Investing Lessons from the Best Poker Players

Researchers on game theory say that poker strategies can translate into lessons for investors, according to a recent article in The Wall Street Journal. Carnegie Mellon professor of philosophy Kevin Zollman says that investors dislike losing more than winning and are prone to what behavioral finance refers to as the disposition effect, which leads them to sell assets that have increased in value but hold onto those that have decreased in value. The same behavior… Read More

Investing Lessons from Peter Lynch

A recent article in Fidelity.com offers insights from investing legend Peter Lynch. Here are some highlights: “In the stock market, the most important organ is the stomach. It’s not the brain.” Lynch says tolerance for pain is paramount because there will always be market declines. “Most people do really well,” he says, “because they just hang in there.” “More people have lost money waiting for corrections and anticipating corrections than in the actual corrections.” During… Read More

Investing Insights from Joel Greenblatt

During a recent interview at the CFA Society New York, author and legendary investor Joel Greenblatt offered perspective and insights regarding the state of value investing and its future outlook. Here are some highlights: ·      Greenblatt defines value investing as buying shares of a strong business at a discount. “The whole value versus growth thing is a little bit off,” he said, arguing that low price-book and low price-sales metrics are factors more than indicators of… Read More

Some Lessons For My Former Investing Self

By Jack Forehand (@practicalquant) One of the most dangerous games we all can play in investing is the game of looking back and thinking about what we should have done. Hindsight bias leads us to believe that we should have known all sorts of things that there was no way to know at the time, and that leads to conclusions that would have been very difficult to draw with the information that was available then.… Read More

Lessons from a Quantitative Investing Conference – Part Deux

By Jack Forehand (@practicalquant) Last week, I had the privilege of attending Alpha Architect’s annual Democratize Quant conference for the second time. The conference brings together leaders in the fields of quantitative investing and asset management to talk about the state of the business, and to share ideas to help all of us learn and improve our investment approaches. Given how good last year’s conference was (my summary of that is here), they were going… Read More

Investor Options When Star Manager Leaves

Using the example of Henry Ellenbogen’s departure from T. Rowe Price at the end of this month, an article in Barron’s speaks to whether investors should “take your money and run” when a star manager leaves. Although Ellenbogen is working toward a smooth transition with his successor, Josh Spencer, the article notes that “manager changes do pose risks to investors. For one, a new stockpicker may not execute the fund’s strategy as effectively.” Of more… Read More

Swedroe: Investing Offers No Safety Flags

In an article for ETF.com, BAM Alliance director of research Larry Swedroe argues that there are no assurances as to when it’s safe to invest in the stock market. “For many investors today,” he writes, “the market looks too dangerous. So, they don’t want to buy, or they decide to sell.” The problem with that approach, he describes (using the metaphor of a life guard flag at the beach) is that “there is never a… Read More

Market Wisdom from Howard Marks

In a recent podcast, author Tim Ferris interviews Howard Marks to discuss the Oaktree Capital co-founder’s views on investor psychology, his new book Mastering the Market Cycle: Getting the Odds on Your Side, and macro issues related to the economy. The lengthy discussion spans Marks career, life lessons, and how to navigate an uncertain and random world. Here are some highlights: Marks emphasizes the importance of knowing your limitations as an investor. The phrase, “I don’t… Read More

The Pitfalls of Back Testing

By Jack Forehand (@practicalquant) —   Active investment managers have a pretty dismal long-term record. Depending on which study you look at somewhere between 80% and 90% of managers underperform their benchmarks over the long-term net of fees. But what if I told you there was a way to turn those results upside down? What if there was a world where managers beat their benchmark 90% of the time? What if there was a world where managers… Read More

Lessons Learned Since the Financial Crisis

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