Thoughts, ideas and insight from the top minds in the investment world
By Jack Forehand (@practicalquant) — Since I was twelve years old, I have been very active in competitive sailboat racing. It is a great respite from the world of managing quantitative investing portfolios that I exist in during the week. And it offers me an opportunity to be outside, work together with other people in a team, and stimulate my mind with the tactics and strategy that are involved. When I was younger, my experience with… Read More
By John Reese (@guruinvestor) — It’s been over a decade since the financial crisis that led to the deepest economic downturn since the Great Depression, one that pulled the financial rug—and jobs– out from under nine million people and led to foreclosures on approximately eight million homes. Berkshire CEO Warren Buffett—who was born in 1930—appreciates the lessons learned by both events, so much so that in the hallways of his company’s Omaha, Nebraska headquarters he… Read More
Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] Could Simple be the New Complex? [2] Value Investor Channels Buffett [3] Swedroe on Factors in Emerging Market Stocks [4] Passive Investing Could Cause Market Trouble ——- Photo: Copyright: arcady31 / 123RF Stock Photo
A recent Barron’s article profiles value investor Fred Copper, lead manager of the Columbia Overseas Valuefund, who has learned that the best way to beat his benchmark (the MSCI EAFE Value index) is to “not invest like it.” Copper has adopted a more flexible definition of value than some of his peers, based on his belief that traditional style benchmarks for value funds include a significant amount of cyclicality–meaning they include stocks that are sensitive… Read More
In a recent article for ETF.com, BAM Alliance director of research Larry Swedroe outlines findings of an August 2018 study on factor-based investing titled, “The Cross-Section of Equity Returns in Emerging Markets.” Among the many findings of the study–which covers 27 emerging market countries for the period between 1988 and 2014—here are some highlights: Size, value and momentum anomalies are statistically significant using value-weighted portfolios; After controlling for company size, the book-to-market ratio and momentum… Read More
Index investing in the commodities market hasn’t done so well, according to an article in The Wall Street Journal. The article cites data from Sam Stovall, chief investment strategist at CFRA Research, who said that since January 1970, investors who held the S&P 500 for at least 12 years would “always have had positive returns including dividends.” Commodity indexes, however, have not provided that type of return, says PNC investment strategist Amanda Agati, who argues… Read More
Facebook, Apple, Amazon, Netflix and Google parent Alphabet “can’t get away from each other,” says an article last month by Bloomberg columnist Nir Kaissar, who argues, “But look closely and it’s no longer clear why they should be lumped together at all.” For example, Kaissar points out, the Global Industry Classification Standard (GICS) classifies neither Amazon nor Netflix as tech companies–but rather tags Amazon as a retailer and Netflix as an entertainment company. As of… Read More
“A fundamental shift in market structure towards rules-based, passive investing over the past decade means a lot of trading is no longer based on fundamentals” and the shift could lead to a global market downturn, according to a recent article in the Financial Times. The concern has risen to the Fed, who will address the topic at this year’s economic symposium in Jackson Hole. Passive investments ignore fundamentals, the article says, citing the example of… Read More
According to recent research from Robeco Asset Management’s David Blitz: “hedge funds have hitched their wagon to stocks with large equity-price swings—a misguided strategy over the long haul.” These findings were reported in a recent Bloomberg article. In an interview, Blitz said, “The fact that hedge funds are positioned like investors in high-volatility stocks, this does not contribute positively to their returns.” Blitz says that moving away from a low-volatility factor represents one of the… Read More
An article in Bloomberg reports that investors are penalizing earnings misses more than surprises by the widest margin in almost 2 years. Data gathered by Bank of America Corp. showed that in July, S&P 500 stocks that beat estimates outperformed by only 1.5 percentage points while those that reported earnings misses underperformed by 3.6 percentage points, the widest margin in seven quarters. “Living up to, let alone exceeding, Wall Street’s expectations has become a bigger… Read More
In an article for Barron’s, Mark Hulbert outlines the findings published in a paper by University of Chicago economics professor Eric Budish titled, “The Economic Limits of Bitcoin and the Blockchain.” According to Hulbert, Budish’s paper argues that bitcoin is “destined to play no more than a ‘bit’ role in the global monetary system because, if it were to grow ever more significant, it would become increasingly vulnerable to an attack that could destroy much… Read More