“The premier anomaly is momentum.”, so said Eugene Fama, author of the efficient market hypothesis, seminal academic researcher on momentum investing and 2014 co-recipient of the Nobel Prize in Economics. Evidence has shown that momentum strategies that exploit this anomaly can be applied to generate excess returns for investor portfolios.
Momentum strategies are centered on the observation that market participants display initial under reactions and lagged overreactions to changing market dynamics. This behavioral bias leads to the core of the momentum strategy – investment decisions are made by assuming past winners indicate future winners and past losers indicate future losers.
At Inukshuk Capital Management (ICM), we feel that we have a responsibility to help inform and educate our clients, especially as the industry evolves. There are many positive developments taking place regarding fee and performance disclosures that investors need to know. Unlike many in the industry, we welcome the opportunity to serve our clients with a fiduciary duty. A fiduciary duty is the highest responsibility and standard of care in the industry. We fervently believe that an investor who understands what they own, why they own it, and what it costs, is an empowered and confident investor and more likely to achieve their investing goals over time.
An investment strategy focused on absolute returns can complement one’s overall portfolio while also reducing risk through style diversification, especially with a portfolio heavily geared toward buy‑and-hold investing.
Out of the countless strategies that exist in the investing world, the most widespread and widely accepted approach is known as buy‑and‑hold investing. The buy-and-hold strategy is quite simple: financial instruments, usually stocks, are purchased and then held for a long period of time, with the investor seeking profits through upward price movement.
Portfolio Manager vs. Investment Advisor: What’s the Difference, and Who Can You Trust to Navigate a Volatile Market?
For investors, there’s never been a better time to utilize the expertise of a financial professional. Whether you are investing passively or building a more active portfolio, financial experts can help you achieve your investment goals more quickly and efficiently. However, it’s equally important to know which services are provided by the financial professional, and what you can expect from them.