What we talked about
Narasimha Krishnakumar explains how QuantMomo translates institutional-grade factor models into simple, rules-based portfolios that everyday investors can follow. He breaks down the “why” behind momentum, all-weather, and value strategies, emphasizing process over hunches: position sizing, risk controls, and a clear rebalance cadence. By connecting directly to a user’s brokerage, QuantMomo helps investors execute consistently and reduce the stress that comes from discretionary, emotion-driven decisions.
Show notes
Narasimha Krishnakumar built QuantMomo on a premise that most retail investors resist: the first solution to any investing problem, buying a stock you believe in, acting on a tip, following the news, is almost always the wrong one. His momentum strategy, when tested in India, returned 100% in two years for early trial users. His all-weather strategy, by contrast, is designed so investors can set it once a year and not touch it.
What we covered
- QuantMomo’s name encodes its philosophy: quantitative momentum and more. The “more” refers to the fact that momentum alone is insufficient, it needs to be combined with other strategies, other asset classes, and other time frames to be durable across the kind of shocks the market delivered in 2008 and 2020.
- The Indian market is roughly where the US market was in 1998, the year the first online brokerage platforms launched in America. Narasimha sees a 300-million-person addressable market in India that is largely investing through mutual funds and fixed deposits, with stock market participation still below 100 million dematerialized accounts, and growing rapidly. The market cap is approximately $5 trillion.
- Backtesting means testing a strategy against historical pricing data to see how it would have performed. But Narasimha is direct that historical data cannot predict the future, it can only give you an estimate of the range of volatility you might face. QuantMomo follows backtesting with forward testing using Monte Carlo simulations before any strategy is offered to investors.
- The three ingredients of rules-based investing, as Narasimha describes them, are process (what strategy you follow), allocation (how much of your capital goes into each position), and time frame (when you rebalance). The momentum strategy rebalances monthly, holding approximately 20 stocks selected by algorithm. The all-weather strategy, which includes equities, gold, commodities, and bonds across different tenors, rebalances once a year.
- Gold has returned over 25% in 2024, outperforming US stock market averages, a result that traditional 60/40 allocation advice does not capture. Narasimha advocates for genuine multi-asset diversification, pointing out that most conventional financial advice ignores commodities entirely and underweights gold.
- The emotional breaking point for rules-based investors comes during drawdown periods. When a momentum portfolio drops more than the benchmark index, investors start questioning whether to override the system, which is precisely when overriding it is most costly. QuantMomo’s data shows that these drawdowns have historically recovered, but recovery requires patience that discretionary investors frequently run out of before it arrives.
About Narasimha
Narasimha Krishnakumar is the founder and CEO of QuantMomo, an investment management platform that makes factor-based, rules-driven investment strategies available to retail investors in both the US and Indian markets. He brings over 50 years of combined experience in software engineering, product development, and algorithmic trading.
- LinkedIn: https://www.linkedin.com/in/nkrishnakumar-quantmomo
- Website: https://quantmomo.com
Episode 46 of the PreVetted Podcast.
Full transcript
Federico Ramallo (00:02) Welcome back to the PreVetted Podcast where we spotlight extraordinary people and remarkable talent reshaping our world. Our guest today is
Narasimha Krishakumar.
a financial technologist, quantitative developer, systematic trader, and the founder and CEO of QuantMomo. He brings more than 50 years across software engineering, product development, algorithmic trading experience. At QuantMomo, he has architected a multi-strategy, rule-based system operating across the US and Indian markets.
with real-time data pipelines and automated execution work that includes live options, backtesters, futures engines, and IB API-driven execution. So, QuantMomo’s vision is to help retail investors follow disciplined, rules-based strategies, reducing discretion, stress, and noise. So, prepare for a very interesting episode today.
Narasimha how are you doing today?
Narasimha Krishnakumar (01:11) Very good. First of all, thank you. Thank you for having me on this podcast. Really excited to be discussing QuantMomo and…
Federico Ramallo (01:22) Yes, I find very interesting what you’re doing at Quon Momo. Can you describe it in layman’s words? What are you doing?
Narasimha Krishnakumar (01:31) Yeah, you know, quant-momo really, what does it mean, right? So many people ask, what does quant-momo mean? So quant-momo stands for quatitative momentum and more
investing, making making accessible gold space investing for retail traders, you for different types of audiences. So that’s that’s kind of how we began. I manage a portfolio
look at various market conditions, how can we really generate alpha in the market? So that was kind of the driver for all of this. And then we had episodes in 2008.
And the 2020 shock was enormous, the COVID shock we had. It was enormous.
than.
policies that help the market bounce back not only bounce back but achieve double digit returns in the market so if you were a buy and hold investor and you are facing a 30 % product
be.
So that was kind of the foundation of QuantMomo
strategies that you can use.
So that’s kind of what we started with. And we looked at a lot of factor-based There are various factors in the market. Momentum is a factor.
could be a factor. So there are a bunch of different strategies out there in the market that most of the big institutions use that are not accessible to the retail investor. So for me and for
So what we did was to look at all of that, look at all the literature in the final.
a set of strategies that can help investors generate alpha. And this is a multi-asset, multi-strategy approach where you’re allocating a property. One of the things that we do is enable retail investors to create these strategies through a simple mobile app. So we started this journey in the US. And then in the US, there are a lot of
traded funds that do similar things so customers and investors can go buy exchange traded funds to participate in this kind of a factor-driven model. In India that’s a brand new greenfield opportunity and just to you know look at the
rate in the capital markets is pretty low in India. So we saw a huge growth opportunity in India and one of the things that we could do from a multi-strategy approach is to use a very similar approach in India based on data. So whatever we do is based on data that we gather from the markets. We do extensive testing of our strategies and then we simulate how the future could look like and
strategy holds then we make it available to our investor audience. So that’s available through a mobile app. The investor can use the mobile app, connect with their brokerage account and trade their own capital. So that’s kind of what we are facilitating through this investment management platform.
Federico Ramallo (05:33) I’m wondering how, you you were talking a little bit about the differences between the Indian market and the US market, right? Can you elaborate a little bit more on that? ⁓
Narasimha Krishnakumar (05:41) Yeah,
definitely. So India as an economy is really on a growth pedestal. If you look at the gross domestic product that India produces, the rate of change of growth is primarily around the 6 % to 7 % range. So that’s kind of the growth that you are getting. And you have a vast stock market, and you probably have read a lot of news about Jane Street entering India, and then
financial, entering India with geo-financial services. So there is a lot of things happening in India. However, the markets are different in terms of the maturity levels. I would say to my investors that when you look at the markets in 1998, where we had the first online brokerage platform in the US, 1998, 1999, about 27 years ago.
level in the Indian market. So we have about five years from 1988-1998.
five range for the US markets in India right now. So lots of online brokerages are coming online. People are very educated about investments in the stock market. There’s a lot of options trading that is happening. So people are very educated. So that’s kind of one good thing. From a capital market perspective, there’s a lot of opportunity in terms of the technology. Where I look at is technology.
like you know for a simple let’s take a simple example right so a trailing stop order you know is not
but that’s not available in India. So how do you really overcome some of the technological challenges that exist because that’s kind of evolving. They will get there eventually. And you know, we…
of development in the US, about 20 to 25 years of development, where all those capabilities have come into products and brokerage systems. So that’s one of the fundamental differences. Then there’s also differences from a regulatory perspective.
Securities and Exchange Board of India.
as well as investors from doing things that are…
from fraudulent actors that exist in the market. So they have a very critical role. And the regulations are changing constantly. So there’s a lot of regulatory framework that’s
keeps changing, so you need to keep up to date with those regulatory changes. So that’s one of the key differences here. We are in a stable spot with the Securities and Exchange Commission, although regulations are still being promulgated from SEC. But in India, it’s changing constantly, and you need to keep track of what are the things that you
So those are kind of the two things. And then when we look at the stock market in particular
indexes that are available in
technologies that are coming into the market. So we’ve looked at the entire landscape and our analysis says that the growth is there for the taking over the next 20 years.
Federico Ramallo (09:13) Interesting. So the Indian market has less mature tools that gives you a better opportunity to develop them. And also the volume of the market, it’s undervalued by the market, right? That people don’t realize that there are a lot of opportunities to do in the Indian market. And people focus more on the US.
because that’s kind of where people kind of orbitate around, right? Very interesting, yeah. And that gives you a greenfield opportunity that it’s very interesting, yeah.
Narasimha Krishnakumar (09:37) you
Yeah, it’s a huge opportunity in India. as I said, 300 million people that are potential targets for participation. And also, if you look at the market size, it’s about $5 trillion now. The stock market in India is about $5 trillion. And every day, something new is coming. While there is a process of maturation from a technology perspective, there is a lot of new things that are coming. And if you look at the Indian market,
different assets for investments. Real estate and gold are of ingrained in the Indian DNA. know, stock market is secondary and the participation is usually through mutual funds in India. And then, you know, lot of people park their capital in fixed deposits, which is also called as, you know, certificates of deposit here in the U.S. And the rate of return that they can get from a risk-free perspective using fixed deposit is in the 7 to 8 % range, depending on the…
of the product. there’s a lot of money that is parked in different types of assets. And as people see that the returns are 10 % and above in the stock market, where there is this premium that they can get, they will start participating in the market. So I think that’s a huge opportunity. Right now, out of the $1.4 billion, we look at dematerialized accounts. So there is something called as dematerialized
share certificates of companies that you
We track the number of accounts. That’s less than 100 million today. But that’s growing rapidly.
Federico Ramallo (11:38) Right, right, interesting. And what about inflation in India? I’m asking because I truly don’t, I’m not familiar with the Indian market, right? Because here in Mexico, we’re having 8 % inflation every year, we were take. And I’m from Argentina and I lived through hyperinflations and all of that. And it was at that,
There were some situations where it was crazy because you would need to put your money into this fixed time investments so you could not lose much money by inflation, right? Because they would be paying like 30 % by the inflation was 35.
you’re losing less than if you had it sitting in your bank,
Narasimha Krishnakumar (12:41) Yeah, inflation has been high, but I think right now where the economy is, it’s in the 5 % to 6 % range. folks can really make a real return. So there is a nominal and there is a real return. So what you talked about with the 35 % inflation and 30 % rate is you have a negative.
your returns are not coping with inflation. In India, the current treasury bill rate, is about three months, 91 day tenure, is about 6%. So that’s producing a small real rate of return.
So inflation has always been high in India, and it’s all the rate of change. So I think monetary policy is kind of tracking the inflation and setting the interest rates appropriately. But if you look at the curve of the bond investments, the current structure of
securities, tips kind of product in India. But one can construct such a product if there is a desire. again, this is where in the US, you have tips, securities, which help you achieve that real rate of return and its inflation. In India, I think that’s an opportunity. I haven’t seen a product yet. But I think there could be an opportunity there to create tips type of securities, which adjust the rate based on inflation.
Federico Ramallo (14:20) Right, right. Yeah, because I’ve done investments here in Mexico for 90 days where they give us 15%. Right. And it looks great on paper, but then what I do is I say, okay, 15 % minus 8%, right? That’s the effective, you know, I’m probably, I’m butchering the equation, right? I’m oversimplifying it, right? But my idea is to be able to, you know, beat inflation.
Narasimha Krishnakumar (14:26) Mm-hmm.
Mm-hmm. ⁓
Federico Ramallo (14:47) And what I’ve seen on the US side is that inflation has been going higher and higher, even higher than Mexico.
So, ⁓
My strategy is very basic on investment. based on my experience, what used to work, based on my experience in Argentina, what used to work is properties. Because I’ve been experiencing, in particular in Argentina, very unstable economies. So sometimes cash means nothing, right? So it wouldn’t make sense to have cash.
Narasimha Krishnakumar (15:19) you
Federico Ramallo (15:19) To give you
an example of that, I bought a car in Argentina, and then 20 years later, we sold that car for the same amount of money in dollars, which is crazy, right?
Narasimha Krishnakumar (15:26) Mm-hmm.
Federico Ramallo (15:30) and that was the fluctuations of the market because it was an imported car that was cheap to buy before, but now that import closed, it became more and more expensive, right? Because there was no supply of cars, right? And there was a higher and higher demand, right? So it was a artificial price increase, right? But anyway, I got
I got the benefit, right? Out of that, right?
So tell us a little bit more about the rules-based investing. How does that work and what are the benefits?
Narasimha Krishnakumar (16:09) Yeah, so I think one of the questions that comes up is people are very excited about investing in things that they think that they understand. Like you look at Apple products, Apple makes iPhone, they have been growing.
So most of them kind of make it very emotional and personal when it comes to investing. I will invest in the stock, I will buy this stock because I think it is going to go up. So the whole idea of investing, let’s start there, is to make money. Now the question is how much money you want to make over what term and what is your process for doing that investment. Most of them work with their financial advisor which is the…
set aside life goals, what do want to achieve in your life.
achieve your goals from a financial perspective. So that’s the right option for most of them. But there are many, many people in this world who are…
in the action in the market. They think Apple is going to go up tomorrow because they may have an earnings event or somebody hears a rumor that there is the next product coming up and they want to participate. And then most of them end up losing money because of these emotional decisions. So there are three things that you need to look at. One, what is your process for investments? How much money? Second thing is how much money are you going to…
Let’s say I’m convinced that Apple is a stock that I want to own. How much money should I put into Apple? The third is primarily, okay, what is the time frame that I’m looking at? Am I an investor? Am I a trader? Am I looking at this for a very short term gain or am I going to hold on to…
are kind of the three areas that you need to look at. And what we have done at WantMomo is being very methodical and disciplined. So we give you a set of strategies. For example, you are talking about your car being worth the same because the currency has depreciated and you have seen no change in the value of your car.
So if you look at that, then in that case, what is a better alternative?
Because we are all Argentinized pegging its currency against the US, there are different dynamics that are going on. And one of the strategies that we have is an all-weather strategy, where we look at four different components. One is equities. Gold we look at, because most of the traditional investment advice does not talk about gold. And if you look at the gold’s performance this year, it’s close to 25 % this year.
beaten all stock market averages in the US, it’s done the same thing in India as well. And then you look at commodities, which people don’t talk about. And then you look at a basket of bonds across different tenors and terms and things like that. So that’s one strategy that we have, which is very rules-based. You can set it and forget it. Most of them call this an all-weather, sleep well at night strategy. Now if you want,
good action and you want to participate in stocks that go up a lot, momentum is your plan. So we have a momentum strategy where we pick about 20 stocks every month and then we enable trading those stocks through our
This is an investment. You do a rebalance every month.
achieving alpha, significantly. we have done some of our back tests indicate that you would achieve about 20x performance on the benchmark index. So that’s kind of the power of momentum. Now this is rules based. The 20 stocks that we allocate is based on the risk that we foresee and we forecast in terms of what the risk is. we don’t, we don’t, the algorithm.
does not take positions where it’s concentrated. It’s distributed in a way it is risk managed. That’s kind of what we do. So there is a risk management. So the question of how much to allocate is very important. The time frame for momentum is shorter. You do rebalance every month. There is a lot of time frame related analysis that has gone. And we can do weekly, we can do monthly, we can do quarterly.
people once a month is good enough is what we felt. did a survey of our audience and we did it once a month. All whether we do a rebalance once a year. And then we have a value strategy, which is all about value stocks, right? So they have very good fundamental metrics and you know, we use different characteristics in our algorithm to sort out these value stocks. And if you look at the allocation, these are kind of the three things that, three strategies that, you
can allocate different proportions. Again, you want to diversify.
so that you can absorb shocks like the COVID shock or the great financial crisis shock. So that’s kind of what we do. It’s rules-based in that sense. You don’t really use emotion. The algorithm really sets the rules. And again, it’s not for everybody. If everybody is not comfortable with somebody else’s rules, that’s a valid point. However, it’s all based on data. So we have used data to curate these rules and make them available.
investor base and we do discuss the rules of the strategy and you know we get a lot of questions about you know can you change this rule should we override the rules again if you start doing that then it becomes discretionary so there is a difference between a discretionary investor who invests based on know tip that you get from your friends or the news that you read or you know the product from the company that you use here it’s not that it’s very mechanical but
there is a process for this mechanical investing framework. And that’s what we enable our investors with. And when we launched in India, the Momentum strategy performed significantly in two years. We were up about 100%. Some of our early trial users, they got 100 % growth in the market. So that’s kind of what rules-based investment is. It’s process.
allocation and time frame. So those are kind of the three different ingredients of the rules-based investment framework. And then there are different strategies. So we give you different strategies so that you can allocate to each strategy and outperform the market. So the goal is outperformance of the market. That’s kind of the overall goal.
Federico Ramallo (23:06) very interesting. Yes, and as you said, it’s not for everybody because people might not feel comfortable with a rules-based system because they feel that they lose control, right? And it’s a feeling, right? That reminds me to this story that I usually have with my wife when I’m driving and I sometimes don’t follow the Google Maps direction, right?
Narasimha Krishnakumar (23:25) Mm-hmm.
Federico Ramallo (23:30) and I go on another route, right? And she says, why are you putting Google Maps if you’re not following it? Right? And I’m like, well, I feel comfortable more, I prefer going this other route for whatever reason, right? I feel I’m beating the odds, right? You know, which usually that’s not the case, right? But at least I feel that I’m making the right decision, right? Or maybe it’s because I forgot to turn.
And I don’t want to acknowledge that to my wife. No, I’m just joking. it’s the same thing, That route is based on the information that the map have based on the traffic. And on our position driving, can feel that we’re making more progress or making better decisions. But eventually, we’re going to, it’s only a feeling.
Narasimha Krishnakumar (24:09) you
Federico Ramallo (24:12) is not actually effective, right?
Narasimha Krishnakumar (24:15) Right, and that’s where emotion meets the person and you step in and use your discretion to make those decisions based on what you have seen in the past. So that’s the kind of emotional feeling and that’s something which is very hard for us as human beings to deal with emotions. So that’s kind of what I have learned. So yeah.
Federico Ramallo (24:38) Yes, yes. And I play with virtual money investment, you know, and I experienced that. I said I buy my stocks myself with, you know, this virtual money, right? And just playing with it, right? And but the moment we wanted to put more, you know, real money, the level of stress went up because now the stakes are higher, right?
the uncertainty, right? That was killing me. So eventually it didn’t move forward with that investment strategy because of that, right? So I think that a rules-based system will be much more appealing.
And you mentioned something about backstead as a strategy, right? Can you elaborate a little bit more on what backtest means and how are you using it?
Narasimha Krishnakumar (25:24) Yeah, so as I said earlier, it’s based on data. So in financial markets, we have a lot of data, especially the pricing. You can find out what the price of a stock was.
say.
certain price, you can look at you know how much the stock has appreciated, you can get daily stock based data, can get options data, can get futures data. So it all begins with the historic data for a backtest. Backtest is primarily looking backwards. How did the stock behave? If you were to have a strategy, let’s say you know we take a momentum strategy and we say
how did the stocks in the momentum strategy behave over the past 20 years. So that’s the kind of what a backtest means, testing your strategy against historic data. And the strategy itself has different variables. You look at allocation, you look at price data, you look at a…
scope of this call but you know at a high level the back testing is okay we have the strategy we have the data how does this strategy perform
generating superior returns compared to the benchmark index. And the benchmark index would be SMP 500. In India’s case, we use NIFTY 500, NIFTY 50 as our benchmarks. So that’s what you go do when you do the backtest. Now, after the backtesting, it’s all about, OK, we don’t know. The future cannot be known, right? So it’s an unknown future. It could go up or go down.
So you want to really simulate whether the strategy holds given any random price movement in stock. this is kind of a walk forward test. Some people use Monte Carlo simulations which is the actual framework for doing forward testing. This is kind of completely.
So that’s kind of the forward test. So if the strategy holds very well against both the back test and the forward test, there is a merit for it to be included in a portfolio of strategies that one can offer. So that’s kind of what the framework is from a back testing perspective. Back testing primarily means you are testing your strategy against historic data.
Federico Ramallo (27:48) So do you think that historic data can help you predict future behavior?
Narasimha Krishnakumar (27:53) Historic data cannot help you predict future behavior. Historic data is looking at what is the past performance. Future is unknowable. However, when you look at the future, there are different types of outcomes. So the stock can go up, the stock can stay flat, the stock can go down. So those are kind of what the future could look like. Now the question is, how much can it go down? How much can it go up?
can it stay flat? So those are kind of areas where algorithms really help. And you also look at, OK, it’s all the rate of change. So there is this whole notion of volatility in the markets. So can you get an estimate for volatility given what your strategy is? And how do you use that volatility?
So that’s kind of what you can do. The future is unknowable. So what you can do from a predictability standpoint is look at the ranges of volatility historically and look at what would happen if those ranges are…
So that’s kind of what I would say the takeaway from that is. so futures are knowable. All you can see is an estimate of volatility from historic data.
Federico Ramallo (29:15) How does your system trade, you know, are using a brokerage account or are you trading directly?
Narasimha Krishnakumar (29:21) It’s the brokerage account. So our application connects with the user’s brokerage account. So they come in and sign in with our application. And then…
same thing in the US, can connect with interactive brokers for example.
multiple brokerage systems that have a good API support. In the background, we do call APIs and we enable the placing of…
Federico Ramallo (29:54) What type of behavior have you find odd? Are people on stressful periods want to break the rules and say, I can do better?
Narasimha Krishnakumar (30:04) Yes, so that’s a great question actually. most of the investors want their stocks to go up. And it depends on the profile of the investor. the risk profile of the investor. When there are periods of drawdown, people really start questioning everything. When you have a 20 % drawdown, then you’re like, OK, should I continue?
That’s the question that every investor is faced with. And if you’re working with a financial advisor, you you are kind of protected from that decision because the financial advisors have a process for managing the portfolio.
they kind of shield the investor from that decision. But if you’re an individual investor, you always have the decision to make whether to hold the position or fold it and go invest somewhere else. So that’s what we have seen. But the momentum strategy, what happens is as momentum stocks can go up, they can also go down significantly more than the benchmark. So that is one area where investors really don’t trust the process and they will
you know, before they have had an opportunity to recoup the losses, right? So that’s why, you know, again, the lesson from the overall process that we have created is you need to diversify. So I wouldn’t recommend anybody put all their eggs in one basket. Diversification is the free lunch that we have. So diversify across strategies, across asset classes, across timeframes even, right? So that’s what we would recommend.
If you just focus on one strategy which is momentum, you will draw…
So you want to really diversify your strategies, your timeframes, and the asset classes. That serves the purpose very well. That’s what we have found. But some people want the action in momentum. They just say, OK, I’m going to invest in momentum. I’ll put 10 % of my capital. And then you see this behavior where momentum is not going well.
They held on.
higher than what the index provided. So we have seen that several graphs that we share with our customers where we show that when the drawdown happens in the index, the momentum starts drawdown.
where you get tested but you know we have seen that there is a recovery
We understand there is a problem, but it requires patience.
Federico Ramallo (32:45) Yeah, I can understand that feeling of being scared of, you you’re trusting a system and you see that everything is crashing and you should continue trusting the system, but if you pull up there, then you’re losing money, right? Yeah. I think Dave Ramsey said that when a stock that you bought goes down in value,
Narasimha Krishnakumar (32:45) Yeah.
Federico Ramallo (33:08) you haven’t lost money, you know, because you haven’t cash out, right? So what you’re losing is equity on the stock, right? And then the moment you sell the stock, that’s when you lose the money, right? So if you keep it, then, you know, when the stock goes up, then you get more equity, right? So it took me a while to…
kind of understand that, right? And I think that he said it like that to explain people like, you’re not losing money until you actually completed the transaction, right? Yeah.
Narasimha Krishnakumar (33:41) And that’s why risk management becomes extremely important. We have a very disciplined approach of how we allocate money. I talked about this, and that I cannot emphasize more because position sizing is very crucial when it comes to following the rules. It’s like many people, see, one of Warren Buffett’s best advice is to buy an index fund and afford it. That’s accurate, right? It’s like, okay, but you also want to diversify across multiple.
asset classes. You want to some gold in your portfolio.
thing is what is the percentage allocation that you want to make and that’s based on the goals that you have in your life. So some people who are old cannot afford to take risk in the stock market so they probably will need to increase allocation to stable assets and you know manage their portfolio that way. But concentrated positioning is very bad because let’s say you believe you have a conviction and you believe that something is going to go
you have a 50 % drawdown, then that’s not a good scenario to be in. So that’s where the overall position sizing comes into play. How do you position size? How do you really position it based on the risk that you can forecast is where the rules come into play quite
Federico Ramallo (35:03) And the index fund is a way to distribute your risk with a very, very simple rule-based system, right? Because basically they say, we’re going to buy all these shares and we’re going to put them in an index, right?
Narasimha Krishnakumar (35:18) Correct, there is, know, index again, there’s cap weighted index and you know, we have seen US being concentrated with the Magnificent 7 or MAC 10.
There is an entry criteria to get into the index, right? So not all stocks on exchanges can get into the index. They are going to vet some of the stocks and…
just participation in the equity market. You want to participate in other markets as well so that when the equity markets are down you have an uncorrelated performance in other markets like bonds could be one of the things that you could look at because most of the traditional advice has been 60-40 which is 60 % equities 40 % bonds but I go beyond that right how do you really participate in commodities as well
history behind it. We used to be on the gold standard and currency was valued based on the gold reserves that…
seen over the past two years, gold has become an asset again.
sequentially 20 % plus returns from a gold perspective. So you want to have a diversified portfolio of assets and the best thing is to look at what is the index fund that can give me that portfolio, index funds that can allocate across different assets and be able to
Federico Ramallo (36:51) my comment about being a rules-based system is very simplistic, right? But it’s a way for me to kind of understand how index funds work, right?
I have a relative that he has a very simple rules when he bets. And basically what he does is he says, I’m going to spend $1,000. So I’m going to go and spend it as entertainment. And there’s a reason I mention this, but.
I’ll try to finish the story quickly, but the idea is he decides how much money he’s going to spend, let’s say $1,000, right? And then he sees that money as entertainment, right? So either he spend it on bedding, on a casino, or going on a trip, or going to lunch, or whatever, right? But he assumes that that money’s gone, right? It’s fun money, right?
Okay, then if he goes and bets and loses all the money, that’s it. I’m done and he retires, you know, he leaves, right? And that he finished his betting session there. And then if he makes more money and doubles the money that he came in, that’s the moment that he leaves, right? And because…
on both extremes, right? Like if you’re making more money, then you want to keep doing and then you lose everything, right? And if you lost a thousand dollars and you say, I wanted to get it back. So I’m going to put more and more money, right? Those two are traps that, you know, that activity has, right? But what he says is that by having that rule, then he can go and have fun in a, you know, control environment, right?
without risking getting into bad behaviors. So the reason I mention this is because I think that in stock investment there’s something similar. If you start doing bad behaviors, you’re going to lose money. And it’s similar because there’s a risk, there is an unknown. So there is a similar…
behavior than the betting right?
Narasimha Krishnakumar (38:58) Yeah, it is. there are various books that have been written. It’s all about position sizing and what is the optimal allocation for a particular stock. It’s very similar to whether you should buy a stock and if you lose, you don’t care that you lost the money, but you participated in the action. It’s like, again, I don’t like to use the lottery terminology, but you want to…
play certain bets and it becomes again a question of how much is that, right?
I think it’s all about how much risk you are willing to take. It’s very similar to what you described. You are going with a fixed mindset where you want to better.
your happiness and your maximum…
to investments you can you know pretty very similar right so you want to participate in a potential growth opportunity from a capital standpoint but how much do you allocate how much of the portfolio and what is the basis for that allocation right so the basis for the allocation is what we look at
of a particular investment and then we say, okay, here is kind of what we can feel comfortable with this based on the risk that we have seen, right? So that’s kind of, yeah, very good analogy that you use.
with investments, it’s about position sizing. What is the position size and how much have you got?
Federico Ramallo (40:31) That way you distribute the risk and the other important concept that you brought in is remove emotions out of the equation.
Narasimha Krishnakumar (40:38) Correct.
Federico Ramallo (40:39) So one last question. What is the roadmap for the QuantMomo? What are you planning to build next?
Narasimha Krishnakumar (40:47) So I think there’s a lot of proliferation of artificial intelligence today. Everybody is talking about artificial intelligence.
So one of the things that we are looking to enable our users is a financial coach framework, where we can coach them on a variety of elements as it relates to their financial life. One of the challenges that we have today is your financial life has multiple products, multiple interfaces that you need to look at. You have a bank interface, you have a stock market interface, you have a retirement interface, you have an insurance interface. So there are a
of interfaces and you need to, you it’s all fragmented, right? So you don’t have a comprehensive view of what your finances look like. So one of the things is, you know, to be able to build that comprehensive view for audiences, variety of audiences, to empower you with knowledge in terms of what your financial situation is and then enable them to automate, you know,
So in the process, we will also look at the risk profile of the person. My risk profile could be different than your risk profile based on our age, based on our background, based on where we work, what type of income we can generate, then based on the amount of assets that we have accumulated, things like that. So being able to risk profile you and then.
in terms of what you can and cannot do is what our roadmap will look like. So we started with rules-based investments, but then we are kind of expanding our overall scope to a full-fledged financial coach, which is all about your data. We get your data, we kind of tell
perspective and then be
It’s not about checking in with somebody in the financial industry every year. It’s about as and when I need it. For example, can I afford to buy a car today, given my finances? And many people don’t.
much.
a person would come in to the platform and they would get an answer immediately based on what their data is saying about them and their risk profile is saying about them.
Federico Ramallo (43:14) very interesting. Yes, I think that that’s a great use for an AI agent because I think that the issue with AI agents is that they are non-deterministic. you know, adding that to the rule-based system, which is deterministic, right? It’s much more deterministic than it could add more risk, right? But if you use it to personalize your rules,
I think that’s a great way because you allow the users to have a personalized recommendation and then based on that you go with the rules-based system that you already trust and built.
So thank you very much for joining us today.
I’m grateful for having you here and I’m looking forward to see where you’re taking Guadmomo next.
Narasimha Krishnakumar (43:59) Yeah, we’re super excited to take Quantomo to the next level. We’re really happy that you were able to have me on this show.
for the time.
Federico Ramallo (44:15) Thank you.