On the Extremes

There’s a strong tendency in the financial markets to live in the extremes. That is, we often draw a line in the sand. You’re either bullish OR bearish. You’re in OR you’re [ … ]

What I’m Reading: Low-Risk Investing Without Industry Bets

The strategy of buying safe low-beta stocks while shorting (or underweighting) riskier high-beta stocks has been shown to deliver significant risk-adjusted returns. However, it has been suggested that such “low-risk investing” delivers high returns primarily due to its industry bet, favoring a slowly changing set of stodgy, stable industries and disliking their opposites. We refute this.