Excess Returns

In this episode, we are joined by Lawrence Cunningham. He is a professor at George Washington University and one of the world's leading experts on Warren Buffett. He is also the author of many excellent investing books including "Dear Shareholder", "The Essays of Warren Buffett", "Quality Investing", and the upcoming "Quality Shareholders: How the Best Managers Attract and Keep Them".   We discuss a wide range of topics, including: - the key traits that have led to Warren Buffett's long-term success  - the characteristics of a quality shareholder and what companies can do to attract and keep them  - the impact of the rise of passive investing on corporate governance - the most important attributes that can help to identify quality companies and whether they can be quantified.  We hope you enjoy the discussion.  FOLLOW PROFESSOR CUNNINGHAM ON TWITTER https://twitter.com/cunninghamprof ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

Valuing a company (or the market in general) typically involves looking at its price and judging that price relative to its current and projected future fundamentals. But some have argued that this process has become broken in the most recent decade and other factors have become more important than actual results. In this episode, we talk about some of these factors, how they have impacted the market, and what they might mean for the future.  We discuss:  - How Fed policy has impacted the market in general and the relative valuations of value and growth - Why narratives can sometimes be more important than fundamentals - Whether passive fund flows are distorting the market  ABOUT THE PODCAST  Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES  https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA  https://www.validea.com FOLLOW OUR BLOG  https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL  https://www.valideacapital.com FOLLOW JACK Twitter:  https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter:  https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

Buying expensive stocks has historically been a terrible investing strategy. On average, expensive stocks significantly underperform the market as a whole over time. But despite the poor performance of the group, the absolute best performing individual stocks typically come from within this universe. The difficult part is trying to identify them in advance. In this episode, we look at a quantitative growth strategy developed by Partha Mohanram, a professor at the University of Toronto, and how it seeks to find diamonds in the rough among growth stocks.  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

The process of learning from your mistakes is an important part of improving yourself over time both as an investor and as a person. But it requires that you learn the right lessons and don’t draw the wrong conclusions from your failures. And sometimes that is easier said than done. In this episode, we talk about some ways that learning from your mistakes can be counterproductive.  We discuss:  - Why a significant failure early in our careers led us to overcompensate later on - Why learning the right lesson at the wrong time can be dangerous - The importance of judging process and not outcome when learning from your mistakes ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

In this episode we are joined by Vitaliy Katsenelson. Vitaliy is the author of the popular Contrarian Edge blog and the CEO of investment firm IMA.  As quantitative investors, we often find we learn the most from investors who use very different approaches than we do. As a discretionary value investor and long-term student of value investing, Vitaliy provides us with an alternate take on value and the advantages a discretionary approach can offer in uncertain times.  We discuss:  - How COVID-19 has changed the game of value investing - Why buying great companies sometimes isn't a great investing strategy - The importance of developing a process to challenge your own beliefs VITALIY'S BLOG https://contrarianedge.com/ FOLLOW VITALIY ON TWITTER https://twitter.com/vitaliyk VITALIY'S FIRM https://imausa.com/ ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

The Price/Book ratio has probably been the most important valuation ratio of the past century. If you look at the academic research that supports value investing, you won’t find any other ratio that is referenced more often. There is also no ratio that is used more by systematic value funds.  But the rise on intangible assets and other factors have led many to question whether the ratio has value any more.  In this episode, we look at the arguments for and against the Price/Book and whether it should still have a place in value portfolios.  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

In this episode, we are going to try something a little different. Our goal at Validea is to capture quantitative strategies that work over the long-term. To do that, we go through books and academic papers to find factor-based models with results to back them up. We are going to periodically do some episodes for the podcast where we do a deep dive into these strategies and look at the factors behind them. In the first episode, we will take a detailed look at our strategy based on Warren Buffett, which was extracted from the book Buffettology. But before we look at the strategy's criteria in detail, we start with a more basic question: Can Warren Buffett be quantified?  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

We all have a tendency to believe that the way we invest is the best way. As quantitative investors, we can sometimes feel that there is no reason anyone should ever use a discretionary strategy. But like most issues in investing,  there are two sides to this argument. In this episode, we talk about the benefits of both quantitative and discretionary investing.  We discuss:  - Why quantitative strategies can limit the impact of emotion and biases - Why discretionary strategies can work better in situations where a more detailed analysis is needed - How both strategies contain some elements of the other - Why the ultimate answer may lie in the hands of the end investor ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau

In this week's episode we are privileged to be joined by Jim O'Shaughnessy. Jim is a pioneer in quantitative investing and the founder of O'Shaughnessy Asset Management. He is also the author of the best selling book What Works on Wall Street, which is now on its 4th edition and is considered by many to be the definitive guide to factor-based investing.  In this discussion, we get Jim's takes on a wide range of topics both in and outside the investing world.  We discuss:  - the recent struggles of value investing and what it means for the future - the process of updating an investment strategy over time while still adhering to your core principles - the role that investor behavior should play in the construction of investment strategies - the advice Jim would give to new parents based on his experience raising 3 children - the long-term changes that the current COVID-19 crisis might have on the way people work in the investment industry We hope you enjoy the discussion.  MORE INFO ON O'SHAUGHNESSY ASSET MANAGEMENT https://osam.com FOLLOW JIM ON TWITTER https://twitter.com/jposhaughnessy ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA www.validea.com FOLLOW OUR BLOG blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL www.valideacapital.com FOLLOW JACK Twitter: twitter.com/practicalquant LinkedIn: www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: twitter.com/jjcarbonneau LinkedIn: www.linkedin.com/in/jcarbonneau

We all have our beliefs about the way that things should work in investing. When the market gets overvalued, we think it should go down. When value stocks struggle for a long period of time, we think they should outperform. When central banks or governments implement policies we don't agree with, we think they will inevitably end in disaster. But that focus on the way we think things should be can sometimes lead us to miss the reality of what is. In this episode, we talk about the balance between having conviction in the way things should work out and recognizing the way they are actually working out.   We discuss:  - The reasons the market continues to rally despite one of the worst economic situations we will likely see in our lifetimes - The dangers of allowing your beliefs regarding Federal Reserve policy to filter into your investment strategy.  - Why momentum can be the great equalizer in separating what is from what should be  ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA www.validea.com FOLLOW OUR BLOG blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL www.valideacapital.com FOLLOW JACK Twitter: twitter.com/practicalquant LinkedIn: www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: twitter.com/jjcarbonneau LinkedIn: www.linkedin.com/in/jcarbonneau