Archive for March, 2009

What can we learn from Past Financial Turnoil

Posted on 12/03/2009. Filed under: Lessons from past financial crises |

This presentation by Inmoo Lee of Dimensional Fund Advisers explores previous financial crises and tries to draw out what we can learn from them in terms of our expectations going forward.

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The Arithmetic of Active Management

Posted on 07/03/2009. Filed under: academic approach to investing, arithmetic of active management, William F Sharpe |

In the video featured below, Professor Kenneth French mentioned the paper written by Nobel Laureate Economist William F Sharpe. Well here it is.

This type of information needs to be seen in a completely different light to what those of us who are more enlightened call financial porn because it is the informed view of a very highly rated and acclaimed academic. Unlike fund management companies who pump out marketing material designed to entice unwitting investors to part from their money William F Sharpe and others like him have spent decades trying to get to the truth. They have no axe to grind.

The question you have to ask your self is, Do you want to be one of the (as William F Sharpe puts it) “individual investors … foolish enough to pay the added costs of the institutions’ active management via inferior performance“. Of course there is also the famous Dirty Harry saying “What you want to ask yourself is … Are You Feeling Lucky?

For more information on William F Sharpe see this

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Stock Picking v Index Investing

Posted on 07/03/2009. Filed under: academic approach to investing, Active v Passive, Index Investing, ineffectiveness of active fund management |

I have just found this extremely interesting video link which shows Professor Kenneth French talking about Stock Picking and Index Investing. He explains, far better than I ever could, how stock picking is essentially a fools errand … but a very necessary one which enables those of us with more sense to take a cheap ride on the increased market efficiency which their zero sum strategies create. He also makes some very interesting comments about Hedge Funds.

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