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The following posts are related to investment theory. Scroll down to see more articles.

No investment crystal ball needed

Realistically estimating strategy performance through stochastic models. Money managers have a tough job. They need to raise capital, build and maintain client relationships, keep in compliance of regulations, and then actually manage investments. All...

Not all investment returns are created equal

Understanding the important differences between absolute return, total return, and relative return. The financial media has spent quite a bit of time during the current bull market reporting on the “underperformance” of actively managed funds. While the...

Fundamental line indicators for investors

Fundamental analysis is the foundation of stock investing and continues to be the number one source of data for selecting stocks by giant institutions, market professionals, managers of small funds, and retail investors. However, the quality of...

Leverage for the long run

‘False precision’ explored: There is never certainty in terms of market or strategy outcomes, only probabilities and managing risk—and whether you have the emotional fortitude to stick with a plan and process over time. Editor’s note: Michael...

A case for active tactical investing

Lessons from behavioral economics and fractal mathematics theory can help explain why tactical investment strategies can be beneficial in portfolio construction. Editor’s note: Dennis Yamasaki has an extensive educational background in quantitative...

The essence of trend following: What is, is

Trend followers must always keep this thought top of mind: A market can only go up, down, or sideways; there is supply, demand, or equilibrium. Unless you’re Bill Clinton, what is, is. There may be fundamental reasons why a market should be doing...

Investing in election-year markets

Presidential election years are unique, and this election year is shaping up to be like no other. The impact of elections on markets and investor portfolios can be significant. Here we take a historical look at how markets have behaved during these...

The case for mechanical trading strategies

When it comes to implementing trading strategies, there are many compelling reasons to rely on computers rather than human discretion. Computers have been used in the investment business for more than 40 years. Initially, fund managers used computers...