The Profitability Factor

Phil DeMuth discusses a possible breakthrough for factor-based investors known as “Profitability”. “Over time, tilts towards value, momentum and profitability have outperformed the market, and due to the diversification benefits, a combined portfolio of these three has provided much higher reward per unit of risk and a significant reduction in extreme risk or losses. Thus, Read more about The Profitability Factor[…]

Smart Betas and Tourist Investors

Rick Ferri correctly notes: “Wall Street is always coming up with cunning new marketing techniques to attract tourist investors. These are less-sophisticated individual investors and advisors who are easily wowed by glitzy industry trends, only to abandon them when the strategy falls short of expectations.”  Read the full article >>

Seven Predictions for 2014

Chuck Jaffe writes: “In nearly 20 years of covering the mutual fund business, I’d like to think my annual forecasts for what will happen in the industry in the year ahead have been significantly more accurate. I have typically gotten about three-fourths of my prognostications right—and when I’m off, typically, it’s more a case of Read more about Seven Predictions for 2014[…]

The Fama-French Three Factor Model

This is an excellent review of factor-based investing written by Frank Armstrong III: “The Fama French Three Factor Model provides a highly useful tool for understanding portfolio performance, measuring the impact of active management, portfolio construction and estimating future returns. The Three Factor Model has replaced the Capital Asset Pricing Model (CAP-M) as the most Read more about The Fama-French Three Factor Model[…]

No Silver Bullets in Investing, There’s Just Snake Oil in New Bottles

This is a brilliant piece from James Montier of GMO. “Modern day investment management resembles, sadly, another old profession – and I’m not thinking of the oldest one, although there may be parallels there as well. Rather, I’m thinking of ancient alchemy with its near constant promises to turn lead into gold, just as investment managers repeatedly offer Read more about No Silver Bullets in Investing, There’s Just Snake Oil in New Bottles[…]