Excess Returns

Many investors have come to accept the fact that the major factors like value and momentum will produce excess returns over the long-term. But what if the fact that these factors have become widely known and have strong evidence to support them has reduced or eliminated their effectiveness?  In this episode, we discuss this idea with Adam Butler of Resolve Asset Management. Adam is one of the deepest thinkers that we know in the investing world. He is also a prolific writer and host of the popular Gestalt University podcast.  We discuss:  - The life cycle of investment factors and why the factors that have the strongest evidence to support them may be the most vulnerable to having their premiums reduced or eliminated  - The framework for judging whether a factor has lost its effectiveness - How to construct an equity portfolio in a world where it is difficult to determine which factors will work going forward - The benefits of risk parity and why more investors don't use it.  We hope you enjoy the discussion.  

FIND OUT MORE ABOUT RESOLVE ASSET MANAGEMENT

https://investresolve.com/ 

FOLLOW THEIR PODCAST 

https://investresolve.com/podcasts/ 

FOLLOW ADAM ON TWITTER 

https://twitter.com/gestaltu 

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 

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https://twitter.com/jjcarbonneau 

LinkedIn: 

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

We all have our political views. We all have a series of policies that we think would make the world a better place than it is today. And in the polarized world we are in today, most people are more entrenched in these views than they ever have been. 

No matter what you think about politics, though, it is important to understand that it is likely best to separate those views from what you do with your investment portfolio. 

In this episode, we look at the historical data to explain why which party controls the White House is not likely predictive of how the market will perform. 

We discuss: 

- The historical performance of the market under Democratic and Republican administrations

- The importance of sample size when judging historical returns

- The role of the lag in the impact of economic policies

- Why the policies of both parties going forward may be more similar than you think

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

All of us can fall into the trap of thinking that a certain outcome in investing is obvious. Whether it be the future direction of the market, which asset classes will perform best going forward, or the types of stocks that will lead the way, it is easy to think that certain outcomes are a virtual certainty. This can be particularly true during a period like the one we are in where opinions are polarized. But it is important to understand that the market's collective wisdom is usually smarter than all of us and what we think is obvious often is not. 

In this episode, we discuss some of the things that may seem obvious in the current market, and why they might be wrong. 

We discuss:

- The challenges of deviating from the market consensus 

- The impact of the Coronavirus on the market 

- Why bonds may still belong in investor portfolios despite their low yields

- the importance of avoiding binary decisions 

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

The volume of financial content that is produced these days can be completely overwhelming. Filtering through it to find the best articles is a task that most investors just don't have the time to complete. 

Thankfully, they don't have to. 

Tadas Viskanta helped solve this problem when he launched Abnormal Returns over 15 years ago. Every day, Tadas identifies the best financial content and distills it down to a condensed series of links. And he does it for free. Tadas is also the Director of Investor Education at Ritholtz Wealth Management. 

In this episode, we discuss: 

- the process Tadas uses to filter the vast amount of financial content that is out there 

- his views on audio and video and the future of content 

- the role of content in communicating with current and prospective clients 

- the importance of authenticity 

We hope you enjoy the discussion. 

ABNORMAL RETURNS

https://abnormalreturns.com/

FOLLOW TADAS ON TWITTER

https://twitter.com/abnormalreturns

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

Growth investing has seemed easy in the past decade. Growth stocks have easily outpaced both value stocks and the market, which has led to great performance for many growth strategies. But it likely won't always be this easy. Over the long-term, growth stocks as a whole have trailed the market, and successful growth investors have had to identify a small group of stocks that perform well in a universe that typically does not. 

In this episode, we look at some of the realities of growth investing. 

We discuss: 

- Why growth investing is about finding diamonds in the rough 

- How difficult it can be to hold the great growth stocks through the severe ups and downs they typically experience

- Why investors desire to find the next great growth stock can lead to overvaluation within the space 

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

Investing in today's world requires an ability to understand multiple disciplines. In addition to understanding markets and having the ability to put current events in a long-term context, it also requires an understanding of economics. And with governments playing an increasing role in markets, it requires an ability to understand public policy and interpret its impact. Nir Kaissar is unique in his ability to offer insights into each of these areas. He is the founder of Unison Advisors and a regular columnist for Bloomberg. 

In this interview, we discuss each of these areas, and the unprecedented times all of us are currently living through. 

We discuss:

- The COVID-19 crisis and the government response to it and what they mean for investors

- Why the struggles of value investing in the past decade aren't enough to tell you it is dead

- Whether bonds still make sense for investors with yields near all time lows

- The role of market valuation in analyzing future returns

- Whether passive investing is distorting the market 

We hope you enjoy the discussion 

NIR'S BLOOMBERG ARTICLES

https://www.bloomberg.com/authors/ASlX9_7a5l8/nir-kaissar

FOLLOW NIR ON TWITTER

https://twitter.com/nirkaissar

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

It has been said that the most dangerous words in investing are "this time is different". But sometimes a confluence of factors come together to significantly change the character of the market. In the best research paper we have read this year, Corey Hoffstein argues this is one of those times. In this interview, we go through all the details of Corey's argument and how they fit together to form a very compelling argument that this time might in fact be different. 

We discuss: 

- Why the "moneyness" of markets has greatly increased the interdependence between the stock market and the economy

- Why the rise of divergent investment strategies has increased market volatility 

- The role of the Federal Reserve policy in driving investors up the risk curve 

- How passive investing has impacted the market overall and the relative pricing of stocks within it

- The role of options dealers and how options buying and selling can exacerbate volatility

COREY'S BLOG 

https://blog.thinknewfound.com/

FOLLOW COREY ON TWITTER

https://twitter.com/choffstein

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

Active management deserves all the criticism it gets. After all, over 80% of equity managers underperform their benchmarks over the long-term and active managers charge vastly higher fees compared to passive indices.

But active management also gets a bad rap. There are many active strategies that perform very well over time, and justify the fees they charge.

How can both of these conflicting statements simultaneously be true? The answer lies of the definition of the term “active management” and the fact that many strategies that investors consider passive also have significant active components. 

In this episode we talk about the various types of active management and the pros and cons of each. 

We discuss:

- Why the S&P 500 is an active portfolio

- The various approaches to fundamental indexing 

- The one type of active management that should be avoided at all costs

- The pros and cons of factor investing

- Whether the days of the star fund manager are over

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

John Rekenthaler is Vice President of Research for Morningstar, the author of the Rekenthaler Report column, and a leading expert on the mutual fund industry. John has been with Morningstar almost since the beginning and has witnessed the evolution of the mutual fund and investing industries first hand. In this interview, we draw on John's extensive experience to cover a variety of topics related to the fund industry and investing in general.

We discuss: 

- the key attributes to look at when analyzing funds 

- the pros and cons of passive investing

- whether star fund managers are a thing of the past

- judging fund managers by the company they keep 

- the dangers of using macro data to time the market 

- his biggest lessons from Morningstar founder Joe Mansueto 

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

In this bonus episode, we we discuss a presentation Justin recently gave to Fidelity customers about some of the major narratives shaping the current market. The word "unprecedented"  tends to be overused in investing, but 2020 has certainly seen many occurrences that many investors have never seen before, and may not again. 

We talk about some of these things and what they mean for investors going forward.  

We discuss: 

- Why 2020 has turned the factors that have worked over the long-term in investing upside down 

- How the current dominance of large-cap stocks fits in a historical context 

- The historic pace of both the decline and recovery we saw this year  

- Whether you can read anything into the large amount of cash Warren Buffett is holding 

- The implications of the massive government stimulus  

- The future outlook for the newly minted retail traders who came into the market in the wake of the Coronavirus crisis.  

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