154: Tao Wang, Managing Member of Alpha Architect

Tao Wang was born and raised in China and studied finance and investment in the United States. Wanting to get some coaching on how to put theory into practice, he approached Alpha Architect founder, Wes Gray, and offered to work for him — for free. Not one to pass up a bargain, Wes accepted the “Chinese cheap labor.” In the end, it was a win-win all around. Wang is now a managing member of Alpha Architect. Among other things, he’s helping the firm expand its footprint in China.

In today’s interview, Toa explains the various theories behind the firm’s investment strategies — particularly factor-based investing. He also shares a fascinating study in which “following the model” produced a better return over deviating from the model with additional human involvement, which didn’t perform as well as the passive index. The bottom line: You’re better off sticking with the model.

In today’s episode you’ll learn:

• About Alpha Architect
• How Tao met and was hired by Alpha Architect’s founder, Wes Gray
• About factor investing
• About the experiment that demonstrated that it’s better to stick with the model than to add
• About Alpha Architect’s plans for expanding into the Chinese market