Jason Zweig on Potential Quantitative Model Crisis

A Ph.D. in Economics and former senior risk manager for Bridgewater Associates, Richard Bookstaber argues that while human judgment along with quantitative modeling can lead to better results than either alone, “when humans put blind faith in quantitative models, that’s dangerous.” This according to Jason Zweig in this month’s Wall Street Journal. The article discusses Bookstaber’s new book, The End of Theory, in which the author argues that computers and mathematical models perform well when… Read More

Zweig: Emerging Markets Look Good, But Don’t Rush In

Funds are pouring into emerging market funds, with one-twelfth of total holdings having come in over the past 90 days, writes Jason Zweig of The Wall Street Journal. Presumably, he says, the heavy inflow is in “hot pursuit of high recent returns” (the asset class is up 12.4% this year). While participating in these funds is a good idea, Zweig says, investors should be careful not to rush in. “These stocks aren’t so much absolutely… Read More

WSJ’s Jason Zweig on American Capitalism

The notion of capitalism as a mechanism in which “fat and happy” companies become acquisition targets is changing, writes Jason Zweig in last week’s Wall Street Journal. Zweig cites new research that shows “U.S. companies are moving toward a winner-take-all system in which giants get stronger, not weaker, as they grow.” A few “superstar firms,” he says, have evolved to dominate and crowd out competitors. Twenty years ago, he writes, the U.S. had more than… Read More

Zweig: Guard Against Following the Herd

Given the market’s currently stretched valuations, optimistic investors should be on their guard, says Jason Zweig of The Wall Street Journal. Zweig discusses new findings that show how the confidence of others can influence an individual’s decision-making to a larger degree than their own can. According to a recent report in the Journal of Neuroscience, there is a particular region of the human brain that monitors how positive other people are about their choices, writes… Read More

Zweig Says Fees Should be Linked to Performance

The practice by many fund managers of charging flat fees to clients regardless of their performance isn’t fair to investors, says Jason Zweig of The Wall Street Journal. The tides are changing, he says, but not quickly enough. Federal law allows a mutual fund to raise fees when it outperforms, but only if it lowers fees by the same amount should it underperform (a so-called “fulcrum fee”). However, Zweig writes, this isn’t the norm, and… Read More

Jason Zweig on Investing Fact Versus Fiction

The human mind seeks to “confirm its pre-existing beliefs while ignoring warning signs that we might be wrong,” writes Jason Zweig of The Wall Street Journal. He uses the example of the surprise Trump win to illustrate how people avoid admitting that they were wrong. “If it requires fibbing to ourselves,” writes Zweig, “so be it.” Psychologists define the brain’s tendencies using the terms confirmation bias and hindsight bias. The first drives us to find… Read More

Zweig on Investing Vs. Speculating

Every asset, writes Jason Zweig of The Wall Street Journal, “is an investment in some people’s hands and a speculation in others’. So it isn’t what you buy, but rather why you buy it, that determines whether you are investing or speculating.” Zweig explains that this distinction, which is often credited to legendary investor Benjamin Graham, may be flawed in that an investment can in fact be speculative in nature or actually resemble a hybrid… Read More

Zweig’s Market Survival Guide

There’s a lot of talk among investors about beating the market, but in a recent Wall Street Journal article  Jason Zweig suggests that many overlook the challenge of merely surviving it. “Of all the qualities an investor needs to succeed,” he writes, “stamina may be the most underrated.” Zweig cites Morningstar data showing that of the 525 U.S. stock mutual funds that existed thirty years ago, 223 are still operating today (of those, only six… Read More

When Taken by Surprise, Wait it Out

“Little is ever clear about an incoming president, and no more than usual—perhaps less—is clear about this one,” says Jason Zweig of The Wall Street Journal. In yesterday’s “Moneybeat”, Zweig warns that investing action during a time of “political shock” is best put on hold. In the article, he argues that few could have anticipated the precipitous plunge (700 points) in Dow Jones Industrial Average futures on Tuesday night, only to be followed by a… Read More

Zweig on Closet Indexing & Active Share

For many years, argues Jason Zweig in last month’s Wall Street Journal, “many fund managers haven’t done much managing at all.” Instead, he writes, they track market indices and “buy a bit more of this stock and a little less of that one, in what’s known as closet indexing.” The problem, however, is that active fund management clients are paying hefty fees for what amounts to passive management. “To call such chicken-hearted tweaks ‘active management’”… Read More