7 Traits for Investing Greatness:
#2 Process, not Outcome
#3 Ignore Forecasts & Predictions

Categories Author: Jim O'Shaughnessy, Investing

Active investing is hard. Plus, there’s a strong temptation to join the “masses going Passive” — or else get left behind. Following up on the first part of this article, here are the 2nd and 3rd Traits (of 7 total) that I think are necessary to be a successful long-term Active investor: Continue reading “7 Traits for Investing Greatness:
#2 Process, not Outcome
#3 Ignore Forecasts & Predictions”

7 Traits for Investing Greatness:
#1 Long-Term Perspective

Categories Author: Jim O'Shaughnessy, Investing

Years of experience have taught me that becoming a successful Active investor is extremely difficult, requires a very specific set of characteristics, and that many investors attempting to actively manage their portfolios today lack the emotional and personality traits necessary for success.

Investors with Passive portfolios — presuming they are adequately and broadly diversified — face only one real point of failure: reacting emotionally to a market selloff and selling their holdings, often near a market bottom.  Continue reading “7 Traits for Investing Greatness:
#1 Long-Term Perspective”

Book Marks:
4 Books About How to Think Better

Categories Author: Patrick O'Shaughnessy

“Summer” is over for many of us, sorry to say, and TMI1 has left our brains prone to being led astray over the past couple of months. If you’ve already read through the Summer Reading List prescribed in this post, here are some books that help us think in ways that make us less prone to errors — and/or hasty decisions — as we begin to wind down 2017.

Happy Reading,
— Patrick

Continue reading “Book Marks:
4 Books About How to Think Better”

Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative
(Part 2 of 2)

Categories Author: Ehren Stanhope, Investing, Market Cap

In the first part of this 2-part article, we define microcap stocks and their unique, transitory nature. This second part guides investors through the factor landscape in Micro and explores where investors can expect to find opportunities.

Factor investing is more effective in Micro than in any other cap range

Though factor investing has rooted itself squarely in large cap equities, we believe it significantly more effective in small and microcap — the eclectic corners of the market. Continue reading “Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative
(Part 2 of 2)”

Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative
(Part 1 of 2)

Categories Author: Ehren Stanhope, Investing, Market Cap

The ironic twist to the proliferation of “factor”-based strategies in recent years is that the overwhelming majority of these strategies are1 launching in U.S. Large Cap Equity — the most competitive arena for any financial market in the world. Sure, factors can be effective in large cap but, lately, discerning investors are discovering that the factor research in eclectic corners of the market is much more compelling. This article presents our findings in perhaps the most capacity-constrained of those eclectic corners: microcap. Despite some unique considerations as it relates to liquidity and tradability (see Part 2), the opportunity in Micro is hard to ignore.2 Continue reading “Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative
(Part 1 of 2)”

Podcast 2: Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative

Categories Author: Jim O'Shaughnessy, Insight, Investing

“What Works on Wall Street” Podcast
Many investors readily agree that alpha is scarce. It is hard to find, always in great demand, and requires skill to extract. The eclectic microcap universe provides a disparate group of continually evolving and devolving businesses with structural features that remain persistently attractive for investors…


Episode 1 transcript: Continue reading “Podcast 2: Microcaps’ Factor Spreads, Structural Biases,
and the Institutional Imperative”

Podcast 1: Factor Crowding, Cobras,
and Other Market Hyperboles

Categories Author: Jim O'Shaughnessy, Insight, Investing

“When a measure becomes a target, it ceases to be a good measure.”
— Goodhart’s Law1

“What Works on Wall Street” Podcast
After reading as many as 18 different WSJ articles on the subject, it’s understandable why investors might be up in arms about the alleged perils of factor crowding. We hope this discussion allays some of those concerns…


Episode 1 transcript: Continue reading “Podcast 1: Factor Crowding, Cobras,
and Other Market Hyperboles”

2017 Factor Alpha Newsletter
International ADR

Categories Investing, OSAM Research

While investors have long enjoyed the growth in U.S. equities (usually the largest allocation in their overall portfolio!), regional leadership is a cyclical pattern. At some point, it is very likely the U.S. will no longer be the highest-performing market globally. Huh?1 Sure, the U.S. equity market has risen 293% since its credit crisis bottom in March 2009 — versus Developed International and Emerging Markets “mere” rise of 150% and 154%, respectively. Well, this 2Q17 International ADR2 (IADR) edition of the Factor Alpha Newsletter, dispassionately, sans headlines and other noise, compares our built-in-house multi-factor themes to the MSCI ACWI ex U.S.3

Continue reading “2017 Factor Alpha Newsletter
International ADR”

5 Ways a Factor Alpha Approach
Can Boost REIT Portfolios

Categories Author: Chris Meredith, Author: Travis Fairchild, Investing

Here’s what we found:

  • The public real estate market is uniquely inefficient and a fertile ground for active, factor-based investing.
  • Real estate is a diversifying asset class with many benefits, but most investors are under-allocated.
  • Public REITs offer complementary exposure while avoiding the drawbacks and barriers to entry of private real estate, but with lower fees and no loss of performance. 

Continue reading “5 Ways a Factor Alpha Approach
Can Boost REIT Portfolios”

Visualizing Factors & Themes — What You See is What You Get

Categories Insight, OSAM Research, Value, Yield

“Is there a point where index funds theoretically can’t work a course?” asked Charlie Munger at this year’s Daily Journal Corporation Annual Meeting.1 “If everybody bought nothing but index funds, the whole world wouldn’t work as people expect.”

We agree.
So to help animate Munger’s premonition in real-time (see the cheery motion graphics below), our Team’s Developer / Performance Analyst)2 rolled up his coding sleeves and hacked into our “Factor Style Grid”.  Continue reading “Visualizing Factors & Themes — What You See is What You Get”