Identifying a recession is not impossible because there are a number of indicators that can provide valuable insights into the state of the economy. Some of these indicators include GDP growth, unemployment rates, consumer spending, industrial production, and interest rates.

While it can be difficult to predict the timing and severity of economic downturns, there are many tools and resources available that can help identify potential warning signs and prepare for the impact of a recession.

This approach differs from other models in that it combines macroeconomic factors to explain the return of traditional asset classes. Unlike traditional models that rely solely on the performance of individual securities or asset classes, this approach takes a more holistic view of the investment landscape, considering the macroeconomic environment and its impact on different asset classes.

Factor investing tactically using macroeconomic factors has several benefits:

• Improved diversification: By considering the impact of macroeconomic factors on different asset classes, investors can build a more diversified portfolio that is better equipped to handle market volatility and achieve long-term investment goals.

• Enhanced risk management: By avoiding negatively impacted securities and focusing on securities that should perform well, investors can reduce risk and improve overall portfolio performance.

• More informed decision-making: By analyzing the impact of macroeconomic factors on different asset classes, investors can make more informed investment decisions that are backed by data-driven insights, rather than relying on intuition or guesswork.

• Potential for higher returns: By focusing on securities that are likely to outperform based on macroeconomic factors, investors may be able to achieve higher returns over the long term.

Portfolio Manager’s Profile

Aaron is the founder and Chief Investment Strategist at Omega Squared Capital Management, a Texas-based active asset management firm focused on researching and developing applied macroeconomics towards the financial markets. Aaron has a background in the hedge fund world and portfolio management in the banking industry. Aaron worked as a portfolio manager for Alpha Energy Capital, a hedge fund in Austin, TX, focusing on quantitative oil and gas futures trading. He also has experience designing and managing separately managed accounts of individual stocks at Wells Fargo Private Bank in Dallas, TX. Aaron is also a self-taught computer programmer focusing on statistical computer languages such as R and Python. He leverages technology to help make investment decisions and outlooks about the financial markets.

Aaron’s investment philosophy consists of strict adherence to the business cycle stages. His understanding of shifts in the business cycle and the correlated risks and opportunities that each regime brings provides him the ability to control a portfolio around his clients’ risk-reward goals in a playful manner.

Aaron is married and has three daughters, including a set of twins. Aaron has a deep curiosity for learning and a need to understand how things work. He enjoys reading, learning new computer languages, and spending time with his family in his free time.