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Top 10 Posts from 2016: How to Read Financial News, Active Investing

Top 10 Posts from 2016: How to Read Financial News, Active Investing

The end of the year is a good time to look back and take stock. What Enterprising Investor articles did readers find most compelling in 2016? The results are illuminating. Our top content runs the gamut from the granular — tightly focused, practice-oriented material on starting a firm and what to read to stay informed — to more “big picture” analysis on negative interest rates and the ongoing active vs. passive debate. Taken together, they reflect the currents at work in the investment management profession at both the system-wide and individualized levels. Read more

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Alpha Wounds: Short-Termism

Short-termism is a major alpha wound that hurts the performance of active investment managers. Short-termism leads to higher trading costs, makes it harder to properly evaluate the management of businesses, imposes time constraints that prevent investment strategies from reaching full flower, and increases bias. New research demonstrates this pressure is coming from clients rather than from investment managers themselves. Read more

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Alpha Wounds: Passive Management Is Not Passive

Passive investing is not actually passive. When looked at this way, it means there are important lessons for active investors. Examples include the hidden story behind market capitalization and the importance of low turnover. This also opens passive investing up to criticism regarding the free passes given to it in terms of risk, cost, and momentum. Read more

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