A New Method for Rebalancing Helps Systematic Models Get Better

By Justin Carbonneau (@jjcarbonneau)—-Talk about the Markets and/or Invest with Justin —-A centerpiece for most systematic investing models is a “refreshing” of the portfolio positions, which is also often referred to as rebalancing. Simply put, on each rebalancing date certain positions are removed from the portfolio and replaced with better scoring stocks based on the strategy being followed. When you run investment models and the underlying company fundamentals and valuations change, it’s important to let… Read More

Ben Graham’s Biggest Contribution May Not Be Value Investing

By Justin J. Carbonneau (@jjcarbonneau) —  If you Google “Ben Graham”, you will see that his name is synonymous with the value investing philosophy, and rightfully so. His book, Security Analysis, which was published in 1934 during the heart of the Great Depression, kicked off the era of classic value investing — that is, buying stocks that look cheap based on their assets or earnings. Graham’s investing philosophy was greatly influenced by the excesses seen… Read More

Mauboussin: Understanding the Process Can Help Separate Luck and Skill in Investing

AAII editor Charles Rotblut, CFA, interviewed Michael Mauboussin, head of Global Financial Strategies at Credit Suisse, about the role of both luck and skill in investing (subscription required). According to Mauboussin, to separate skill from luck, you first have to look at the process that generates the output you are looking to achieve. In order to assess the process, you need to look at three important elements: Analytical: “having an ability to find situations in… Read More

How To Keep Emotion At Bay

Through the wonders of modern technology, it is simpler than ever to employ a systematic, proven approach to investing. But, as Chuck Jaffe notes in a recent MarketWatch column, investors need to be careful to keep emotion at bay when using systematic approaches. “All too often, investors believe they have found that prized vessel to prosperity — right up to the point where the system stumbles or fails, or where it turns up a ‘buy’… Read More