Why Your Brain Is the Biggest Risk in Your Portfolio
The disposition effect isn't a personality flaw — it's a structural bias built into how humans process gains and losses. Understanding it is the first step to building around it.
Read → 5 min
Institutional portfolio intelligence — regime-aware, rules-based —
built for individuals.
Our principles are not marketing copy. They are operational constraints that govern every feature we build and every decision we make.
Data guides decisions, but causal reasoning governs them. We require five-year backtests, show Monte Carlo confidence intervals, and never claim a strategy is optimal without showing you its failure conditions.
Diversification means ensuring assets fail independently, not just holding many of them. We analyze failure modes across regime states, enforce concentration limits, and use hierarchical clustering to build truly orthogonal portfolios.
We adapt allocations to market regimes, not investment philosophy. Process evolves; principles do not. Tactical changes happen inside a systematic framework, never from panic and never from momentum chasing.
We show you why a rebalance triggered, what the transaction costs are before you confirm, and the uncertainty distribution around any return estimate. There are no black boxes. You understand every decision.
We measure outcomes in years, not quarters. Automation removes emotion from execution; regime detection prevents panic selling; rebalancing disciplines enforce buy-low mechanics. The system works by staying the course.
We optimize for Sharpe and Sortino ratios, not raw returns. A portfolio with 10% returns and 6% volatility beats one with 14% returns and 18% volatility. We never maximize upside at the expense of downside control.
Cacao Hedge runs a continuous investment discipline on your behalf: detect the regime, optimize the allocation, execute the rebalance, and report the reasoning.
Securely link Alpaca or Schwab via OAuth 2.0. We read positions, request quotes, and submit orders, nothing else.
Choose from proven templates such as Risk Parity, All Weather, and 60/40, or build a custom strategy with your asset universe and optimization objective.
Daily simulation with realistic transaction costs, drift-based rebalancing, and Monte Carlo confidence intervals. Required before any live deployment.
Our 5-state Hidden Markov Model reads 9 market indicators daily. When the regime shifts, allocation targets adjust automatically within your defined guardrails.
When drift exceeds your threshold, orders are generated, previewed, and executed. You see every trade and the rationale before and after it runs.
Connect Alpaca or Charles Schwab. Choose a strategy. The system reads nine market indicators, classifies the current environment, and optimizes your allocation accordingly — then holds the course. You approve. It executes. Evidence drives every rebalance.
Hypothetical illustration. Backtested results do not reflect actual trading.
The disposition effect isn't a personality flaw — it's a structural bias built into how humans process gains and losses. Understanding it is the first step to building around it.
Read → 5 minEvery market passes through distinct environments. Classifying them probabilistically is not prediction — it is evidence-based positioning. A clear-eyed primer on what the model does and doesn't claim.
Read → 7 minDiscretionary rebalancing feels prudent but introduces the same bias it's meant to correct. A look at why pre-committed, rules-based discipline outperforms not because of alpha — but because of consistency.
Read → 6 minNo promise that systematic investing is easy to watch. Only a system designed to make it possible to stay invested — through the states that matter most.
Cacao Hedge is in limited release. Share your contact details, investing experience, and what you want a systematic portfolio process to help you solve.