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Concentration Impact on Style Indices

July 30, 2020 Applied Finance

Big 5 companies surge in index concentration… what will be the effect on style boxes and cap-weighted portfolios?

The recent surge has notable impacts on commonly-used style index construction methodologies. Due to the increased reliance on passive allocations, investors should be aware of the significant distortions regarding style index diversification and skews in the classification assigned to individual stocks. […more]

The False Bargain of Passive Investing

July 14, 2020 Applied Finance

Today the irony continues, as the intellectual foundations in financial economics that underpinned Bogle’s incredible success are much less robust than they appeared in the early 70’s, yet the push for passive investing is stronger and more fervent than ever. For proactive, process-oriented, intelligent advisors this will create a great opportunity to distinguish yourself from the growing herd of “commodity” advisors who preach little more than fee minimization, rather than alpha generation or negative alpha avoidance. […more]

A Challenging Industry – Autos

Tough sledding when attempting to value companies in the auto industry like Tesla (TSLA) and Ferrari (Race). Tesla’s valuation is in in excess of all 3 (formerly ‘Big”) US automakers, combined. Ferrari is sitting at somewhere around a $4million per car valuation. […more]

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