Process

Empirical's Investment Process

Driven by Rules, Not Emotion

Empirical utilizes our proprietary Rules Based Investing^® process to completely remove subjective emotional decision making from the investment process.

ZERO EMOTION

The most destructive force to successful investing is emotion, specifically fear and greed.

RISK CONTROL

EAM's rules are focused on risk control because risk is more predictable and controllable than returns.

DELIVERING RETURNS BY MANAGING RISK

As of 6/30/2026 all 12 of EAM's investment models, on a Gross basis, have delivered Alpha since their inceptions (see fact sheets).

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All Investments entail risks, including possible loss of principal.

Investors emotions toward investing

This is the typical emotional roller coaster that individuals and advisors experience through a market cycle when investing.

The key is to maintain a disciplined approach (Rules Based) and stay the course.

Loss vs. Gain

A loss is more destructive than a gain is beneficial

After suffering a 50% loss, a 50% return does not get you back to breakeven. It requires a 100% return.

This is the reason Empirical focuses our rules on controlling risk not on chasing returns. It is much more important to protect against big losses rather than achieve big gains.

Ironically, the very act of controlling risk typically leads to better returns.

Why Rules Based

A highly regarded study led by mathematical psychologist Amos Tversky and Nobel Prize winner Daniel Kahneman found that investors feel the pain of a loss twice as much as the joy of an equivalent gain.

Said another way, fear is twice as powerful as greed. Both are destructive when it comes to investing.

Using proven sets of rules serves to minimize the effects of emotional decision making.

Loss Aversion vs. Risk Aversion

Investors don't dislike risk, they dislike loss which can lead to irrational emotional decisions.