A “Protective” Alternative to the 60/40 Portfolio

By Justin Carbonneau (@JJCARBONNEAU) As this Forbes article points out, the 60/40 portfolio is “one of the most dominant investment approaches of our time”. This asset allocation is incredibly simple and it’s worked, but with U.S. stocks up nearly 350% off the 2009 lows and interest rates at historical lows, some investors are wondering if the 60/40 stock/bond portfolio has the same risk reduction and return benefits as it has in the past. This article… Read More

BlackRock’s Ang Favors Momentum

In a recent interview with Barron’s, BlackRock’s head of factor investing Andrew Ang said he favors momentum stocks. Here are some highlights from the interview: While Ang does not believe in market-timing in and out of factors, he leans toward a “multifactor combination” and rotation of factors throughout an economic cycle. “Our biggest theme,” he adds, “is that we are overweight momentum. Momentum has momentum itself right now.” He mentions the FAANG stocks as major… Read More

AQR’s Antti Ilmanen Predicts Low Returns

Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes, warned AQR principal and researcher Antti Ilmanen at the 2016 CFA Institutes European Investment Conference. This according to an article earlier this month in Enterprising Investor. “I’ve got bad news as a starter,” Ilmanen told the conference audience. He suggested that for a balanced portfolio, the real return would be closer to 1% annually than… Read More

Making the Most of Market Anomalies

David Larrabee, Director of Member and Corporate Products at CFA Institute, gave investors an insider’s thought from the 69th CFA Institute Annual Conference in his latest article. Empirical data suggests that there are a number of opportunities for disciplined investors to take advantage of market anomalies in a “meaningful and profitable manner”. Larrabee reminds investors of the macroeconomic picture by discussing chief strategist at BCA Research Peter Berlin’s key advice of what to do in… Read More

Momentum Works, But Is It For You?

A recent study from three economists from the Federal Reserve Bank of Chicago confirmed that momentum investing can be a winning investment strategy, even when you account for the risk of periodic crashes. But in a piece for The Wall Street Journal, Robert Litan says that doesn’t mean investors should go all-in on momentum approaches.

Hussman Talks “Extreme Strains”, and Momentum Investing

Fund manager John Hussman says he sees “extreme strains” ahead that many investors are underestimating. In an excerpt from his most recent market commentary posted on Seeking Alpha, Hussman talks about how he missed some 2009 and 2010 upside “as we worked to make our approach robust to Depression-era outcomes”. Hussman says he thinks that will prove to be a good thing in the long run. “From a fiduciary perspective, I continue to believe that… Read More

Momentum Not Dead, According to Study

Are momentum-focused investment strategies dead? MarketWatch’s Mark Hulbert recently highlighted some new data that indicates they are not. Hulbert says that after “spectacular losses” in parts of 2008 and 2009 — many began to believe that a momentum-focused stock-picking approach — which keys on stocks with the best recent performance — was no longer effective. But, Hulbert says, “New research … has found that, by following a simple rule of thumb, you can markedly increase… Read More