Who is Stone Wall Financial?

Stone Wall Financial is a SEC-Registered Investment Adviser firm, founded by partners who collectively represent many decades of industry experience in technology, risk management, private wealth management, brokerage, private banking, financial planning, and securities analysis. Our firm delivers a full suite of our SHEP solutions as a Sub-Adviser to investment advisers, registered and exempt investment companies.

What is the SHEP Mission?

Our mission is the driving purpose behind all we do. We understand that trust is not built on just verbal platitudes, but through delivering desired outcomes. To do so, we seek to provide access to SHEP solutions through a variety of channels through partnerships we establish with institutions and their financial professionals. Only then are we able to deliver on our mission to provide financial security to individual investors through tactical strategies that may provide downside protection with enhanced upside performance.

SHEP is our proprietary algorithmic trading platform. It combines the power of a robust technology system with our SHEP Edge algorithmic formulae designed to mitigate clients from risk during major market downturns and make an informed rules-based, data driven decision for reentry.

The SHEP platform combines both Modern Portfolio Theory (MPT) and technical analysis to build and manage optimized portfolio constructs capable of addressing any client’s needs or circumstances. Each portfolio is anchored by a highly advanced quantitative technology platform and MPT principles of risk/reward maximization. Through integration to custodial platforms, SHEP is adhering to its strategy and pursuit to successfully protect and enhance portfolio performance. All securities in SHEP portfolios are individually optimized to seek protection and performance across ever-changing market cycles and conditions.

What sets our SHEP quantitative trading platform apart from others?

Our platform leverages proprietary advanced algorithms and real-time data analysis attempts to identify trading opportunities with precision. It’s designed for anticipating and preempting protective actions ahead of major market downturns that seek enhanced performance, while offering unique investment management that may not be available on other platforms.

How does your SHEP platform ensure accuracy in trading decisions?

We use a combination of AI augmented machine learning, statistical models, and historical data to optimize and continuously refine our SHEP algorithms. This helps to ensure that our trading decisions are based on the most accurate and up-to-date information.

How secure is your SHEP platform?

Security is a top priority. We employ state-of-the-art encryption, multi-factor authentication, and other security measures to protect our platform and ensure that our transmissions to manage our SHEP Advantage data transmissions are secure.

Can I gain access as a subscriber to the SHEP platform?

Presently, our SHEP platform is proprietary and not available as a subscription service. Stone Wall Financial operates as a Sub-Adviser, ready to partner with institutions and their financial professionals to provide access to our full suite of SHEP solutions.

How does AI with machine learning enhance the optimization of your SHEP model parameters?

Our use of AI with machine learning helps to automate the parameter tuning process in advanced algorithmic models, like the SHEP Edge. This is of great value to support our efforts to ensure that every SHEP security and model is optimized with greater efficiency and accuracy, reducing the risk of human errors in hopes of improving the model’s predictive capabilities.

What advantages does AI bring to the process of predicting future market trends?

AI is capable of processing vast amounts of data at high speeds, identifying complex patterns and trends that may not be apparent to human analysts. The ability to analyze and learn from large datasets enables AI features to make more accurate and timely predictions about future market movements.

Can you provide an example of how your successful implementation of AI augmented machine learning has brought value to your SHEP investment strategies?

The most notable example is how we leverage AI-driven, machine learning in our portfolio optimization strategy. By using machine learning with our rules-based, data driven algorithms we are able to better analyze historical data and market conditions. Our research has shown great potential for producing significant increases in portfolio returns while minimizing risk. For this reason, our SHEP models will periodically recycle our optimization process. Doing so increases our confidence that these models are better positioned for the opportunity to outperform other traditional methods.

Has your SHEP platform’s hypothetical back-tests been properly tested and validated for accuracy?

Yes, our platform has undergone extensive and rigorous testing using over 30 years of historical market data. We can confidently conclude the accuracy of our displayed hypothetical performance outcomes. We understand, to be credible, we had to evaluate SHEP’s responses across many market conditions and include both in-sample and out-of-sample periods of time. Our SHEP platform has endured a thorough examination by a highly credible third-party resource that concluded that the SHEP Model is logically constructed, internally consistent, and is, in all material respects, arithmetically accurate in terms of its formulae, algorithms, and calculations. CLICK HERE to review the SHEP Model Audit: Findings Report by BDO.

What is the purpose behind why Stone Wall Financial used both in-sample and out-of-sample testing before releasing SHEP strategies to the market?

In-sample testing allowed us to optimize our models by identifying patterns and relationships within the historical data, ensuring it performed well under known conditions. Out-of-sample testing, on the other hand, enabled us evaluate the model’s performance on unseen data. In doing so, we believe this provides a realistic measure of SHEP’s predictive power and robustness in real-world scenarios.

Why do so many emphasize that out-of-sample testing is so crucial for validating the reliability of models like SHEP?

Out-of-sample testing is crucial because it tests the model’s ability to generalize how it should respond to new, unseen future data. This step helps us ensure that we have avoided “overfitting.” Conducting these tests on all of our models ensures our strategies are not just tailored to past data but are likely to make accurate predictions in future market conditions.

What key metrics do you use to evaluate the performance of SHEP models during your hypothetical testing?

We use a variety of performance metrics, Sharpe ratio, maximum drawdown, Beta, Alpha, annualized returns, trading analytics and tax leakage, to evaluate our models. These metrics provide a comprehensive view of our SHEP models’ hypothetical results in risk-adjusted returns, stability, and overall effectiveness in different market environments, as measured against its relative benchmarks.

Are the traditional views true that active investment management cannot consistently time the market?

While it’s true that timing the market can be challenging, historical data shows that certain market indicators and economic trends can provide valuable insights. For instance, understanding and using a combination of momentum, trends, and technical analysis can help identify potential entry and exit points. It’s not about predicting the exact highs and lows but about making informed decisions based on data.

How are your SHEP models different from others timing the market with day or swing trading strategies?

Our model strategies are built to seek protection first, intentional on managing or mitigating risks of anticipated major market downturns. Although our trading frequency differs across our SHEP optimized securities, many may go months without a single trade. With precise focus on keeping clients on “the right side of the market,” we don’t rely solely on market timing. We build diversified portfolios using asset allocation, leading with risk management first, and then empowering the SHEP Edge to determine reliable reentry points. Our research has revealed effectiveness capable of increasing the potential for enhancing returns with less risk. The SHEP Edge is intended to be robust and reliable, poised to respond to the ever-changing market conditions without relying solely on timing.

How has the advancement in technology contributed to the success of algorithmic trading platforms like SHEP?

Advancements in technology and machine learning have significantly improved the ability of investment professionals to analyze vast amounts of market data in real-time. Predictive models and algorithms can be very different. Effectively built platforms like SHEP can identify patterns and trends that simply may not be visible to the human eye. There are universally accepted advantages with algorithmic trading platforms. One in particular, is the absolute, purely rules-based, data driven approach to decision-making, is not cloaked by human behavioral biases and subjectivity. With SHEP’s robust and more systematic approach to market timing, while not foolproof, it adds a layer of sophistication to the decision-making process.

What would be the experience of my clients should I choose to partner with Stone Wall Financial to access SHEP model portfolios?

With Stone Wall Financial as a Sub-Adviser, you remain in the driver’s seat as your clients’ primary adviser at all times. You are of course free to enlist or withdraw clients’ from SHEP® Advantage or Custom actively managed solutions at any time. Our role is to ensure timeliness in transmitting model changes through your TAMP or ours, consistent with the mode’s strategies you’ve selected. Your TAMP, in order to execute SHEP models on your behalf, will require your clients to sign a Letter of Authorization (LOA) allowing your TAMP partner to ensure timely trades of SHEP transmissions.

If I don’t have my own TAMP relationship, would I incur any additional expense to work through your partnership alliance with SMArt-X?

No. You would not incur any expenses to work with our partner, SMArt-X. All of the expense for onboarding, training, and migrating your client accounts are all covered by us. Additionally, we also cover the ongoing support costs SMArt-X provides you, as well as your own white-label website solution. The website will be your primary resource for overseeing your clients’ accounts, performance reporting, billing, and investment management needs.

Our
Partnership

Sub-Adviser Relationship Overview

Stone Wall Financial, as an SEC-Registered Investment Adviser, is ready to partner with you as Sub-Adviser to your client accounts. In your capacity, as your clients’ primary adviser, you are in the driver’s seat at all times, free to enlist or withdraw clients from SHEP Advantage or Custom actively managed solutions. In our ability to operate as Sub-Adviser to registered and exempt investment companies, we can sponsor our own, or partner with you to deliver Exchange Traded Funds powered by SHEP.

Gaining Access to SHEP Solutions

Our 5-Step Partnership Process

Steps in partnering with us to gain the SHEP Edge for you and your clients.

We are here to support you in gaining a deeper understanding of how SHEP portfolios, strategies and securities can benefit you and your clients. Although your journey may be unique to your own objective and circumstances, we hope the stages outlined below are beneficial. At any point through this process, we are happy to assist.

1. Due Diligence

• Let’s Talk SHEP: Demo – Book an Appointment

• Review performance details of our SHEP Indices on VettaFi – Coming Soon

• Review performance details of our SHEP Advantage Models & Strategies – Coming Soon

• Review performance details of our SHEP-Sponsored ETFs – Coming Soon

• Obtain the BDO Findings Report on the SHEP platform’s financial performance accuracy

2. Portfolio Comparative Analysis

• Need our help? Schedule a Consultation

• Use our SHEP Indices as benchmarks in your investment analysis tools (e.g. Morningstar, Nitrogen, Envestnet, Bloomberg)

• Our Indices Names: SHEP Aggressive Model, SHEP Moderate-Aggressive Model, SHEP Moderate Model

3. SHEP Partnership Options

• Let’s Talk Partnership – Schedule a Consultation

• Sub-Adviser relationship works the same for SHEP Advantage and Custom Portfolios

• Access to SHEP ETFs

• Interested in sponsoring your own ETF, or boosting the performance of your existing ETF?

• Let’s Talk ETFs: Powered by SHEP – Schedule a Consultation

4. Determine TAMP Solution

• Let’s Talk TAMP Options? – Schedule a Consultation

• TAMPs provide access to SHEP Advantage and Custom Portfolios.

• If you don’t have a TAMP partner, we can introduce you to ours.

• Establish Sub-Adviser relationship and plan process for firm and client onboarding

5. Onboard & Implement

• We work with your TAMP to upload SHEP Advantage and/or Custom Portfolios

• TAMP provides you with your own, white-labeled website for synchronizing and managing your client accounts

• Intuitively, you enroll client accounts to the preferred SHEP model portfolios

• SHEP platform executes your clients’ portfolio strategies automatically

Our
Partnership

Sub-Adviser Relationship Overview

Gaining Access to SHEP Solutions

Our 5-Step Partnership Process

General FAQs

Augmented Intelligence (“AI”) through Machine Learning

Hypothetical Testing Approach

Timing the Market

How to Partner with Stone Wall Financial

OurPartnership

Sub-Adviser Relationship Overview

Gaining Access to SHEP Solutions

Our 5-Step Partnership Process

General FAQs

Augmented Intelligence (“AI”) through Machine Learning

Hypothetical Testing Approach

Timing the Market

How to Partner with Stone Wall Financial

Our
Partnership