Three Slogans that Don’t Work for Money Managers, But Should

By Jack M. Forehand — One of the interesting things about investing is that the approaches that work the best in raising capital and obtaining clients are often the worst approaches in terms of producing the best long-term outcomes. Things like chasing strong recent performance, owning the stocks everyone wants to own, and the belief that successful investing needs to be complex all look great on paper, but none of them typically lead to optimal long-term performance. So I thought it would be fun to take a look at some possible investing marketing messages that would never work, but that […]

Factor Strategy Focus – Benjamin Graham

By Jack Forehand — When we started following guru-based models, the term factor investing didn’t exist. We just wanted to find a way to outperform the market, and we realized that only a very small group of investors had successfully done that – and we certainly weren’t in that group. So we decided to follow investors who had long-term records of beating the market and whose strategies could be quantified. We read their books and research papers to try to find out how they did it. We researched strategies by legendary investors like Warren Buffett, Ben Graham, and Peter Lynch, […]

The Investor as a Storyteller

By John P. Reese — The celebrated author Mark Twain said, “It’s not what you don’t know that kills you, it’s what you know for sure that ain’t true.” Twain’s point is well taken, and a keen interpretation of the human condition. As a species, we are extremely accomplished at spinning tales and making meaning, whether based in logic or not, and formulating decisions based on those stories. A precarious tendency when it comes to investing. The award-winning journalist and novelist Will Storr’s book The Unpersuadables: Adventures with the Enemies of Science (2014 Picador/Overlook) delves into the psychology and neuroscience […]

Sensible Stock Picks Based on Fundamentals

While some forms of stock picking can be risky, choosing stocks based on proven strategies and underlying fundamentals can “increase an investor’s odds of enjoying outperformance over time,” writes Validea CEO John Reese in a recent Forbes article. Reese explains that stock picking resides on a continuum comprised of varying approaches and combinations of approaches. He describes the philosophy of Benjamin Graham, the legendary investor and mentor to Warren Buffett who is widely viewed as “The Father of Value Investing,” and how his fundamentals-based investment strategy formed the basis for some of the stock screening models Reese developed. Using these […]

John Bogle Shares Thoughts on Professional and Business Values—Part 3

An essay by Vanguard founder John Bogle, published in a recent issue of the CFA Institute’s Financial Analysts Journal, offers insights and guidance concerning the need for balance between professional values and business values in the world of investing and finance. This is the third installment of a five-part series outlining highlights of the essay. Bogle uses the examples of Adam Smith and Benjamin Graham, trailblazers in professional investing, to illustrate the evolution of the industry: Smith, whose book Theory of Moral Sentiments in 1759, highlights the importance of prudence in business dealings: “The care of…the fortune…is considered as the […]