Carbon is an automated investment service designed to protect against loss and maximize gains through unique risk profiles with clients who aren’t currently participating in the stock market out of fear or lack of trust. By translating the hedging principles of skilled investors into meaningful strategies for growth, clients can be more confident in their investments and can begin to rebuild the trust that the financial industry has lost in recent time.
Our mission at Carbon is to get the Millennial generation investing by offering solutions to some of the roadblocks that have previously deterred them from doing so. By investing sooner and smarter, Millennial’s can be better prepared for their financial futures.
Carbon is the one of the most abundant elements in the universe, it’s present in all life, and it represents more than 18% of the human body. The stock market plays a similarly critical role in life and both direct and indirectly affects almost everyone. Most might know carbon in it’s different forms like diamonds, coal, and graphite; and with investing, we typically identify various asset classes like stocks, bonds, mutual funds, and ETFs. In essence, carbon is very important to our lives, and we believe investing is too.
Automated investment services (AIS) are a dime a dozen, and rely on modern portfolio theory (MPT) that essentially automates the process of investing client funds into index funds and low risk ETFs. This is no slight to MPT as it’s creators won a Nobel memorial prize in 1990, however this approach still leaves investors fully exposed to systematic risk and lacks the excitement of owning individual stock. Carbon utilizes hedging strategies formerly reserved for financial professionals and allows them to be used by the first time investor, so they can remain protected and own individual stocks relative to individual risk preferences.
Not yet! Carbon is still very much an early stage venture and we need your help to get it off the ground. By signing up you’re indicating your interest in what Carbon has to offer. The more support we gain from the community, the more motivation we have to continue development. Upon signup, you’ll be granted access to your personal dashboard, which is constantly being updated as it continues to be developed. While it may not appear to be much, we do this so that you may monitor our progress all the way up to our official launch.
While our platform, or algorithm of sorts used to decode investing intentions may sound complex in nature, it is simplified by generalizing all risk-reduction strategies into a “collar strategy”, using a form of market derivatives called options. This specific strategy involves going long 100 shares, buying a put at or out of the money (variance again depends on risk preferences), then writing a call out of the money to help offset the premiums of the put protection. Since options in nature represent 100 shares of stock, Carbon will pool investor funds that share the same strategy of investment in order to fully and cost-efficiently utilize a set of options – regardless of what each investors individual contribution is.
Since Carbon’s primary investment objectives are specific to individual stocks, Carbon will offer a limited number of large cap stocks available for allocation in an individual portfolio. As well, using this method eliminates the need for diversification, although it is still recommended. As such, Carbon will offer and suggest appropriate investments relative to a clients risk tolerance. Finally, remaining capital not able to be allocated into individual assets will be pooled and placed into index funds, so that your whole portfolio is working for you.
No! Although our investment strategies typically require sufficient capital to be cost efficient, Carbon is able to pool investor capital from those who share the same strategy. By doing so, Carbon is able to offer our hedging strategies more cost effectively than if you were to duplicate the strategies yourself. The only thing we ask is that you be able to purchase at least 1 share of the security you’d like to own when investing.
Individual risk tolerance is largely determined one’s investment goals. More specifically, Carbon will ask you to complete a short survey that will help to understand your tolerance by time frame, risk capital, and general sentiment towards the markets. This information is then considered and a tolerance is suggested. Since we acknowledge there is no exact science to determining risk tolerances, Carbon will allow you individually modify your tolerance if you feel your results do not accurately reflect your sentiment.
No. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.
We hate to recite legal jargon, but unfortunately this is a truth of investing, and no one is able to predict the market or the value of your investments at any point in time. However, since Carbon utilizes market derivates to hedge specific assets, there are scenarios in which specific, asset-specific risk can be mitigated. In these situations, additional fees will be assessed in order to cover the costs necessary to hedge. Think of it as the insurance premium necessary to cover your investments.
Options are financial derivatives that behave as contracts that give the buyer the right, but not the obligation to buy or sell or specific asset at a predetermined price, at a predetermined date. When purchasing an option, the buyer will pay a premium determined by factors such as the intrinsic value, time to expiration, volatility, interest rates, and cash dividends paid. On the contrary, those who sell of options contracts will collect the premiums as a credit, however, they may be required to uphold the specifics of the contract in which was sold, if the option is exercised. Since one contract represents 100 shares, buyers who intend to utilize options strategies with assets will need to hold at least 100 shares, or provide sufficient capital as collateral, should the option be exercised. A call option represents a contract with the right, but not the obligation, to buy a security at a predetermined price, on a certain date. A put option represents the opposite, and is a contract with the right, but not the obligation, to sell a security at a predetermined price, on a certain date.
A collar strategy is an options trading strategy that involves the simultaneous holding of a security, the purchase of a put option, and the sale of a call option. Wherein the options have the same expiration and are of equal numbers of contracts. By varying the difference between the ceiling (call options), and the floor (put options), an investor can vary the premium required to initiate this strategy.
Systematic risk, also known as "market risk" or "undiversifiable risk", is the uncertainty inherent to the entire market or entire market segment. Also referred to as volatility, systematic risk consists of the day-to-day fluctuations in a stocks price. Volatility is a measure of risk because it refers to the behavior, or "temperament," of your investment rather than the reason for this behavior. Because market movement is the reason why people can make money from stocks, volatility is essential for returns, and the more unstable the investment the more chance there is that it will experience a dramatic change in either direction.
Unsystematic risk, also known as "specific risk," "diversifiable risk" or "residual risk," is the type of uncertainty that comes with the company or industry you invest in. Unsystematic risk can be reduced through diversification, as suggested in modern portfolio theory.
Unfortunately there is no definitive, “one size fits all” price that Carbon can provide as our investment strategies rely investing mechanisms that incur additional variable costs that cannot be determined ahead of time. Because of this inability to provide exact figures, estimated fees will be calculated prior to each investment cycle relative to the individual securities within one’s own portfolio. Although Carbon strives to provide accurate estimations of these fees, Carbon makes no guarantees to their accuracy and scenarios may arise in which fees being charged may be greater than, or less than the estimated amount.
No. Carbon is actively seeking the legal certification necessary to handle client funds and investments. There is currently no ETA, and Carbon will be unable to offer any investment advice, handle client funds, or otherwise provide any services pertaining to investing until this certification has been acquired.
No, and Carbon has no intention of doing so. Rather, Carbon has initiated contact with currently registered broker/ dealers who will be better able to serve the needs of Carbon and its clients. By doing so, Carbon is able to better focus on its goal of providing a powerful and simple investment experience for its clients.
No. Registered investment advisors (RIA’s), who oversee less than $100 million in assets under management are not required to register nationally with the SEC. Firms that are under this limit are required to be registered individually in each state and territory in which they intend to conduct business, or where their clients may reside.
Carbon will keep all Users’ and Clients’ non-public information confidential, except as obligated by the full extent of the law or by regulatory authorities. Carbon employees who require Users’ and Clients’ private personal information to maintain and operate the Site maintain restricted access to this information. Carbon’s servers will process all information you provide to us for the following purposes: displaying and formatting personal information on the Site, delivering related content, and other purposes related to the Site. Carbon’s clients may have additional information collected and used to perform trades on their behalves, display investing activity in their accounts, and calculating their portfolio performances.