Excess Returns

No investor can match the combination of Warren Buffett's annual returns and the period of time he has been able to sustain them. Buffett has generated those returns in a variety of ways, many of which your average investor could never copy. But Buffett's greatest contribution to the investing world likely isn't his returns or his approach to picking stocks. Buffett's greatest contribution has been his willingness to help all of us become better investors. Through his writings, his annual meetings, and his general willingness to share his knowledge, Buffett has probably contributed more to educating other investors than anyone in history. In this episode, we look at some of the biggest lessons investors can learn from Buffett. 

We hope you enjoy the discussion. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

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LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

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The way economic policy is implemented has undergone some major changes in the past decade. The Federal Reserve's response to the Great Financial Crisis, and the continued quantitative easing in its aftermath, marked a significant change in the way the central bank implements monetary policy. And the fiscal policy response to the current crisis also marked a significant departure from how things have been done in the past. 

In this episode we are joined by one of our favorite economic thinkers, Cullen Roche, to help us make sense of all of this. Cullen is an expert on Federal Reserve policy and one of the few people who predicted that the outcome of quantitative easing would not be the significant inflation that many thought it would. We discuss a variety of topics including why quantitative easing hasn't caused inflation, the implications of the recent massive government stimulus, Modern Monetary Theory, and the role inflation plays in the value/growth dynamic. 

We hope you enjoy the discussion. 

CULLEN'S BLOG

Pragmatic Capitalism (pragcap.com)

FOLLOW CULLEN ON TWITTER

https://twitter.com/cullenroche

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

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https://twitter.com/practicalquant

LinkedIn:

https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

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https://twitter.com/jjcarbonneau

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https://www.linkedin.com/in/jcarbonneau

The academic research supporting the momentum factor is very strong.  But most of that research focuses on the momentum in a stock's price.  An interesting research paper written by Dashan Huang looked at the potential to enhance the excess of return of price momentum by also looking at the momentum in a firm's fundamentals. In this episode we discuss this paper and the pros and cons of combining fundamental and price momentum. We also outline the seven variable system the paper uses to calculate fundamental momentum and how it separates out firms who are showing improvements in their businesses. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

We have reached the one year anniversary of the podcast so we wanted to take a break from our regular investing episodes for a week and reflect back on our first year and what we have learned. 

In this episode we talk about our biggest lessons from our first year of podcasting and some of the behind the scenes details that go into creating the podcast. As we begin our second year, we also would welcome any feedback on things we can do to improve the podcast and the types of episodes that listeners find the most useful. If you have any feedback, please send it to us at [email protected]. 

We want to thank everyone who took the time to listen to us in our first year. We really appreciate your support. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

There is a tendency for those of us who support quant models to talk about them as if they are these things that just run on autopilot over the long-term that are free from all the decision-making issues that plague us as human beings. That just isn’t the case, though.

There are many decisions that go into the development, optimization, and evolution of quant models that require human intervention and a thoughtful, nuanced approach.

In this episode, we discuss the human decisions that go into quant models and how to develop a thoughtful framework to make them. 

JACK'S ARTICLE

When Quantitative Becomes Discretionary – Validea's Guru Investor Blog

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

Value investing has struggled for over a decade now. Although no one will dispute that fact, there are significant disagreements about whether this is just another of the long periods of underperformance that have been common in the history of value or if something about the strategy has become broken. 

In the first year of our podcast, we have talked to some of the smartest people we know in the investing world about this topic, including Jim O'Shaughnessy, Tobias Carlisle, Adam Butler, Partha Mohanram, Wes Gray, Vitaliy Katselnelson, and Kai Wu, and have received a diverse set of opinions. 

In this episode, we bring together all of those insights in an effort to answer one question: Is Value Investing Dead? 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

Warren Buffett is one of the greatest investors of all time. He has also been very generous in sharing the lessons he has learned over his career with all of us. There are many things all of us can and should learn from Buffett.

But despite that, there are also many lessons that investors should not learn from what Buffett does. Like all investors, many of the things Buffett does are the result of his own unique situation. The majority of investors also have substantially smaller portfolios than Buffett and much shorter time frames.  In this episode, we look at some lessons that investors should not learn from Warren Buffett. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

Benjamin Graham is considered by many to be the father of value investing. Not only did Graham produce an exceptional track record during his lifetime, but he also counts some of the most successful value investors of all time among his disciples, including Warren Buffett. 

But despite the long-term success of the deep value investing style popularized by Graham, many argue that things have changed and that value investors need to evolve to keep up with the times. 

In this episode, we take a deep dive into the principles of Graham and the criteria of our quantitative strategy based on him, and debate whether his strategy is still relevant today. 

We hope you enjoy the discussion. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau

Our economy is changing. The largest, most successful companies in the world no longer require substantial tangible assets to operate their businesses. The businesses that are disrupting our world and wielding monopolistic power aren't powered by plants and factories. Instead their value lies in things like brands and technology and the value of their networks. 

This new world has challenged many traditional beliefs about investing. Everything from how we define value to how we look at growth has changed.  More traditional methods are now being supplemented by things like alternative data and machine learning. 

In this episode, we speak to Kai Wu of Sparkline Capital, who has written some of the best research we have seen on these topics. 

We discuss: 

- The forces causing disruption in our economy and how to measure its impact

- How to measure intangible assets using both traditional fundamentals and more advanced metrics

- The rise of monopolies and the implications for investors 

- The impact of all of this for investors who use traditional fundamental strategies. 

We hope you enjoy the discussion. 

FIND OUT MORE ABOUT SPARKLINE CAPITAL

https://www.sparklinecapital.com/

FOLLOW KAI ON TWITTER

https://twitter.com/ckaiwu

ABOUT THE PODCAST 

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter:

https://twitter.com/practicalquant

LinkedIn:

https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter:

https://twitter.com/jjcarbonneau

LinkedIn:

https://www.linkedin.com/in/jcarbonneau

There is little disagreement among market observers that passive investing is growing. There is also little dispute that the trend is likely to continue as a result of the rise of ETFs, investors’ focus on fees, the inconsistency of active manager outperformance, and numerous other factors. That is where the agreement ends, though. There are substantial disagreements as to if there has been an impact on the pricing of securities within the market, and if so, what that impact is.

There are two ways that some argue that the rise of passive investing is influencing the market. The first is that it has been a significant source of fuel behind the market and has caused it to go up more than it otherwise would have. The second is that it is impacting the relative pricing of stocks within the market and is benefitting the largest stocks that have the highest weights in market cap weighted indexes relative to all other stocks.

In this episode, we discuss both of these and try to summarize the arguments both for and against the conclusion that passive investing is distorting the market. 

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

SEE LATEST EPISODES

https://www.validea.com/excess-returns-podcast

FIND OUT MORE ABOUT VALIDEA

https://www.validea.com

FOLLOW OUR BLOG

https://blog.validea.com

FIND OUT MORE ABOUT VALIDEA CAPITAL

https://www.valideacapital.com

FOLLOW JACK

Twitter: https://twitter.com/practicalquant

LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094

FOLLOW JUSTIN

Twitter: https://twitter.com/jjcarbonneau

LinkedIn: https://www.linkedin.com/in/jcarbonneau