“The number of times…the index has beaten the manager is about 82% over the last five years. That’s not a really good indication of how the industry is doing.” It’s hard to argue with that assessment.
Let’s face it. We humans are pretty bad at setting our emotions and biases aside when it comes to investing. My conversation with Chris Meredith of O’Shaughnessy Asset Management is an introduction to quantitative investing. Analyzing data over long periods of time, deciding on a set of factors, and being disciplined in sticking with the strategy has been the recipe for success for O’Shaughnessy.
You may be surprised that there are many similarities between quantitative and fundamental investing. But quantitative strategies help bring clarity out of the chaos.
In today’s episode you’ll learn:
- About quant investing
- About Chris’s background and what drew him to quantitative investing
- About O’Shaughnessy Asset Management
- The average percentage of investors who don’t beat the market
- About smart beta
- The factors on which Chris bases his models
- Things to consider when investing internationally
- Why Chris considers low-volatility investing a defensive strategy
- O’Shaughnessy’s offerings for high-net worth individuals
- Why discipline wins in the marketplace
- Why a long-term mindset is important — for both managers and investors
Listen to this episode on iTunes
What was your biggest insight from this week’s episode? Let Jay know in the comments or on Twitter: @jaykimmer.
LINKS FROM TODAY’S EPISODE
- Read the full transcript from Chris’s interview
- O’shaughnessy Asset Management
- Invest like the Best by Patrick O’shaughnessy
- Chris’s blog, Cutting Through Noise
DETAILED SHOW NOTES
- [0:01:34] Chris’s self-introduction
- [0:02:22] What attracted Chris to quantitative investing
- [0:06:08] Chris’s views on investing and why we tend to be so bad at it
- [0:11:38] The factors Chris bases his models on
- [0:14:44] What is smart beta
- [0:18:26] How O’shaughnessy works with high-net worth individuals
- [0:21:32] Jay and Chris discuss home-country bias as it pertains to investing
- [0:23:52] When considering international investments, O’Shaughnessy considers these things
- [0:26:12] Jay and Chris discuss the value of historical data
- [0:30:19] Jay and Chris discuss the importance of a disciplined approach for both managers and investors
- [0:32:39] Educational resources from O’Shaughnessy
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