Predicting market movements is every investor's dream, but one man believes he's invented a reliable solution to the challenge of betting on the future.
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Yuri Khmelnitsky, a Moscow-born chemist living in upstate New York, turned his observations on stock market movements into a formula for predicting market fluctuations. Now he’s created a web-based tool for personal and institutional investors alike.
Introduce your business
It’s every investor’s dream to be able to predict fluctuations of financial markets. Who wouldn’t want to be able to buy low and sell high? The Universal Market Predictor Index (UMPI) provides subscribers with trend-line data that indicates the future direction of the market.
Using our proprietary technology platform we calculate the index on a regular basis and post the updated graphical UMPI trend line once every 3 days. Our subscribers are able to access the graphical data and check for UMPI-predicted market trends at any time.
This information will help them adjust their investment portfolio to take full advantage of the upcoming market rise or decline.
Where did it come from?
I had an idea that you could track movements in market value and potentially ascertain patterns. I observed market behaviour for many years before I felt confident I could model and predict results.
It took me almost 5 years to develop and validate the UMPI – a reliable stock market prediction tool.
Quite honestly, I was amazed at the results – the data showed that in the vast majority of cases UMPI consistently and correctly predicted market moves, with a 90% success rate. The results are posted on our site for any prospective customer to analyse.
Of course, the technology I developed is a great help to me as a private investor. My son, Artyom, who runs his own successful internet business, helped me turn the UMPI technology platform into an easy-to-use subscription-based web service available to all investors.
The UMPI website homepage
Plot the story to today
We’re really just getting going! You could say this is a classic basement pipe-dream that’s been turned into a vibrant web-based business service.
My background is as a classically trained chemist. I obtained my PhD from Moscow State University in what was then the USSR. I had no idea about going into business.
But as the USSR collapsed I was able to move my family to the USA in 1992 where I took a research role at the University of Iowa. My career has moved me around the US to near Albany in upstate New York, which is where I live today.
Along the way I developed a passion for investing and became an avid student of investment theory and a market-follower. Every book and article that told me predicting market movements is impossible fed my idea that there must be a way to break the data down and find a pattern.
The Universal Market Predictor Index started as a hobby but quickly became an obsession. You can imagine the feeling I had when I realised I was on to something that worked. It’s been a long but fruitful journey.
Does your sector present a big opportunity?
On the face of it, the opportunity is huge - there are about 80 million individual investors in the US, and several times that around the world. Right now every investor is either looking at the market stock by stock, or trying to get to grips with every possible macro economic or socio-political trend.
By providing an automated set-it-and-forget-it tool, we give investors with diversified portfolios the chance to plan at a topline level.
Of course it would be a dream to have 80 million plus subscribing clients, but our business plan is relatively modest. Obviously our overheads are very low, at least until the service takes off. Even if only one in 10,000 investors ever use the platform we will be in great shape.
What difficulties have you encountered?
I approached the problem as I would any scientific test, which I think is what allowed me to reach a solution. I had an idea that I turned into a hypothesis, and then proved it out with a significant sample of data.
Even so, the main challenge was to refine the model to the extent that I was convinced it was a marketable product. As a trained scientist who has worked in commercial operations, it’s my obligation to be sceptical and rigorous.
It’s not in my nature to operate on a wing and a prayer, so in a sense I was my own worst enemy. But I think that rigour will pay off.
And of course, devoting time to nurturing this idea while working a full time job was painful at times. But again, I believe the sacrifices I have made will prove to be worthwhile.
Yuri developed his system over five painstaking years
How do you make sure people find out about your business?
We are at the very beginning of this road, so we have an embryonic marketing plan. I believe the core of any good marketing plan is a proven and valuable product – it’s really about creating communications that amplify that product’s virtues.
You also have to put your message in front of potential customers when they’re in the frame of mind to listen to you.
I am convinced we have a low-cost solution that can add significant value to everyday investing. Most investors conduct all their desk research online, so a robust SEO strategy is the cornerstone of our plan.
We’re also keen spreading our message through PR, largely with personal finance journalists, and are considering investor conferences and the like.
What sets your business apart from the rest?
The market for personal finance guidance products is crowded. So competition is tough.
I think our razor edge advantage is that we provide literally the only product that gives a reliable black and white answer to the question, should I buy or sell right now?
While there are many companies that give a view to the nuances of market movements, or give very niche advice, no one else gives such a powerful topline indication of stock market movement.
I believe in the power of markets to put the solutions to particular problems in front of those in need. I fundamentally believe we offer a service that solves one of the most common and deep rooted problems in investing – knowing whether a market has topped or bottomed out. So maybe our competitive advantage is sheer simplicity.
What are your top three tips for people starting a business today?
Most of my career has been spent in pharmaceutical research, and at one stage I was involved in launching a successful biotech company. So I am quite familiar with the excitement and adrenalin of a start-up. In my experience there are only three ingredients to a successful entrepreneurial endeavor.
First you need motivation – lots of it! Things get very tough very easily, and you need a deep reserve of mental energy to persevere.
Second, you need the ability and dedication to work hard. And not just in the volume of work you undertake, but also the quality. You have to maintain high standards.
And the third ingredient is really the magic ingredient that separates success from failure. You must be capable of honestly evaluating yourself and your work, and to change whatever needs changing, no matter how attached to it you are.
You have to be your own worst critic, because no one else will do it for you. And you have to act on that self-reflection. This for me is the true key to success.