Investing in 2014: New Lamps for Old Lamps

Strategies and Valuations

The year began with CSS Analytics featuring an article entitled, “Are Simple Momentum Strategies Too Dumb?”

Momentum was a major strategy employed in 2014, and will likely be a key strategy for 2015. Conventional momentum strategy is to buy the past winners and sell the past losers, whereas the value strategy is normally buying past losers and selling past winners. Hence, the returns of these two strategies are negatively correlated.

Both strategies seem to be in favour recently, but in running both consecutively, one can come up against a few problems like increased trading, and therefore higher transaction costs, overlapping shares, and higher weightings on certain names that inevitably increase security risk.

Incorporating these two strategies into one portfolio however, may reduce transaction costs, the overlap of securities and the security risk.

Here is my thought on momentum in May,

On choosing Quality names, below is still true.

Aswath Damodaran on Narrative and Value,

SSRN, a distraction, and a fount of ideas,

And John Cochrane on shorting premium.

Here I was in January lamenting (with the help of a CFA magazine) on private clients and quant strategies.

Behavioural Finance

This year, more emphasis was placed on behavioural studies and how investors are not always rational.

Escape the crowd, says John Kay,

Portfolio Decisions

In June this year, I started a new blog!

Sample core portfolios from Blackrock,

Some wise words here,

Off the beaten (horse) track…

Feedback, feedback, feedback…

Here is Mauboussin on emphasising process, and, you should listen to all of the Masters in Business interviews by Barry Ritholtz, highly recommended.

Market Views

Mark Carney gave a speech in Davos appealing to the higher ‘sense and sensibilities’ of the financial sector.

Mebane Faber on bubbles,

A good Hussman article,

On the UK front, worth a note,

And Ed Croft on facing the beast (cool and cool-headed British investors embracing the motto, keep calm and carry on)

Finance Writers and Experts

Spoiled for choice when it comes to financial blogs, there are indeed many good ones out there.

Robert Shiller looking very suave…

Here is his interview with Ritholtz,

Ritholtz instructing “When to Ignore the Experts”…

and Jason Zweig, “Everything I Know About Investing I Learned From My Drivers’ Ed Teacher”,

Here is Todd Wenning on what is your investing edge,

And the greatest investment book ever, according to the Brooklyn Investor.

Noteworthy Articles

This one is good,

http://blog.samaltman.com/super-successful-companies

So is this,

I like this snippet from the article,

The excellent Richard Beddard on investment checklist,

And the latest from Mark Howard, in relation to the recent oil price,

http://www.oaktreecapital.com/MemoTree/The%20Lessons%20of%20Oil.pdf

Not on investing, but, yeay!

An article that may or may not be about investing,

View story at Medium.com

Favourite Paragraphs

But the best one this year goes to…

Will investing in 2015 be the same? Who knows, but I hope to be tweeting about it. Happy new year everyone!

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