Five Questions: Value Investing with Wes Gray

By Jack Forehand (@practicalquant) —   This is the first interview in our new Five Questions series. Each month, we will take an in depth look at a specific issue in the market through a conversation with a leading expert in the area. The goal of this series is to move beyond the high-level discussion typically available in the media and to learn from someone who has studied the issue in depth. In our first interview, we… Read More

The Inexact Science of Market Valuation

By Jack Forehand (@practicalquant) —   When it comes to market valuation, investors love certainty. They want to hear definitively that the market is cheap, or the market is expensive, and that they can use that information to predict where it is headed in the short-term. As a result, strategists that make these type of market calls (particularly the ones who do so on the negative side), can generate significant headlines and attention for themselves. None of… Read More

Why Every Investor Should Join Twitter

By Jack Forehand (@practicalquant) —   I am not a big user of social media. I have had a Facebook account for a long time, but I almost never use it. I have never used Instagram. And don’t really even understand the concept behind SnapChat. None of this is meant to knock social media. It has changed the world, and in many ways for the better. It just isn’t for me. But all of that changed a… Read More

Beware of Binary Market Indicators

By Jack Forehand (@practicalquant) —   Whenever the market declines, the news is filled with information that can lead investors to panic. That is no surprise since doom and gloom sells. Even with the small pullback we have recently had (we can’t even call it a correction since the market hasn’t declined 10%), there has been no shortage of negative headlines and calls for impending doom. I have previously written about the dangers of letting these headlines… Read More

The Challenges of Market Cycle Timing

By Jack Forehand (@practicalquant) —   Everyone wants to follow the investing advice of market legends. After all, that level of success is typically not achieved by accident. Investors want to learn from their wisdom. They want to do what they do. In some cases that can be a slippery slope, though, and it is important to consider the advice of market legends in the context of your own personal situation. . Howard Marks’ new Book, Mastering… 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

Could Simple be the New Complex?

By Jack Forehand (@practicalquant) —    Since I was twelve years old, I have been very active in competitive sailboat racing. It is a great respite from the world of managing quantitative investing portfolios that I exist in during the week. And it offers me an opportunity to be outside, work together with other people in a team, and stimulate my mind with the tactics and strategy that are involved. When I was younger, my experience with… Read More

The Benefits of the Other Side

By Jack Forehand (@practicalquant) —   Polarization has become the new thing. Everyone seems to have such strong opinions one way or the other on every issue that they just can’t see how the opposite opinion to their own is even possible. They can’t see how a rational human being could think differently than them. Obviously, the biggest place we currently see this is in politics. More and more political opinions are cast in stone and are… Read More

The Dangers of Headline Investing

By Jack Forehand (@practicalquant) —   It was November 2016. After improbably winning the Republican nomination, Donald Trump was a significant underdog in the general election. Almost every pundit gave him very little chance to win. For those of us who invest in the stock market, that was considered a very good thing. After all, the stock market hates uncertainty. The consensus view among market experts was that in the unlikely scenario that Trump did win, we… Read More

Knowing When Your Investment Process Has Failed

By Jack Forehand (@practicalquant) —   It is widely accepted in investing that process is more important than outcome. Investing strategies that have no long-term basis can work very well in the short-term, and strategies that have proven themselves over time can struggle for long periods of time. So the most readily available information to evaluate an investment process (short-term performance) is usually the least reliable. The balance of evaluating process vs. outcome is crucial to investing… Read More