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…

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 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…

Will Value Stocks Rebound?

Last week in Sagacious we featured an opinion piece on the challenges involved in sticking with an investment strategy that has recently been underperforming. This week, the Wall Street Journal published an article that examined the extremely long period of underperformance value stocks have experienced relative to growth stocks. The investment strategy of buying “cheap”…

Are Backtested Results Effective?

One of the key factors influencing the success of raising capital for a new investment strategy is what is known as a “backtest.” When an investment strategy has little to no auditable track record (i.e. the strategy is new or hasn’t launched yet), firms looking to raise capital for an algorithmic or quantitative strategy tend…

The Role of ESG In Investment

Even though it is still too early to determine whether a framework for making investments based on environmental, social, and governance (ESG) considerations is accretive to portfolio performance from purely a return perspective, there is no arguing that ESG policies are becoming an integral part of the investment management process for asset allocators. This article…

The Case for a Universal Fiduciary Standard in Finance

A topic of discussion that often comes up in the investment management industry is whether or not there should be a blanket fiduciary duty imposed on investment advisors that deal with the public. Currently, there are many different categories of registration for investment advisors in Canada, some which impose a fiduciary duty and others which…

The Challenges of Modern Investment Management

Victor Haghani from Elm Partners (previously founding partner of Long Term Capital Management) sat down with NYU Stern School of Business professor Aswath Damodaran to discuss a myriad of hotly debated topics that are at the forefront of present-day investment management. Embedded in this view is how he believes that even investment managers that qualify…