Michael Edesses is out with a scathing article lambasting the field of empirical finance. He draws inspiration from Harvey, Liu and Zhu’s (HLZ) recent article, entitled “…and the Cross Section of Expected Returns”, but extends HLZ’s conclusions to an absurd limit. In this article, we discuss why we embrace the framework of healthy skepticism described by HLZ, but in the context of a more optimistic and constructive view of empirical finance.
We just love a good debate, and there seems to be quite a heated debate at the moment about the relative utility of passive versus active investing. Perhaps this debate is as timeless as investment management itself, but a flurry of recent studies may have finally armed passive advocates with enough ammunition to settle the argument once and for all.
Rob Seawright of Above the Market recently posted an article broadly skewering tactical asset allocation (TAA) strategies. He cites the failure of market gurus to pick market turns (from a CXO analysis we’ve discussed in the past), and a Morningstar study showing that TAA has under-performed the Vanguard U.S. 60/40 balanced fund over the past few years (hearsay from a Larry Swedroe article here).
Today, we are happy to announce the launch of Skew, our second blog. Until we move it to its permanent home, you can find it at GestaltU.com/skew/. Bookmark it or add it to your feed reader right now. Go ahead, we’ll wait.
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