Our Methodology : marketriders.com

Note: this white paper is intended for investment professionals and advanced investors.

MarketRiders' investment approach is based upon Modern portfolio theory (MPT), which seeks to optimize investment return while lowering risk. MPT is rooted in the concept of diversification whereby an investor selects a variety of asset classes that collectively lower risk below the risk profile of any individual asset class. Diversification lowers risk because asset classes are generally uncorrelated, or more specifically, change value in opposite directions. The most obvious example of this is when stocks fall bonds often increase, and vice versa. By adding up to six asset classes to a portfolios' architecture, the stabilizing benefit of diversification can be increasingly felt. A collection of asset classes will have an overall lower risk profile than any individual asset class. Ironically, even adding an asset class that might be perceived as "risky" can lower the overall risk in a portfolio, thus diversification has been described as "the only free lunch you will find in the investment game."

MPT is the philosophical opposite of traditional stock picking. MPT is based upon investing in entire markets or indexes, rather individual stocks recommended by business analysts who look for equities that will outperform the index. With MPT investments are described statistically in terms of their expected long-term return rate and their expected short-term volatility. Volatility is equated with "risk" and provides a measurement of how far below the average an investment's bad years are likely to be. The goal of this investment approach is to identify your acceptable level of risk tolerance, and then build a diversified portfolio with the maximum expected return for that defined level of risk.

More technically, MPT models an asset's return as a variable with a normal distribution and risk as the standard deviation of return. A portfolio is then modeled as a weighted combination of these assets so that the return of a portfolio is the weighted average of the assets' returns. By combining different assets whose returns are not correlated, MPT seeks to reduce the total variance of the portfolio. MPT also assumes that investors are rational and markets are efficient.

To implement MPT, one must first determine an investor's ideal asset allocation across multiple asset classes including US stocks, bonds, real estate, foreign, emerging market stocks, and in some instances, commodities. A large part of financial planning consists of finding an asset allocation that is appropriate for an investor. The variables which effect this determination are the investor's age, timeframe in which one needs to use funds, investment experience and one's ability to maintain a policy allocation in the face of market volatility and risk.

In a given year, different asset classes perform differently making it difficult to predict which asset will perform best in a given year. Thus, although it is psychologically appealing to try to predict the "best" asset classic for any given period of time, we consider this approach risky and scientifically unsustainable. Research demonstrates that investors who "jump" from the one asset to another generally end up with worse results than someone following the disciplined approach defined by MPT. Unfortunately, investors can't consistently predict the future.

Portfolio Recommendation Algorithm
Our portfolio recommendation algorithm is programmed to construct for each investor an optimal asset allocation by weighting the following factors: your age, investment experience, risk tolerance and years until you need the money. By answering these questions through moving the sliders within our software a specific "score" is calculated and mapped to a specific matching portfolio. For example, if an investor was to set the sliders to: 50 years old, do not need to withdraw funds from your portfolio for 10 years (an IRA for example), and limited investment experience and a medium amount of risk tolerance, our algorithm would produce a score of 3.5 which corresponds to a portfolio with 40% bond exposure and a specific asset allocation and with it, a group of recommended ETFs.

If, however, you changed your time horizon to indicate you need funds within 3 years, our algorithm will heavily weight this slider so that your portfolio is skewed towards a bond allocation.

Investors are "fitted" with one of 9 basic asset allocations in portfolios that range in the level of bond exposure - from 90% bond exposure to 10%. The algorithm then evaluates the amount you intend to invest and recommends a specific portfolio with a varying number of ETFs. For example, a portfolio over $100,000 will contain a greater number of ETFs than a portfolio of $25,000. More ETFs give you more flexibility in certain asset classes, but trading costs are higher when the portfolio is rebalanced, or when funds are added or withdrawn. For example, a portfolio of $100,000 will be assigned three ETFs to cover the single asset class of the US Stock market. These three ETFs provide more granularity and accuracy when it comes to rebalancing, but also slightly increased expenses. A smaller portfolio of $25,000, however, would be assigned one ETF for the US Stock Market that includes small, medium and large cap stocks. While you don't have the ability to rebalance between these 3 segments of the US Stock market, trading costs are reduced. With larger portfolios, trading expenses are less of an issue.

ETF Recommendations
At MarketRiders, we have culled through a universe of over 900 ETFs to carefully select the best 20 ETFs as building blocks for our portfolios. We used several criteria in selecting these ETFs as follows:

1. Exposure to Core Asset Classes. Since our methodology is based upon MPT, we wish to gain exposure to broad asset classes which have 3 basic characteristics: a) they give basic, valuable differentiable characteristics to an investment portfolio. For example, while real estate protects against the effects of inflation, bonds protect against a financial crisis, b) they rely fundamentally on market generated returns, not on active management of portfolios. In most asset classes, active managers do not outperform the market and because satisfying investment objectives is critical, a core asset class won't rely on luck or serendipity, and c) they are derived from broad, deep, investable markets. As a core building block of a portfolio, we are focused on well-established marketplaces instead of trendy concoctions promoted by Wall Street financial engineers (ala all of the new ETFs currently coming out). Thus, we do not recommend a sector fund like technology, or an index based upon some new quant method of reweighting stocks.

Rick Ferri, the author of "The ETF Book" has developed a helpful way to categorize ETFs according to how they are designed and how they are managed. We use his categorization table below to further distinguish between ETFs in our recommended portfolios. They are all market capitalization weighted and passively managed approach.

2. Volume. After identifying the list of broad based asset class ETFs, we further filter the list by looking at volume. We will only employ the largest ETFs with an average size of $6 billion in net assets where daily volume runs on average over a million shares per day. This affords sufficient volume and liquidity so that the bid/ask spreads are narrow.

3. Fees. Our ETFs are inexpensive with an average fee of .19%. Low fees are key to achieving higher returns.

4. Turnover. We evaluate the annual turnover of the securities within the ETF. More turnover means more taxable income. We require that the turnover be very low, about 10% in the equity ETFs. For bond ETFs, the turnover is naturally greater as bonds mature and need to be continually replaced.

5. Sponsors. We primarily use ETFs from Vanguard and iShares with several from State Street Bank. These 3 firms account for close to 90% of all ETF assets and are the most highly regarded ETF providers in the industry. Since Vanguard is a not for profit institution, with the lowest fees in the industry, they tend to keep the other ETF providers "honest." In addition, the skill sets and technology for managing and constructing ETFs are highest among these 3 firms.

6. Index Construction. We have evaluated each ETF for the way the provider has constructed an index around the asset class and seek to find the best ETF that most precisely replicates a given index's performance over a long period of time. There are various ways to index a market. For example, small cap US stocks, are generally indexed using the popular Russell 2000. But the alternative S&P 600 small cap index is superior due to its construction and how it avoids the drag of what is known as the annual Russell 2000 trade.

Toxic ETFs
The ETF industry has dramatically expanded since the SEC changed the definition of an "index" in 2003. Prior to that time, ETFs were purely limited to baskets of stocks that indexed broad markets and asset classes like the S&P 500 or MSCI EFA for Foreign Developed Country Markets. After 2003, the SEC began allowing an ETF provider to create any set of guiding rules and thereby create a new "index". This has changed the historic definition of an index.

With nearly 900 ETFs today, the original "purity" of ETFs as suitable building blocks for asset allocation has been polluted. One of the most extreme examples of this is an ETF released by a new player, FocusShares, which developed an index of mid- and large-sized companies consisting of casinos, producers of beer and malt liquors, distillers, vintners and producers of other alcoholic beverages, as well as cigarette manufacturers - and called it a "sin" index.

Rebalancing Algorithm
Rebalancing is an essential discipline to the MPT approach to investing. MTP requires specifically defined target allocation percentages based upon the investor's objectives. These percentages need to be rigorously maintained through the ups and downs of the market. The practice of rebalancing is essentially a buy low sell high discipline that is counter intuitive and somewhat contrarian. When an asset class goes up, you trim your gains and add to underperforming asset classes to bring your portfolio in line with target allocations. Although this may feel like the wrong thing to do, research and our back testing software demonstrates that this discipline can add significantly to your portfolio performance year-over-year.

When it comes to rebalancing, our software is designed around a proprietary algorithm that guides investors to rebalance their portfolios back to target allocations when specific conditions are met. These algorithms can be manually adjusted within the software to take into consideration your interest in more active or less active rebalancing. The default setting is optimized so that when an asset class is greater than 15% out of balance, a rebalancing alert is generated. For example, if one's allocation to US Stocks is to be 10%, and based upon market changes, the allocation is now 11.6% (slightly greater than 15% variance), an alert will be triggered. We believe that for most investors, this setting is ideal. Our software, however, allows you to increase or decrease the sensitivity of this setting. If you have a large tax deferred IRA, you may want to increase the rebalancing sensitivity. Likewise, if you have a small portfolio of $25,000, you may want to avoid trading costs and decrease the rebalancing sensitivity. The rebalancing levels are set as follows:

MarketRiders rebalancing settings screen

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Effective Date: February 2, 2024

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MarketRiders, Inc. (also doing business as, SogoTrade Asset Management) ( MarketRiders or We) shares your concern about the protection of your personal information online. This is our policy regarding the privacy of information we collect on our websites and account opening processes with respect to all services We provide, including subscription and advisory services (the Service ). This privacy policy applies to www.MarketRiders.com owned and operated by MarketRiders. This policy does not apply to the practices of companies that MarketRiders does not own or control.

This Privacy Policy includes examples of the types of personal information we collect and the kinds of companies with whom we share such information. These examples are illustrative and should not be considered a complete inventory of our information collection, use and sharing practices. It also describes the choices available to you regarding our use of your personal information and how you can access and update this information. We will comply with applicable state laws that may restrict the types of information we may disclose about you or require us to provide you with additional notices.

If you have questions or complaints regarding our privacy policy or practices, please contact us at support@marketriders.com.

Personal information we collect:

Information you provide to us. Personal information you may provide to us through the Service or otherwise includes:

Contact Data, such as your first and last name, email and mailing addresses, residence, postal code, phone number, professional title, and organizational affiliation.
Profile Data, such as your username and password that you set to establish an online account with us, age, gender, biographical details, interests, preferences, information on your execution of certain account-related documents, and information that may be related to a service, account or an event you register for.
Identity Data, such as a national identification number (e.g., social security number where permitted, tax identification number, passport number), or state or local identification number (e.g., driver s license or state ID number), which may be used to conduct Know Your Customer ( KYC ) checks and other screens permitted by law.
Communications that we exchange, including when you contact us with questions, feedback, or otherwise.
Financial Data, such as your economic or financial status, financial account details, investment holdings and preferences, and ability to invest.
Marketing Data, such as your preferences for receiving communications about our products, services, activities, events, and publications, and details about how you engage with our communications.
Tell-A-Friend If you choose to use our referral service to invite a friend to our site, we will ask you for your friend's name and email address. We will automatically send your friend an email inviting him or her to visit the site. MarketRiders stores this information for the sole purpose of sending this email and tracking the success of our referral program.
Other Information that we may collect which is not specifically listed here, which we will use as described in this Privacy Policy or as otherwise disclosed at the time of collection.

Third Party Sources. We may obtain personal information from other sources, such as:

Data Providers, such as information services and data licensors.
Business Partners, such as joint marketing partners and event co-sponsors.

Automatic Data Collection. We, our service providers, and our business partners may automatically log information about you, your computer or mobile device, and your interaction over time with the Service, our communications, and online services, such as:

Device Data, such as your computer s or mobile device s operating system type and version, manufacturer and model, browser type, screen resolution, RAM and disk size, CPU usage, device type (e.g., phone, tablet), IP address, unique identifiers (including identifiers used for advertising purposes), language settings, mobile device carrier, radio/network information (e.g., WiFi, LTE, 3G), and general location information such as city, state or geographic area.
Online Activity Data, such as pages or screens you viewed, how long you spent on a page or screen, the website you visited before browsing to the Service, navigation paths between pages or screens, information about your activity on a page or screen, access times, and duration of access, and whether you have opened our marketing emails or clicked links within them.

Cookies and Tracking Technologies. - Technologies such as: cookies, beacons, tags and scripts are used by MarketRiders and our affiliates, analytics tools, and customer support tools. These technologies are used in analyzing trends, administering the site, tracking users' movements around the site and to gather demographic information about our user base as a whole. We may receive reports based on the use of these technologies by these companies on an individual as well as aggregated basis. We use cookies to remember users' settings, for authentication, and to customize the site for each user's experience. Users can control the use of cookies at the individual browser level. If you reject cookies, you may still use our site, but your ability to use some features or areas of our site may be limited.

How We Use Your Personal Information

We use your personal information for the following purposes and/or as otherwise described at the time of collection:

Service Delivery - We use your personal information to:

Provide, operate and improve the Service and our business;
Execute your transactions;
Conduct KYC checks and other screens permitted by law;
Establish and maintain your user profile on the Service;
Enable security features of the Service, such as by sending you security codes via email and remembering devices from which you have previously logged in;
Communicate with you about the Service, including by sending announcements, updates, security alerts, and support and administrative messages;
Understand your needs and interests, and personalize your experience with the Service and our communications; and
Provide support for the Service, and respond to your requests, questions and feedback.

Research and Development - We may use your personal information for research and development purposes, including to analyze and improve the Service and our business. As part of these activities, we may create aggregated, de-identified or other anonymous data from personal information we collect. We make personal information into anonymous data by removing information that makes the data personally identifiable to you. We may use this anonymous data and share it with third parties for our lawful business purposes, including to analyze and improve the Service and promote our business.

Marketing - We may send you MarketRiders-related or other direct marketing communications as permitted by law. You may opt-out of our marketing communications as described in the Opt-out of marketing section below.

Compliance and Protection - We may use your personal information to:

Comply with applicable laws, lawful requests, and legal process, such as to respond to subpoenas or requests from government authorities;
Protect our, your or others rights, privacy, safety or property (including by making and defending legal claims);
Audit our internal processes for compliance with legal and contractual requirements and internal policies;
Enforce the terms and conditions that govern the Service; and
Prevent, identify, investigate and deter fraudulent, harmful, unauthorized, unethical or illegal activity, including cyberattacks and identity theft.

How We Share Your Personal Information

We may share your personal information with the following parties and as otherwise described in this Privacy Policy or at the time of collection:

Affiliates - Our corporate parent, subsidiaries, and affiliates, for purposes consistent with this Privacy Policy.

Service Providers - Companies and individuals that provide services on our behalf or help us operate the Service or our business (such as IT, hosting, customer relationship management and support, print and mail fulfillment, data management, event services, email delivery, marketing, website analytics, and providers of background, credit, and other screening services).

Disclosures for Joint Marketing - MarketRiders may disclose all the information we collect as described above to other companies such as direct marketers to perform marketing services on our behalf, or to financial institutions, such as banks, insurance companies and securities broker-dealers, with whom we have joint marketing or service agreements.

Third Parties Related to the Service - Brokers, custodians, attorneys, auditors, insurers, administrators, investment funds and their respective managers and other non-affiliated third parties as necessary to provide the Service.

Third Parties Related to Marketing Financial firms, insurance companies, investment funds and their respective managers and other non-affiliated third parties for purposes of marketing other products and services to you.

Authorities and Others - Law enforcement, government authorities, and private parties, as we believe in good faith to be necessary or appropriate for the compliance and operations purposes described above.

Business Transferees - Relevant participants in business transactions (or potential transactions) involving a corporate divestiture, merger, consolidation, acquisition, reorganization, sale or other disposition of all or any portion of the business or assets of, or equity interests in, MarketRiders.

Your Choices

You have the following choices with respect to your personal information.

Access or Update Your Information -If you have registered for an account with us, you may review and update certain account information by logging into the account.

Opt-out of Marketing Communications - You may opt out of marketing-related emails by following the opt-out or unsubscribe instructions at the bottom of the email, or by contacting us. You may continue to receive service-related and other non-marketing emails.

Cookies - Most browser settings let you delete and reject cookies placed by websites. Many browsers accept cookies by default until you change your settings. If you do not accept cookies, you may not be able to use all functionality of the Service and it may not work properly.

Declining to Provide Information - We need to collect personal information to provide certain services. If you do not provide the information we identify as required or mandatory, we may not be able to provide those services.

Other Sites and Services

The Service may contain links to websites, mobile applications, and other online services operated by third parties. In addition, our content may be integrated into web pages or other online services that are not associated with us. These links and integrations are not an endorsement of, or representation that we are affiliated with, any third party. We do not control websites, mobile applications or online services operated by third parties, and we are not responsible for their actions.

Security

We employ a number of technical, organizational and physical safeguards designed to protect the personal information we collect. However, security risk is inherent in all internet and information technologies and we cannot guarantee the security of your personal information.

International Data Transfer

We are headquartered in the United States and may use service providers that operate in other countries. Your personal information may be transferred to the United States or other locations where privacy laws may not be as protective as those in your state, province, or country.

Children

The Service is not intended for use by children under 16 years of age. If we learn that we have collected personal information through the Service from a child under 16 without the consent of the child s parent or guardian as required by law, we will delete it.

Changes to this Privacy Policy

We reserve the right to modify this Privacy Policy at any time. If we make material changes to this Privacy Policy, we will notify you by updating the date of this Privacy Policy and posting it on the Service. If required by law we will also provide notification of changes in another way that we believe is reasonably likely to reach you, such as via email or another manner through the Service. Any modifications to this Privacy Policy will be effective upon our posting the modified version (or as otherwise indicated at the time of posting). In all cases, your use of the Service after the effective date of any modified Privacy Policy indicates your acceptance of the modified Privacy Policy.

How to Contact Us

You can reach us in the following ways:

Email: support@marketriders.com

Mail: MarketRiders, Inc., 1 McBride & Son Center Dr., Suite 288, Chesterfield, MO 63005

Phone: 1-866-990-3837