Superforecasting: The Art and Science of Prediction

Making predictions and forecasting the future are integral parts of everyday life, yet it’s unlikely individuals realize the amount of predictions one makes in a day. The use of heuristics or “rules of thumb” are ingrained in human psychology and help people quickly determine courses of action with limited information at their disposal. Deciding what…

Surviving in the Longest Bull Market as a Bear

There is an old saying that “bull markets don’t die of old age, they get murdered by central banks.” This makes a lot of sense, given that central banks control short-term borrowing rates and use that policy tool as a way to influence the economic cycle in an orderly fashion. The Federal Reserve (arguably the…

The Benefits of Preparing for the Unknown

While many investors may define success for their investment portfolio from a return-centric perspective, arguably the more important factor to focus on is risk mitigation. Once you’ve defined a way to quantify the utility function inherent in a risk-centric framework, then return expectations can follow. Otherwise, the strategy is at risk of being abandoned when…

Nonzero: The Logic of Human Destiny

In Robert Wright’s first book, “The Moral Animal,” Wright examines how evolutionary forces influence the behaviour of individuals, and the impact this has on the human psyche. Though not necessarily billed as a follow-up to ”The Moral Animal,” in “Nonzero,” Wright explores whether there could be a scientific reason to believe that history is directional,…

ETFs Aren’t Always the Most Cost-Effective

Over the last few years there has been a lot of media attention on ETFs (exchange traded funds) and how they have precipitated a “fee war” in the asset management industry. Large asset managers like Vanguard and BlackRock have been accused of inciting a “race to the bottom” in investment management fees, squeezing margins for…

Can Access to Financial Markets Be Democratized?

Robinhood Financial and their quest to democratize access to financial markets ran into another speed bump this week, with Robinhood agreeing to pay a $1.25M fine to FINRA as a result of failing to insure the order flow they sold to third parties for execution without considering such factors as “price improvement” and best execution….

Bad Blood

Theranos was once considered the darling of Silicon Valley (for an overview, see our past insight here). As a private technology company founded by Elizabeth Holmes in 2003, Theranos purported to have revolutionized blood testing by requiring only a fraction of the blood needed in traditional tests. The company was able to raise more than…

Who Should Have a Fiduciary Obligation in Investment Management?

The financial services industry in North America has long had an image problem when it comes to financial advice offered to retail clients. Confusion among investors to the role their advisors play as it pertains to product recommendations has not helped alleviate concerns around mistrust and whether these financial professionals ultimately have the best interests…

The Man Who Solved the Market

Until recently, stories about the investment management firm Renaissance Technologies and its flagship Medallion fund were relegated to hedge fund mythology and investor folklore. Unverifiable anecdotes around performance numbers trouncing the S&P 500 left many wondering if the team at Renaissance had managed to “crack” financial markets and whether the rumors were too good to…

Can Concentrated Portfolios Compete with ETFs?

As low-cost indexing strategies – usually in the form of ETFs – have increased in popularity, we’ve frequently opined that one of the major changes for the investment industry will be the shrinking of investment funds that are providing “high-cost” beta. We would define high-cost beta as an investment fund that charges management fees over…