scott,
This sounds dumb, but the book is so
good I just keep going back to reread
stuff. At 6 years old, grandson Finn
can't get enough of Shel Silverstein's
book, "Where the Sidewalk Ends." He runs
after me to read it. He gets the puns,
conflicts and subtleties. He laughs. In
a while he'll get the metaphors. I feel
the same way. I've been waiting for your
book for a long time. Thanks man,
Gary Millhollen - New Castle, CA
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Scott,
I've now read most of the book. I'm very
impressed and believe it should be
required reading for all high school
students. I wish it were available when
I started out investing but that was
before computers and the internet was
established very well. Thanks for making
your work available on the internet at
nominal costs. Surf well,
David McMillin
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