The Benefits of Base Rates

By Jack Forehand (@practicalquant) —   Wall Street prediction season is upon us. It is the time of year when all the major investment banks and market pundits will issue their 2019…

When Hypothetical Becomes Real

By Jack Forehand (@practicalquant) —   The day you begin to follow a new investment strategy is typically a day of optimism. You have done your research, you have looked at the…

When Your Experience Fails You

By Jack Forehand (@practicalquant) —   Because it’s easier, we’re inclined to use our recent experience as the baseline for what will happen in the future. In many situations, this bias works…

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…

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…

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…

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…