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  1. Monday, November 27th, 2017
    busy dying

    We face a new era of asset management.  Passive investment strategies – and factor-based systematic ones – have been gaining market share, putting pressure on traditional active management organizations.

    You’ve seen the headlines, proclaiming that “winter is coming” for active management or that it faces an “existential crisis.”  In response, many firms have come out with white papers in defense of active management.  They come in two varieties.

    The first kind looks at the historical cycles in the performance of active management, urging investors not to jump ship just before active starts to outperform once again.  Usually there are charts that show the correlation and dispersion of individual stocks and industry sectors — and a review of macroeconomic and market environments to show when active management has performed the best.

    That’s all interesting and informative, but it ignores a couple of major issues:

    ~ The cumulative performance of active management ... continues

  2. Tuesday, September 12th, 2017
    behind the numbers

    What makes for a good investment team?  How can you analyze the capabilities and dynamics of a team when you don’t see it in operation day to day?

    Those questions should provide ample fodder for one of the sessions at my upcoming workshoptjb research | The workshop will be held in Minneapolis on November 7-8.  Attendees also participate in a six-week online workgroup and receive a one-on-one consultation specific to their organization. on due diligence and manager selection.  Assessing a team involves much more than looking at the bios and apparent track records of those involved.

    What pushes a group together and what pulls the individuals apart?  This image, taken from a presentation from the spy consortium Five Eyes,The Intercept | It comes from a deck on “The Art of Deception,” published online by The Intercept. conveys some of the factors involved:

    five eyes

    Notably left out of the diagram?  Money.  Interestingly, it could appear on either side at different points ... continues

  3. Wednesday, August 16th, 2017
    maps of the world

    “A single map can convey enormous amounts of information,” said George Friedman in The World Explained in Maps,Mauldin Economics | The ebook also serves as a marketing piece for Geopolitical Futures, Friedman’s paid service. an informative series of “geopolitical cheat sheets.”  The maps and the short explanations that appear along with them provide an easily-accessible wealth of information.  In the brief amount of time it took to read the ebook, I saw some global issues in a different light — and was reminded of my boyhood love of maps.

    But, as Shane Parrish has written, “Maps are necessary, but flawed.”Farnam Street | Farnam Street, Parrish’s blog, is essential reading for those interested in the process of decision making.  A map can’t faithfully represent the world in every last detail; it can’t replicate reality.

    A good map can aid in understanding — as those in Friedman’s collection did for me ... continues

  4. Thursday, July 6th, 2017
    into the workshop

    Sometimes you just need to get yourself into the workshop to explore new possibilities.

    Last week, I had the chance to attend the CFA Institute’s Investment Management WorkshopCFA Institute | Here is the website for this year’s workshop. at Harvard Business School.  This was the fiftieth year for the program.  (Amazingly, Wally Stern, one of the founders, has been in attendance all fifty years.)

    Billed as “Strategic Decision Making for the Investment Executive,” the workshop brought together investment people from around the world who hold a variety of functional roles in vastly different kinds of organizations.  I think I was the only sole proprietor and was definitely at the “well-aged” end of the spectrum.

    There were around seventy participants.  The program uses the case method, with classes led by Harvard professors.  (I appreciated the opportunity to see them in action; it helped me to think about how to lead my own workshops on due ... continues

  5. Thursday, June 1st, 2017
    precision farming

    I recently came across a report, written almost a year ago, by a group of Goldman Sachs analysts.  Part of a series on “Profiles in Innovation,” it is titled “Precision Farming: Cheating Malthus with Digital Architecture.”Doc Drop | At the time of this writing, the report is available online via this site.  (If that doesn’t sound interesting to you, be patient.  The point I will try to make is a broader one about the investment world.)

    The cover of the report explains that its authors “explore how agriculture offers fertile ground for a confluence of technology trends, from sensors and the Internet of Things to drones, big data and autonomous driving,” asserting that precision farming can lift crop yields 70% by 2050 (and that a number of companies stand to thrive as a result).  That would extend the rise in food production which started in the 1800s with a sustained increase in acres planted, continued with mechanization in the following ... continues