Ten Investment Insights that Matter

Posted: 4 Nov 2014

See all articles by Bruce I. Jacobs, Ph.D.

Bruce I. Jacobs, Ph.D.

Jacobs Levy Equity Management

Kenneth N. Levy

Jacobs Levy Equity Management

Date Written: June 30, 2014

Abstract

Over more than 30 years of research and portfolio management, we developed 10 key insights that inform our investment process. These insights all stem from the realization that the market is a complex system and that it is this very complexity that offers investors the opportunity to outperform. Creating a successful investment practice requires examining a wide array of issues, from a philosophical inquiry into the nature of financial markets to the fine details about the definition of earnings. Our early empirical research indicated that, contrary to the prevailing belief in efficient markets, the equity market is not totally efficient. Opportunities for profitable active investment existed and continue to exist despite the rapid evolution of financial markets. Detecting and exploiting these opportunities to achieve excess returns at reasonable risk requires continuous research to keep up with an ever-changing world. However, research alone will not ensure success. With more than 30 years of experience managing portfolios, we have gained many insights described in the article into the nature of the markets and the investing process.

Keywords: Stock market complexity, multidimensionality, disentangling, pure returns, anomalies, factors, long-short investing, 130-30, leverage aversion, integrated optimization, law of one alpha, alpha transport, systematic risk, equity investing, investment management, market crashes, efficient markets

JEL Classification: G11

Suggested Citation

Jacobs, Bruce I. and Levy, Kenneth N., Ten Investment Insights that Matter (June 30, 2014). The Journal of Portfolio Management, 40th Year Special Anniversary Issue, September 2014, Available at SSRN: https://ssrn.com/abstract=2468260

Bruce I. Jacobs (Contact Author)

Jacobs Levy Equity Management ( email )

100 Campus Drive
P.O. Box 650
Florham Park, NJ 07932-0650
United States
973-410-9222 (Phone)
973-410-9333 (Fax)

HOME PAGE: https://jlem.com/who-we-are#/nav/founders

Kenneth N. Levy

Jacobs Levy Equity Management ( email )

100 Campus Drive
P.O. Box 650
Florham Park, NJ 07932-0650
United States
973-410-9222 (Phone)
973-410-9333 (Fax)

HOME PAGE: https://jlem.com/who-we-are#/nav/founders

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
653
PlumX Metrics