In this episode of Two Quants and a Financial Planner, we dive deep into the world of trend following investment strategies. We explain what trend following is, discuss the potential benefits such as downside protection during bear markets, and explore some of the challenges involved, including false signals, whipsaw risk, and the difficulty of sticking with the strategy during underperforming periods. We also talk about how trend following can be incorporated as one component of a diversified investment portfolio and why the sizing and blending of strategies is so important. Watch on YouTub ..read more

In this episode of Show Us Your Portfolio, Jared Dillian, author of the investment newsletter The Daily Dirt Nap and the book “No Worries: How to Live a Stress-Free Financial Life,” discusses his personal investing philosophy and portfolio. Dillian advocates for a diversified approach that includes stocks, bonds, cash, gold, and real estate, which he calls the “Awesome Portfolio.” He emphasizes the importance of avoiding catastrophic losses and focusing on big financial decisions like buying a house. Dillian also shares his views on debt, leaving money to children, and the role of an emergenc ..read more

In his 2005 research paper titled “Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis,” accounting professor Partha Mohanram laid out a strategy for finding promising growth stocks trading at attractive valuations. Mohanram’s approach aimed to identify the true growth winners among stocks with low book-to-market ratios. Mohanram’s Research Mohanram found that while low book-to-market stocks (aka growth stocks) as a group don’t generate abnormal returns, a subset of winners within the group do deliver strong outperformance. The key is separating t ..read more

On  April 30th, Validea’s Jack Forehand and Justin Carbonneau will co-host an all day livestream on YouTube along with Matt Zeigler and SpotGamma’s Brent Kochuba to raise money to help fight cancer. The livestream will run from 8AM to 8PM ET and will feature 24 half hour interviews with some amazing guests covering topics ranging from value investing to factor investing to macro and options. All proceeds will go to Susan G. Komen. To attend the livestream, click the link below and click notify me on the video page. You can also access the livestream on the day of the event using this lin ..read more

The “Magnificent 7” refers to a group of seven elite large-cap technology companies that have delivered outstanding long-term returns and growth. These companies have come to dominate the U.S. stock market, making up over 25% of the S&P 500 by market capitalization. These tech and consumer behemoths have achieved massive scale and profitability, driving the bulk of the market’s gains in recent years. As the top companies in the world’s largest economy, they are seen as the leaders of the digital economy and the faces of American innovation and global success. So how do these magnificent 7 ..read more

Finding companies with sustainable competitive advantages, or “wide moats” can be key for compounding returns over time. Just like the moats that surrounded medieval castles to protect them from invaders, an economic moat protects a company’s profits and market share from competitors. Legendary investor Warren Buffett has built his immense fortune by focusing on wide moat companies. There are several major sources of moats including: Intangible Assets like strong brand names, patents or regulatory licenses High Switching Costs that make it expensive or inconvenient for customers to ..read more

Free cash flow (FCF) is the cash that a company generates from its operations after accounting for capital expenditures. It represents the money that a company has available to distribute to shareholders, pay down debt, or reinvest in the business. Free cash flow is an important metric because it shows a company’s true profitability and ability to generate cash, which is ultimately what drives shareholder value. Why is Free Cash Flow Important? Studies have shown that companies with high free cash flow yields tend to outperform the market over the long term. The reason free cash flow is so im ..read more

Joseph Piotroski, a professor of accounting at the University of Chicago, published a groundbreaking research paper in 2000 titled “Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers”. In the study, Piotroski laid out a compelling case for using financial statement analysis to separate winners from losers among the cheapest stocks. His findings form the basis of the Validea Book/Market Investor model. Piotroski’s Research: Finding Bargain Stocks Ready to Rebound Piotroski’s key insight was that by focusing on stocks with high book-to-market ..read more

In this episode of Two Quants and a Financial Planner, we dive into the important topic of withdrawal rates and retirement planning. We discuss how Monte Carlo simulations can help us understand the potential outcomes and risks associated with different withdrawal strategies. We also explore the concept of sequence of returns risk and how it can impact a portfolio’s longevity. Additionally, we examine how utilizing different asset classes and employing factor investing can potentially enhance retirement outcomes. Watch on YouTube Subscribe on Apple Podcasts Subscribe on Spotify The post Th ..read more

What is Momentum Investing? Momentum investing is a strategy that aims to capitalize on the continuance of existing trends in the market. It involves buying stocks that have performed well in the recent past and selling those that have performed poorly, based on the idea that those trends will persist in the near-term future. Momentum investors believe that stocks which have outperformed recently will continue to do so, while those that have underperformed will continue lagging. Why Does Momentum Investing Work? The core premise behind momentum investing is that markets are slow to react to n ..read more