Markets are constantly discounting the future. This is like a bookie updating her line, evaluating the health report of the home team. Market participants generate wealth not only through the…
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The nature of a cycle is a repeatable phenomenon, where a trend undergoes map-able deviations from its long-term average. A sin curve is a classic example. Adaptive markets key in…
The world is awash with autobiographies from investors. The style of these works broadly ape those of famous business managers. These books introduce the world to how a successful individual…
You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of…
Position-level analysis doesn’t get enough attention. It helps get to the why not just the what. In this post we unpack key methods to improving prediction.
What is success for an active manager? It really boils down to two things. Generating alpha, and growing assets. In an ideal world, the two are symbiotic. In reality, they…
IPO season is in full bloom, as the procession of big-name (mainly) Silicon Valley unicorns find their way into public markets one way or another. It’s still early days, but things have gone pretty…
the problem is not merely with claims that are ridiculous on scientific grounds, but more broadly that many statistically significant claims will be in error. – Andrew Gelman In the…
This is the first post in a two part series. To skip ahead, here is Part II Former NBA basketball player Rasheed Wallace was a polarizing figure. A cerebral big…
Active Investors are fundamentally buyers of risk. They do so through various forms of research. Risk is available across a spectrum of time-horizons, from secular disruption through long-term buy-hold decisions,…
Successful investing is analogous to habit formation. They both involve adjusting our evolutionary wiring for short-term reward in place of long-term superior gain. We of course know that forming long-term…
Financial market participants struggle with tail risk scenarios. This is an undeniable fact, going back to the days of Black Friday, LTCM, and Lehman. This has recently come to focus…
Over the last cycle, one of the key trends driving equity markets has been value vs growth. We’ve in fact written about the subject. Very few articles go beyond the…
It’s no secret that members of the Trump Administration have had their hands on the tax code. It of course started with landmark legislation passed towards the end of 2017…
This chart prepared by KKR is a great encapsulation of where institutional investors’ focus is. It shows expected allocations, grouped by asset class, compiled during the 2nd half of 2017. …
Financial journalists have been treated to a healthy dose of Warren Buffett in recent months. First it was an ambitious plan to reform health care cost structures, then it was...
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The Fourth Industrial Revolution is a fancy tag-line trotted around global think-forums such as WEF. It represents the current wave of cutting-edge technologies: artificial intelligence, machine learning, blockchain, internet of…
Perhaps you’ve seen this chart, or some variant of it. It encapsulates the pain felt by value investors since the financial crisis: It is a great chart given the range of historical…
With the tournament drawing near, fans of the World Cup are starting to get excited. Thinking back to recent World Cups, 2010 was remembered equally for the piercing wails of…
The economist Stephen Keen is quite controversial. He’s stirred some discontent in mainstream economic circles by attacking econometric modeling. He calls these “Ptolematic” approaches to understanding the economy. For those…
We here at Epsilon are always interested in the evolving landscape of passive and passive like investment vehicles. A few weeks ago, BlackRock, the world’s largest purveyor of ETF investment…
We’re often asked by capital allocators, what type of investors are you? While one can take this as an existential dilemma, these firms “bucket” investment managers based upon a descriptive…
Editor’s note: Epsilon loves books on investing, and not just quant literature! Every month or so, we’ll post a review on a book that we found particularly compelling. While this…
There has been a race to the bottom on fees for passive ETF products, which we view as a natural by-product of the commoditization of beta. Part of the fee…
Fee compression in asset management is a hot button subject, and something we’ve written about. One only need to look at the wave of capital flight from active to passive…
Taxable clients and prospects of Epsilon often ask about the taxable nature of our investment strategies and the viability of adding systematic tax loss harvesting to them. Before we dive…
Principal-Agent (PA) problems have persisted for quite some time. In investing, the dynamic between principal (LP) and agent (GP) has seen a change in sentiment in the last 10 years. …
We’ve been told by colleagues that this is a curious primary objective for a new asset management firm, versus something more direct like performance and market analysis. That bewilderment only…
Consistent performance is perhaps as coveted as outperformance. Consistency puts fears to rest and provides flexibility. But consistency is hard to come by, especially when outperformance is the intent, and…