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…

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…

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…

What We Can Learn from Poker About Investment Management

Investing and poker have a lot in common. Both involve a balance of known and unknown information, and both involve updating probabilities when new information is presented. One might suggest investing is slightly trickier than poker given that the “rules” of the game can adapt over time, but at a high level both share a…

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…

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…