Common Mistakes in Factor Investing

By Jack Forehand (@practicalquant) —   With the release of Michael Batnick’s new book “Big Mistakes: The Best Investors and Their Worst Investments” last week, the topic of mistakes in investing has been front and center on Twitter and on investing blogs. Many investors view mistakes as a topic they want to avoid. Most of us don’t want to admit when we’re wrong and we certainly don’t want to revisit it in the future and bring back… Read More

Every Investor Should Read These O’Shaughnessy Tweets

In a recent Bloomberg article, columnist Barry Ritholtz references a provocative tweetstorm by famed investor James O’Shaughnessy regarding “investor ignorance.” “The post, as regular readers know,” writes Ritholtz, “was about one of my favorite subjects. To be more precise, it was about our own lack of understand of our own lack of understanding.” O’Shaughnessy’s message centers on how important it is for investors to understand what they don’t know, starting with how the market will… Read More

Why What Sells Isn’t What Works in Investing

By Jack Forehand (@practicalquant) —  There are many disconnects in the asset management industry between what sells and what succeeds. Often, what is the most effective for obtaining clients is the exact opposite of what actually produces the best investment returns.  Every investor is subject to a series of behavioral biases that they probably don’t even recognize. Good financial planners use those biases for good by trying to make clients aware of them and helping to… Read More

Housel on the Irony of Luck

In a recent article for the Collaborative Fund, Morgan Housel contrasts luck and risk as they relate to investing, arguing “you cannot understand one without appreciating the other.” “This is the irony of investing,” writes Housel, “Risk and luck are different sides of the same coin, but we treat one as critically important, and the other like it doesn’t exist—at least for you, when you succeed.” Housel offers the following insights/comparisons: Investors should quantify both.… Read More

Stock Market Lessons Learned in 2017

By John Reese (@guruinvestor) — Over the past twelve months, we’ve seen the bull market continue to trudge ahead with highs in many U.S. indexes and growth in various sectors and industries. With the news of major tax reform comes optimism for continued corporate earnings strength. That said, however, there are also growing concerns regarding an overvalued market and a potential correction. Let’s review what we’ve learned over the past twelve months: Bull markets don’t… Read More

What BitCoin Can Teach You About Investing

By Jack Forehand, CFA (@practicalquant) — I am unfortunately not one of the people who has enjoyed the two thousand plus percent return of BitCoin this year. I have spent a lot of time studying it, and in hindsight I certainly wish I had bought it when I began that research process, but as a disciplined (at least most of the time) value investor who runs fundamental based investment strategies for a day job, I… Read More

What A 238 Mile Sailboat Race Can Teach About Investing

By Jack M. Forehand —  I have raced sailboats since I was 12 years old. It has always been a passion of mine. The combination of being on the water while doing something competitive at the same time has always been a big draw for me. Over Labor Day weekend, I competed in the Stamford Vineyard Race on a friend’s boat Threebeans. The race includes many exhilarating moments, but also significant down time, and during… Read More

Former Franklin Templeton CEO Says Stick to your Discipline

Over a more than 46-year investment career, former Franklin Templeton portfolio manager Don Reed has learned patience, says a recent Morningstar article. In an interview on January 31st (the formal date of his retirement), Reed offers investors the following insights: Sticking to your guns can be tough: During the tech bull market of the late 1990s, Reed recalls, Templeton owned no tech stocks because the companies didn’t meet the firm’s valuation criteria. With some stocks,… Read More

Morgan Housel’s Farewell to Motley Fool

In his final column for the Motley Fool (posted August 30th), Morgan Housel reminisces about his early days and what he has learned in nine years with the multi-media financial services firm: Investment fees are falling. Investment costs are not. Housel writes that index fund fees now “round to zero. That’s a big win for investors. But the emotional cost of investing is as high as it’s ever been.” Most investment success boils down to… Read More

Investing Lessons from Brexit

The impact of Britain’s vote to leave the EU may take years to play out, but there are several lessons investors can learn in the meantime. Daisy Maxey of The Wall Street Journal offers the opinions of some investment and behavioral-finance experts: Timing: A Loser’s Game Translating geopolitical uncertainty into potential market movements is very difficult because, according to William Bernstein, investment manager at Efficient Frontier Advisors in Eastford, Connecticut, “it can be highly counterintuitive.… Read More