[ad_1] Quantitative finance continues to debate the reliability and limits of model-driven investment strategies. One central question is how much weight investors should place on backtesting. In The Factor Mirage: How Quant Models Go Wrong, Marcos López de Prado, PhD, and Vincent Zoonekynd, PhD, outline why investors should move beyond accepting historical performance at face value and focus on understanding why a model works. That is a valuable contribution to strengthening the rigor of quantitative investing — and one that invites further reflection on how that reasoning is structured. It may help to frame the issue not as a binary…
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[ad_1] Whenever I talk/write about the stock market and mutual funds, I get a lot of flak about how “discouraging” or “negative” I am. Even after all these years, I find it bizarre that despite the disclaimers and the warnings, people believe that simply staying invested in the markets will guarantee good returns. And I am criticised for merely the truth.I have explained this with data via many articles in the past.The gist of the articles is that history tells us that stock market returns are uncertain. However, over long enough investment durations, there is a reasonable chance that the…
[ad_1] Image source: Getty Images Rolls-Royce (LSE:RR) shares motored to a new record at the end of last month, reaching an intraday high of 1,420p. This followed the FTSE 100 engine maker’s full-year 2025 results, which were excellent. Two days later however, the US and Israel began bombing Iran, sending the FTSE 100 down sharply. The Rolls-Royce share price has now pulled back to 1,292p, as I type, a fall of around 9% from its high. I’ve been waiting for a dip to consider buying more shares. Is this the opportunity I’ve been waiting for? The platform’s burning no more…
[ad_1] Image source: Getty Images With the Middle East conflict sending oil prices soaring, the idea of a stock market crash is back on people’s minds. When you also see big‑name indicators flashing red, it is easy to wonder if a fall’s coming, already underway, or quietly cooling in the background. One key measure analysts use to gauge market health, named after billionaire investor Warren Buffett, recently hit an all-time high, but has since begun retreating. What could this mean for global markets? What’s the Buffett Indicator? The Buffett Indicator compares the value of the market against the economy, usually…
[ad_1] What Institutional Investors Should Ask Before Allocating to Systematic Strategies Your due diligence process for quantitative managers likely focuses on performance: backtests, Sharpe ratios, drawdowns, and attribution. It almost certainly does not test whether the variables are structured correctly in relation to the economic forces they are meant to capture. That gap is not minor. It may be the largest undiagnosed source of risk in systematic strategy evaluation today. This piece gives you one question that closes it. It requires no technical background and can be used in your next manager meeting. The Pattern Three allocators at three different…
[ad_1] Image source: Getty Images When share prices are low, it’s a great time to be looking for stocks to buy. But nobody knows when the next stock market crash is coming, so what should investors do in the meantime? One strategy is to hold off buying and wait for opportunities. That might be what billionaire investor Warren Buffett has been doing recently, but it’s not the only strategy for most investors. Warren Buffett A lot of people have pointed out that Buffett’s investment vehicle Berkshire Hathaway has been building cash reserves recently. While it has made some investments, it’s…
[ad_1] Image source: Getty Images Yesterday (11 March), Legal & General’s (LSE: LGEN) share price fell by a little over 6%. It ended the day at 242p, about 14% below its 2026 highs. Is there an opportunity here with the share price down and the dividend yield up? Let’s discuss. Unpacking its 2025 results The driver of the share price fall yesterday was the insurer’s full-year results for 2025. These weren’t terrible, however, there were a few weak spots. One issue was that core operating profit came in slightly below estimates. It amounted to £1.62bn, up 6% year on year,…
[ad_1] Image source: Getty Images Having been investing for nearly 40 years, I’ve changed my style considerably over the decades. In the early years, I enjoyed taking high-risk punts on small-company shares. Later, I followed the advice of my hero Warren Buffett to buy great companies at fair prices. These days, I aim to boost the passive income generated by my family portfolio. £86bn in passive income In particular, I crave the strong steams of cash that come from owning FTSE 100 shares. According to one report, total FTSE 100 dividends could hit £86bn for 2026, versus £80.7bn in 2025.…
[ad_1] Here is how you can be a successful equity mutual fund investor. This also applies to the long-term direct equity (stock) investing.Understand the true nature of the stock market: All those stories of “compounding” that you have been fed do not pan out in real life. See: Don’t get fooled: Mutual funds have no compounding benefit!Equity investing is like climbing a staircase in which you cannot see the next step and do not know how high or low the next step will be! The next step could arrive the next day or take years. See: Are you ready to…
[ad_1] What This Analysis Delivers A framework for deriving exit multiples from long-run growth, return, and discount rate assumptions embedded in discounted cash flow (DCF) models. Empirical evidence that expected growth explains much of the variation in observed multiples for high-growth firms. Recognition that interest rate regimes materially influence valuation levels and should be reflected in exit assumptions. In high-growth company valuations, terminal (exit) assumptions often account for a large share of enterprise value. When exit multiples are selected without explicit reference to growth, return, and rate expectations, the analysis can become internally inconsistent. The framework that follows draws on…