The Art of Nothing - Leveraging Empty Branches

Have you ever stared at a blank page and thought, “This is powerful”? No? Well, in the world of QuantMage, particularly with selector incantations like If/Else, Switch, and Enter/Exit, an empty branch can be just that — powerful.

The Great Cash-Out Strategy

Let’s dive into a scenario where you’re mulling over parking your funds in something safe, like a short-term bonds ETF, say BIL. Typical, right? But what if I told you there’s a cooler, less conventional way to say, “I’m out”? Enter the empty branch stage left:

This move is like opting out of a party quietly without anyone noticing, rather than announcing your departure. The Switch incantation used to require the last branch to be filled because it was the catch-all. Now, it too can embrace the art of nothing, allowing you to subtly cash out. One caveat: no partial cash out is possible. You cannot use an If/Else with an empty branch under Mixed, for instance.

The Disappearing Act: Equal Weighting Magic

Now, imagine you’re a magician, and your trick is making things disappear — not from the stage, but from your investment distribution. When you pair an empty branch with a distributor incantation like Weighted or Filtered, and you’re playing with equal weighting, something neat happens:

Let’s say one of the distributor’s incantations steps into the realm of nothingness (an empty branch). It’s like it was never there. For your investment, this means if one path leads to cash, it gets ignored for distribution purposes. So, your capital isn’t sitting idly by; it’s fully engaged in the game, either all in on SPY or chilling in cash:

It’s a nifty trick, right? But here’s the kicker: this magical disappearing act only works with equal weighting. Try it with custom or inverse volatility weighting, and the magic fizzles out — you must fill those branches.

The inclusion and special treatment of empty branches under equal weighting open up a whole new playbook for expressing your investment strategies in QuantMage. How will you play it?