What We Can Learn from Andrew Lo’s Adaptive Markets

Laurence Articles

Is the market efficient? Of course not – not exactly, or not even close, depending on your point of view. However, the efficient market hypothesis (EMH), while self-evidently not quite correct, has remained surprisingly resistant to overturning. The reason is that, as MIT professor Andrew W. Lo says repeatedly in his new book, Adaptive Markets, “it takes a theory to …

Value Investing: Robots versus People

Laurence Articles

Who is better at value investing: robots or people? How have robots – the quantitatively-driven passive funds that hold, for example, low price-to-book stocks – fared against actively managed value mutual funds? A provocative paper forthcoming in the Financial Analysts Journal, “Facts About Formulaic Value Investing,” by U-Wen Kok, Jason Ribando, and Richard Sloan, argues that robots are poor value …

Floods and Deserts: Why the Dream of a Secure Pension for Everyone Is Still Unattained

Laurence Articles

Why have defined benefit (DB) pension plans, arguably the most elegantly engineered financial service ever created, stumbled so badly? Less than 50 years after achieving wide acceptance and providing predictable and secure benefits to their participants, many DB plans have been terminated, and others struggle to attain adequate funding levels. Many of the terminated DB plans have been replaced with …