Asset Management has become a more challenging place to make a living in the past decade. On the strategy side, alpha has become much more difficult to generate, as skill within the industry and computing power have risen and factor-based strategies have become more widely available. On the business side, falling fees and increasing market share for the largest players have made it very difficult for smaller firms to compete. But despite that, some smaller… Read More
The ETF landscape has been undergoing significant change in recent years. Although the lowest fee products and the largest providers continue to dominate, several new trends have the potential to shake things up in the coming years. Proponents of things like ESG think they will change the ETF space in major ways. And supporters of Direct Indexing think it has the potential to upend the ETF industry as a whole. But there have been many… Read More
By Jack Forehand (@practicalquant) We have just passed the one-year mark of our Five Questions interview series. When we first launched the series, I wasn’t sure how it would go. I didn’t know if we could get the types of interesting guests I was hoping for. I also wasn’t sure if I could ask the quality questions it would take to make the interviews interesting (I still am not sure about that). Despite the apprehension… Read More
If I asked you to name the greatest investor of all time, you would likely immediately think of Warren Buffett. And there is good reason for that. Buffett has put up 20% annual returns since 1965, which is about double what the market returned over the same period. If you didn’t name Buffett, you might think of Peter Lynch, which would be another good choice. Lynch steered the Magellan Fund to a 29% return from… Read More
By Jack Forehand, CFA (@practicalquant) There are many skills that can benefit you as an investor. Being smart is certainly an asset, although it can also get you in trouble if you don’t know your limitations. The ability to control your emotions is also a huge plus. But I think the most important skill may be the ability to think critically. Having a process you use to view the investing world through and following that… Read More
By Jack Forehand, CFA (@practicalquant) Factor timing is a pretty controversial topic in the quantitative investing world. On one hand, we are all taught that we should buy low and sell high, so it seems intuitive to add exposure to factors that are out of favor. But in reality, it isn’t that simple and factor timing is much more difficult than it would seem in theory. This issue has also divided some of the smartest… Read More
By Jack Forehand, CFA (@practicalquant) Investing in the stock market is a risky activity. The obvious risks like losing a large portion of your portfolio during a bear market, or underperforming the market by a wide margin if you employ an active strategy can be more than many investors can handle. Given th high level of risk that is inherent in investing, it doesn’t make sense to take more risk than you have to. But… Read More
By Jack Forehand, CFA (@practicalquant) Recency bias can be a major issue for many investors. When we analyze the probability of any event in the market occurring, we tend to rely more on the recent past than we should. That can mean that we give too much credence to the most recent year or most recent few years. But it can even go further back than that. For example, when we think about what a… Read More
By Jack Forehand, CFA (@practicalquant) Anyone who reads my articles regularly knows that I am a big user of Twitter. Some of the best investors in the world regularly post to the platform and it is hard for me to describe the amount I have learned from using it. My favorite people to follow on Twitter are those who make me think about things in different ways than I currently do. One person who certainly… Read More
This is Part II of my interview with Tobias Carlisle of the Acquirer’s funds, which just released its first ETF, the Acquirer’s ETF (ZIG) earlier this year. In Part I, we talked about some of the arguments against value investing and how they can be refuted. You can read that here. In Part II, we talk more about the intricacies of building a value portfolio. As a reminder, this interview was taken from a phone… Read More