Practical analysis for investment professionals

alpha


Is Active Management Dead? Not Even Close

Rumors of active management's demise are greatly exaggerated, AthenaInvest's C. Thomas Howard tells Jason Voss, CFA, and he has the evidence to make his case and the tools to help change active management for the better.

Weekend Reads: No Alternatives and Things That Really Matter

The search for alternatives, things that really matter in the world, and a brief foray into the active vs. passive management debate are the topics included in this week's edition of Weekend Reads.

Alpha Wounds: Lack of Independent Judgment

Active managers are often viewed as Sherlock Holmes-style detectives gathering facts, interviewing witnesses, and developing theories to inform their investment judgments. In the latest edition of his Alpha Wounds series, however, Jason Voss, CFA, argues that this perception rarely reflects reality.

Meditation for Investment Professionals

Science demonstrates that meditation reduces stress, improves creativity, counteracts behavioral biases, and improves ethical decision making. It can be an incredibly useful tool for investment professionals.

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.

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.

Alpha Wounds: Bad Adjunct Methodologies

One of the reasons active investment managers compare poorly to passive ones is bad methodologies on the part of investment industry adjuncts.

Alpha Wounds: Benchmark Tail Wags the Portfolio Management Dog

Active management is under siege from many corners. Yet many of these alpha wounds are self-inflicted. Chief among them is benchmark idolatry.

Women and Alpha: “Money Is on Everybody’s Mind”

Have you ever wondered why women and men make different investment decisions and what effect, if any, this has on alpha?

Beating the Market: Four Mistakes to Avoid

Active management is a tough gig. But knowing what does not work at least gets investors a step closer to finding their own secret sauce. Here are a few suspicious approaches some active managers pursue. Rather than adding alpha, these are more like illustrations of how not to beat the market.



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