The (Mis) Behaviour of Markets

As any investor will know, there are no defined set of rules in financial markets; investment management is a far cry from a hard science where normal distributions and other statistical methods work well. While it’s common knowledge that many concepts in modern finance have massive shortcomings (e.g. Markowitz’s modern portfolio theory and the efficient…

Indexed Products Aren’t All Passive

This week Morningstar Inc. released a report which estimated that as of August, in the United States, assets invested in indexed products (either mutual funds or exchange-traded funds) have now eclipsed that of assets being managed by traditional active stock pickers. In last week’s issue, we looked at debunking the myth that passive investing is…

Bursting The Passive Investing Bubble

This week Bloomberg put out an article focusing on Michael Burry’s criticisms of passive investing and how, in his opinion, it mimics the bubble in synthetic asset-backed collateralized debt obligations prior to the 2008 financial crisis. Burry, one of the protagonists in Michael Lewis’ book “The Big Short” who correctly called the financial market collapse…

The Joy of Missing Out

The aphorisms YOLO (you only live once) and FOMO (fear of missing out) have become broadly accepted phrases across many generations during the past decade, and are no longer relegated to just the vocabulary of Millennials or Generation Z. Traditionally associated with living in the moment and the pursuit of self-gratification, there has been a…

The Success Equation: Untangling Skill and Luck in Business

When it comes to hard decisions, humans often have a hard time separating the process of decision-making from the result. The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael Mauboussin is a great read on how to analytically approach the concept of luck in decision-making, providing insight on how to effectively…

Cutting Through the Noise of Financial Media

Given the recent bout of volatility in equity prices, there has been an abundance of financial pundits forecasting the next global recession is surely upon us. Trade war tensions heating up, global economic activity slowing, and yield curves around the globe inverting are the fodder for click-bait style headlines forecasting a sharp decline in equity…

The Surprising Impact of Personality On Investment Management

Despite the fact that quantitative investment strategies are increasing in popularity, there is still a large amount of capital that is being invested by carbon-based asset allocators. Even if a specific strategy exclusively utilizes machine learning and artificial intelligence, there is still a human that is crafting the specifications and building parameters on which the…

The Future of Investment Management

It is no secret that the traditional asset management industry is in the midst of disruption. Advances in technology and the rise of low-cost indexed products has turned the business of investment management on its head. Recently, there has been a distinct trend of consolidation in mid-size asset management, as large entities with more established…

The Moral Animal – Why We Are The Way We Are

For those interested in human psychology and how evolutionary forces can influence the way individuals make decisions, The Moral Animal – Why We Are The Way We Are by Robert Wright is a fascinating read. It explores the science of evolutionary psychology, examining the historical context around how the theory of natural selection was conceptualized…

The Role of Psychology in Investment

The argument could be made that prediction is at the heart of every investment decision. At a very high-level, you are providing capital to a company and predicting that you will earn a reasonable rate of return on your investment; however, this is by no means guaranteed. Morgan Housel from the Collaborative Fund wrote a…