Lessons from March for the Fallen

On September 28th, 2019, I had the privilege of participating in March for the Fallen (#MFTF), an event that honors military soldiers who lost their lives defending our country and our freedom. Participants in the event—which takes place at the Pennsylvania Army National Guard base in Fort Indiantown Gap—can choose a 5K run or a 14-or 28-mile march. Everyone is free to set their own pace and take as much time as they need to… Read More

The Rising Bar for Active Management

By Jack Forehand, CFA (@PracticalQuant) Active managers as a whole have always been pretty bad at their job. Depending on what data source you use and what time frame you look at, somewhere north of 80% of active equity managers underperform their benchmarks after fees over long periods of time. When building Validea, we’ve tried to key in on those individuals and strategies that have a long term record of success, but the number of… Read More

Why Use One Value Factor When You Can Use Many

By Justin Carbonneau (@jjcarbonneau)—-Interested in chatting with Justin – let him know.—- Suppose you wanted to find the value stocks in today’s market using common value ratios. Which would you use and why? Would you lean more heavily on the price-to-book ratio, which is largely used in academic testing and originates out of the world of Graham & Dodd? Or would you rather use something like the price-to-earnings ratio, which is more common and uses… Read More

Active Managers are Flopping Where They Shouldn’t Be

Although active managers argue that “inefficient investment areas like small-cap stocks and emerging markets are where they shine,” a new report from Willis Towers Watson found that they are missing their benchmarks. This according to a recent article in Institutional Investor. The article says, “According to WTW, less than half of managers have delivered returns above benchmarks over five, seven, and ten-year time periods, even before fees are subtracted.” After accounting for fees, the report… Read More

Ivy League Endowments Are Making the Same Mistakes

Return data from university endowments for the fiscal year ended June 30th “is not pretty,” writes columnist Barry Ritholtz in a recent Bloomberg article. Ritholtz cites return estimates of 8.7% as “too optimistic” compared to actual gains including: Harvard: 6.5% Yale: 5.7% University of Pennsylvania: 6.5% Dartmouth: 7.5% During the same period, Ritholtz reports, the S&P 500 saw total returns of 10.4%: “This underperformance is consistent with the record of the past decade, with none… Read More

Ray Dalio’s Power Branding

A report released earlier this month by Peregrine Communications shows that Bridgewater Associates founder Ray Dalio is mentioned more often in the media than State Street Global Advisors and Natixis Investment Managers combined. This according to a recent article in Institutional Investor. At $150 billion in assets, Bridgewater is smaller than many traditional investment companies, the article reports, yet the firm earns “high scores in almost every marketing category that Peregrine measured—except media sentiment.” The… Read More

The ‘Sweet Spot’ Stocks Most Investors Miss

Midcap stocks have been met with indifference by many investors, but may be worthy of some attention, according to a recent article in Investor’s Business Daily. So far this year, the article reports, midcaps (stocks valued at an average of $4 billion) are outperforming their small cap peers, but tend to “fall through the cracks” since they’re below the large-cap threshold ($8 billion) and above the small-cap threshold ($1 billion). The article cites comments from… Read More

Shiller: What People Say Can Set Off Recession

While economic and monetary policy as well as “leading indicators” can provide insight regarding the state of the markets and the economy, “they have severe limitations as forecasting tools. This approach will not produce a definitive advance reading of a major shift from growth to contraction: a recession.” This according to a recent article by Yale professor and Nobel Laureate Robert Shiller for The New York Times. Predicting a recession is extremely difficult to do,… Read More

One Quant Sees Value Rotation as Growth Bubbles Over

Value stocks are “poised to generate some of their best returns in a quarter-century,” says QMA CEO Andrew Dyson (QMA is the quantitative arm of PGIM). This according to a recent article in Barron’s. Noting the ongoing debate on Wall Street regarding whether the recent value rebound is a short-term shift or the beginning of a sustainable comeback, the article says that in a research report Dyson argued that recent earnings and earnings expectations for… Read More

How Value Investors Can Navigate Short-Term Volatility

In a recent interview, Samantha McLemore, CFA, portfolio manager of Miller Value Partners‘ Opportunity Equity fund, offered insights regarding how value investors can navigate market turbulence. Here are some highlights of McLemore’s comments: “We think it’s premature to call the end of the bull market and to call for a recession, but at the same time, risks have risen primarily on the trade side and on the possibility for a monetary policy error.” Strength we’re… Read More

Ritholtz: Passive Doesn’t Rule the World

“The hype about passive taking over the investing world is just that–hype.” This according to columnist Barry Ritholtz in a recent article for Bloomberg. “Active management in the U.S. trounces passive by a ratio of 8-to-1 in dollar investments,” writes Ritholtz, adding, “Expand that to include the entire world, and the ratio is closer to 15-to-1. If we include fixed income in our calculations the ratio balloons to 60-to-1.” The buzz about passive investing, he… Read More

Swedroe: New Findings on the Low-Risk Anomaly

New research on the low-risk anomaly—in which less risky stocks earn higher risk-adjusted returns—shows “exactly which types of stocks are likely to perform poorly over time, especially in a bear market.” This according to an article in Advisor Perspectives by Larry Swedroe, director of research for the BAM Alliance. The article offers a summary of the study results, which were published in the June 2019 issue of the Journal of Financial and Quantitative Analysis: “It… Read More

Shift from Momentum Proves Boon or Einhorn’s Greenlight Capital

David Einhorn’s Greenlight Capital hedge funds gained 8.4% in September, bringing average weighted returns for the year to 24%, the company reported. This according to a recent article in Bloomberg. “Einhorn, who has remained committed to his strategy of buying beaten-down stocks while shorting growth companies, is in the midst of a resurgence following his worst year on record,”‘ the article  reports, adding that in 2018 his firm lost 34% in its main fund. That… Read More