Thoughts, ideas and insight from the top minds in the investment world
By Jack Forehand (@practicalquant) — There are some areas of life where you can never have all the answers – no matter how much you know, how smart you are, or how good the school was you got from your degree from. Investing is one of those areas. As humans, we want to believe we can know everything. We want to believe if we work harder or read more, we can finally get to a place… Read More
By Jack Forehand (@practicalquant) — It is commonly accepted the beating the stock market over the long-term is really difficult. Over the past 15 years, about 70% of large-cap managers have trailed the S&P 500 and about 80% of small-cap managers have trailed the Russell 2000. Investors in these funds have done significantly worse than that. The so-called behavior gap, which measures the difference between a fund’s performance and the performance of investors within the fund,… Read More
Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] I Think, I Know, I Have No Idea [2] Tips for the Contrarian Investor [3] Research Affiliates Says Spread Factor Bets [4] Ritholtz Ranks What Helps or Hurts Investment Returns ——- Photo: Copyright: arcady31 / 123RF Stock Photo
Barron’s recently invited readers to submit letters they might write to Warren Buffett. One, which they published in June (by writer Andrew Bary), suggested that Berkshire shareholders might derive some comfort from knowing a bit more about Berkshire’s succession plan. “After 53 years at the helm,” wrote Bary, “isn’t it time to share the limelight with your likely successor and with Berkshire’s many managers? Investors would get to know them better and gain confidence that… Read More
A new Fidelity mutual fund that will be available only to Canadian investors will be run by two of the firm’s most successful managers, William Danoff and Joel Tillinghast. This according to a recent article in Bloomberg. The new fund, Fidelity Global Growth and Value Class, “marks the first time the managers will run a fund together,” according to the article, which says the fund’s goal is to “achieve long-term capital growth by investing in… Read More
Many analysts say that the rapid growth in U.S. corporate earnings may have peaked in the first quarter of this year, according to a recent article in The Wall Street Journal. According to FactSet data, the article says, earnings growth is expected to reach 19% in the second quarter, 21% in the third and 17% in the fourth, with numbers in the single digits next year. But some analysts argue that the slowing might be… Read More
In a recent Bloomberg article, columnist Barry Ritholtz ranks those factors that he believes drive investment portfolio returns. “An unexpected challenge in performing this exercise,” writes Ritholtz, is a tendency for some elements to offset others.” Ritholtz identifies eight “broad elements that typically determine the total return of any portfolio,” in descending order of importance (i.e. factors later in the list could potentially offset those listed earlier): Security selection: “No doubt,” writes Ritholtz, “better stock… Read More
In a recent article for ETF.com, BAM Alliance director of research Larry Swedroe discusses how factor investing can apply to the bond market, even though it has been slower to gain popularity in fixed income compared to the equity market. The article cites a study by a team at AQR Capital Management that “applied the value, momentum, carry [the tendency for higher-yielding assets to outperform lower-yielding assets] and defensive style premiums to country and maturity… Read More
A recent article in Morningstar highlights the firm’s research into historical trends in fund investor returns which show, “times have been good lately, and we can see that in a look at aggregate investor-return data through the first quarter of 2018.” The study analyzed open-end mutual fund investor returns over the trailing three-, five- and 10-year periods by asset class and by Morningstar category. By asset-weighting investor returns, the study was able to highlight the… Read More
At the 30th annual Morningstar Investor Conference held last month, passive strategist Adam McCullough interviewed Feifei Lee, director and global head of Research Affiliates Investment Management Group about her firm’s multifactor investment strategy. Here are some highlights: According to Lee, Research Affiliates offers investors a multifactor strategy that combines individual factor portfolios while remaining transparent with respect to which factors are under- or out-performing. The strategy employs five factors; value, momentum, low risk, quality and… Read More
A recent Bloomberg article by Allianz chief economic adviser Mohamed -Erian outlines recent global developments that have “exposed cracks in a seemingly happy” market environment, including: “Brexit, tariffs, currency meltdowns in Argentina and Turkey, a China growth scare, and a financial near-explosion in Italy,” to name a few. Although El-Erian argues that the inclination may be to consider each event as unique to its country, this approach “risks overlooking that something deeper is going on… Read More