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Earnings learnings: Why forecasts are fantasy

US stock valuations based on forecast operating earnings regularly veer into ‘fantasy’ land, according to a new analysis by quantitative investment firm Research Affiliates (RAFI), with reality set to disappoint again in 2023 as recessionary risks remain.

David Chaplin | 25th Jan 2023 | More
Research Affiliates hoses down rapid inflation reversal hopes

Entrenched inflation will likely last longer and prove harder to stamp out than most investors acknowledge, according to a new analysis from quant shop Research Affiliates.

David Chaplin | 2nd Dec 2022 | More
Academic factors only academic after all

While nearly 400 investment factors have been proposed in academic journals since 1960, new research calls into question their practicality – and their ability to earn anybody a performance fee.

Lachlan Maddock | 22nd Jun 2022 | More
  • Crypto might never be more than a meme

    While proponents believe that cryptocurrencies will inevitably disrupt traditional finance, it’ll be harder than it seems – and less lucrative than they think. As cryptocurrencies like Bitcoin and Ethereum have shot to prominence in the last several years, it’s now being taken as a given that they will eventually disrupt traditional finance. Blockchain technology offers…

    Lachlan Maddock | 9th Mar 2022 | More
    Why Cathie Wood believes in the ‘super-crazies’

    Implausible doesn’t mean impossible. But it remains to be seen whether the “creative destruction” that ARK Invest is banking on can trump the possibility that we’ve been in a bubble all along. They’re what legendary investor/prophet of doom Jeremy Grantham calls “super-crazies” – the wildly overvalued assets that start to appear shortly before the bubble…

    Lachlan Maddock | 23rd Sep 2021 | More
    Rob Arnott: ‘Sell the top dogs’

    Rob Arnott, the founder and chairman of Research Affiliates, addressed investors on the unanswerable question as to what happens next following the recent rebound in fortunes for value managers. His webinar, on August 5 (US time) begged the question of when it will happen, but he left the audience in no doubt about what was…

    Greg Bright | 13th Aug 2021 | More
  • How the market beats economic forecasts

    Research Affiliates has taken the study of factor timing to a user-friendly new level through a paper which argues that the market’s momentum and valuation are good predictors of economic influences. The paper, by Mike Aked, director of research for Australia, shows that a strategy based on a factor’s discount to historical averages of value…

    Greg Bright | 23rd Apr 2021 | More
    Second big quarter in value rotation

    Value managers are hopeful that, following the second consecutive quarter of the factor’s outperformance, their world has returned to normal. Value may well be back. For the March quarter, for Australian shares, the S&P/ASX 200 value factor index was up 8.50 per cent, making a 12-month return of 42.71 per cent. The S&P/ASX 200 growth…

    Greg Bright | 9th Apr 2021 | More
  • Research Affiliates on ‘the trade of the decade’

    Factor manager Research Affiliates appears to be charging in where value managers are still nervous to tread, with a big call on the state of global markets and where the main opportunity lies – UK equities. Mike Aked, Research Affiliates director of research for Australia, said last week (March 17) that the firm had identified…

    Greg Bright | 19th Mar 2021 | More