Jim O’Shaughnessy of the famous book What Works On Wall Street
What it takes to be a successful active investor. Hint, it’s much harder than you think.
Contrast active and passive equity investing. Risk/rewards.
Conclusion—Investors who do not have the following traits and emotional quality should index their portfolios. I find they are the majority of investors today. Also discussion of points of failure for passive and active investors.
What traits and emotional characteristics are required to succeed as an active investor?
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
A true long-term perspective on their investments.
Discussion of Evolution and why it hampers long-term thinking.
Discussion of behavioral biases that hamper successful long-term active investing.
Power Point illustrations.
Successful active investors value process over outcome.
Short-term focus of investors is killing returns.
Why you need access to truly long-term data to make intelligent choice.
Successful active investors generally ignore forecasts and predictions.
Discussion of studies proving forecasts and predictions are virtually worthless; illustrations documenting the failure of forecasts; both within markets and in outside professions.
Successful active investors are patient and persistent.
Discussion of great investors who may have very different styles, but all share the trait of patience and persistence.
Successful active investors have a strong mental attitude.
Successful investors are made, not born. Discussion of how successful active investors have a mental attitude bordering on stoicism; how they control how they interpret the world.
Tools to use to help you succeed as an active long-term investor.
Long-term data uncovered by What Works on Wall Street that you can use to guide your investment strategy.
The importance of value; momentum; financial strength and earnings quality in putting together your portfolio.
A highlight of stocks with high versus low shareholder yield (Cash dividend %+Bet Buyback %); it’s efficacy since the 1920s
What NOT to own, lottery stocks versus the market.
The importance of a stock’s market capitalization—the most profitable stocks come from the smallest part of the market (Micro cap stocks)
Putting it all together—should you be an active or passive investor?
Weight of the evidence for passive and active investing
Which type of investor are you? Getting the best out of the style you choose.
Discussion and Q/A.
This talk moderated by Saurabh Madaan.