Investment Research

Research held to an institutional standard.

Madison Partners grew out of institutional investment research. Its principals were trained, and spent their careers, at firms where analysis was read by portfolio managers and investment committees, relied on in transactions, and quoted in the financial press. That work spanned bull and bear markets, recessions and recoveries.

The discipline is the one practiced on the best research desks: work from primary sources; build the model before forming the view; state the conclusion plainly; show the basis for every figure; and separate what is fact, what is drawn from others and what is the analyst's own assumption. Today that discipline is applied to markets, valuation, volatility and risk, asset allocation and investor behavior. Madison Partners does not publish research on individual securities.

The work is academic in nature. Madison Partners has published research historically, may publish research from time to time, including in connection with its members' university teaching, and may do so again. Where it can serve the public good, some of that work is shared openly. All of it is independent, impersonal and offered on the terms set out in the Important Disclosures.

Markets, valuation, volatility and risk, and investor behavior; no single-security research
Conclusions stated plainly, with the basis for every figure shown
Assumptions and conflicts disclosed, as on an institutional research desk

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MADISON PARTNERS, LCQuantitative Risk Analysis

Quantitative Risk Analysis

Risk has two dimensions, and they are rarely aligned.

Long-term results depend more on how capital is allocated across asset classes than on the selection of individual securities, and the risk profile is the input from which that allocation is derived.

A risk profile has two dimensions. Risk capacity is the financial ability to absorb loss. Risk tolerance is the psychological willingness to absorb it. The two are often misaligned, and the size of that gap is itself a warning sign.

Our work measures both independently, drawing on research from Bernoulli and Markowitz to Kahneman and Tversky. It is led by a CFA charterholder with experience across equities, fixed income, options and commodities.

Capacity and tolerance measured separately, then reconciled
Methods grounded in peer-reviewed research and explainable in plain English
Assumptions disclosed; results presented as estimates, not promises

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MADISON PARTNERS, LCBehavioral Finance

Behavioral Finance

Behavior should shape finance, not only the reverse.

Finance has long studied how markets move people: how losses, booms and headlines change what investors do. Far less attention goes to the opposite question. If we know how a person is likely to behave under stress, how should that shape the plan in the first place?

The evidence is substantial. Kahneman and Tversky's prospect theory (1979) showed that losses weigh roughly twice as heavily as equivalent gains. Investors overweight recent experience, follow the crowd, and are more confident in their own judgment than results justify. A portfolio that is optimal on paper but abandoned in a downturn is not optimal at all.

Our work starts from the investor's behavioral disposition, identified with the same care as their finances, and asks what allocation, savings path and decision rules that person can actually hold through a full market cycle.

Behavioral investor type identified alongside the financial profile
Plans designed to be held through a full cycle, not just to look efficient
Grounded in five decades of peer-reviewed behavioral-finance research

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MADISON PARTNERS, LCEducation

Education

We give back by teaching the next generation of investors.

Members of Madison Partners teach portfolio management at the graduate and undergraduate levels in a university business school. The courses bring practice into the classroom: how portfolios are built, how risk is measured, and how decisions are made when the answer is not in the textbook.

The teaching extends beyond the lecture hall. For three decades our members have mentored students as they enter the investment profession, and we prepare educational programs for professional and community groups.

We see teaching as part of the work, not apart from it. Explaining something clearly to a student is the best test of whether we understand it ourselves.

Graduate and undergraduate portfolio management instruction
Three decades of mentoring students into the profession
Educational presentations for professional and community audiences

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MADISON PARTNERS, LCOpen Access

Open Access

Some of our best work is free.

Good financial thinking should not depend on the size of an account. Part of what Madison Partners builds is made available to the public at no cost: tools, explainers and educational material that help people understand their own financial picture.

These resources are built to the same standard as our research. They are straightforward to use, transparent about their assumptions, and designed so that anyone can start with a simple question and go deeper only if they choose.

Open access resources are general and educational. They are a starting point for a better conversation with your own advisors, not a replacement for one.

Free to use, no account required
Same assumptions and standards as our professional work
Educational, general and impersonal by design

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MADISON PARTNERS, LCImportant Disclosures

Important Disclosures

Analysts and researchers.

Nature of the firm

Madison Partners, LC is an Iowa limited liability company of investment analysts and researchers based in Highland Park, Illinois. It is not registered as an investment adviser with the U.S. Securities and Exchange Commission or any state, is not a broker-dealer, and does not provide investment banking services. Madison Partners does not hold itself out to the public as an investment adviser and does not advertise or solicit advisory services.

The publisher’s exemption

With respect to its research and publications, Madison Partners operates under the so-called publisher’s exemption. Section 202(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-2(a)(11), defines the term “investment adviser,” and subparagraph (D) excludes “the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation.”

In Lowe v. SEC, 472 U.S. 181 (1985), the Supreme Court held that the exclusion covers publications that are (1) impersonal, offering no advice tailored to the circumstances of any individual; (2) bona fide, containing disinterested commentary and analysis rather than promotional material; and (3) of general and regular circulation, rather than timed to specific market activity.

Madison Partners has published research historically, may publish research from time to time, including in connection with its members’ university teaching, and may do so again. Any such research is prepared and offered on the basis described above.

Informational purposes only

Research, commentary and other material are published and provided solely for informational and educational purposes and should not be construed as an offer to sell or a solicitation of an offer to buy any security, or as the rendering of investment, legal, accounting or tax advice. Reading or using this material does not create an advisory, fiduciary or client relationship of any kind.

Members’ other roles

Members of Madison Partners may teach at colleges and universities and may be associated, in separate capacities, with other firms, including registered investment advisers. Those activities are conducted independently of Madison Partners, LC. Madison Partners material does not represent the views of any such institution or firm and is not prepared on its behalf.

Scope of research

Madison Partners does not publish research, ratings, recommendations, price targets or estimates on individual securities. Its work is academic in nature and addresses markets, valuation, volatility and risk, asset allocation and investor behavior. Opinions reflect the author’s judgment as of the date given and may change without notice.

Sources and estimates

Information is drawn from sources believed to be reliable but is not guaranteed as to accuracy or completeness and has not been audited. Projections, scenarios and the results of any educational tool are illustrative estimates resting on stated assumptions that may not prove correct; actual results may differ materially.

Risk

Investing involves risk, including possible loss of principal. Past performance is not indicative of future results. Readers should consult a qualified financial, tax or legal professional who can assess their individual circumstances before acting on any information.

About this site

This is not a commercial website. It is provided for informational and educational purposes only, offers no products or services for sale, and solicits no business. Research, along with a reference library of primary sources (including SEC rules and releases, the Investment Company Act and Investment Advisers Act of 1940, Federal Reserve materials and tax authorities), will be added over time. Please check back.

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