Use rule-based investment strategies to maintain trading and investment discipline, and protect yourself from fear, greed, pride, and other costly emotions! Since the mid-1990s, assets under management in rule-based or non-discretionary hedge funds have outgrown those in discretionary or qualitative funds. Recent research shows that rule-based funds have outperformed discretionary funds on a risk-adjusted basis over the past 30 years, and have especially outperformed during recent financial crises. This is the first comprehensive guide to designing and applying these sophisticated strategies. Combining academic rigor and practical applications, it explains what rule-based investment strategies are, how to construct them, and how to distinguish bad ones from good ones. Unlike any other guide, it systematically covers every facet of the topic, including Forex, rates, emerging markets, equity, volatility, and other key topics. Credit Suisse head of global strategy and modeling, Chiente Hsu, covers carry, momentum, seasonality, and value-based strategies; as well as the construction of portfolios of rule-based strategies that support diversification. Replete with realistic examples, this book will be a valuable resource for everyone concerned with effective investing, from traders to specialists in applied corporate finance.

Contents
Introduction
Chapter 1 Rule Based Volatility Investment
Learning to Love Volatility
Volatility in Capital Markets
Investing in Volatility Through Rules
Profiting from Volatility and Awareness of the Danger
The Examples of Rule Based Vol Investments
Building a Volatility Portfolio
Some Remarks
Chapter 2 Rule Based Carry and Momentum Investment
Rule Based Carry Investment
“Benchmark” Returns in the FX Carry Trade
The Risks of the FX Carry Trade
The Steam Roller
Simple yet Effective Rules for Carry Investment
Some Remarks
Chapter 3 Rule Based Value Investment
Value in Emerging Markets
Value Investing in Emerging Market FX
Rule Based Investment in Emerging Market FX
Fundamental Rules
Technical Rules: Overlaying Credit Default Swap Spread as Market Indicator
Combining Fundamental Rules and Risk Indicators
Value Investing in Emerging Market Sovereign Bonds
Fundamental Rules
Technical Rules
Combination of Macro Fundamentals and Market Indicator
Some Remarks
Chapter 4 Rule Based Portfolio
The Next Crisis and Beyond
Bibliography
Index