Practical analysis for investment professionals

Dumb Alpha


Dumb Alpha: The Drawbacks of Compound Interest

With short-term forecasts, random walks tend to outperform the accumulated wisdom of professional forecasters. That estimation uncertainty is not reduced for long-term forecasts either, because mean reversion cannot overcome the effects of compound interest. Luckily, there is a range of techniques, from simple to sophisticated, that can help long-term investors with this challenge.

Dumb Alpha: Are Your Forecasts Better Than a Random Walk?

Research confirms a “wisdom of the crowds” effect insofar as only a few analysts seem able to consistently outperform the consensus forecast compiled from many different analysts.

Dumb Alpha: The Ignoramus’s Guide to Asset Allocation

Modern finance constantly busies itself with the development of new, more sophisticated ways to manage risk and generate returns. These efforts, however, generate their own risks. On the opposite end of the spectrum are simple ways to invest that have a proven track record of providing superior investment outcomes.



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