Vol. 21, No. 4, 2023 Mouhamadou M. Ba, Gerald T. Garvey, Brett Z. Miller and Katharina J. Schwaiger Minority representation on US boards has grown more than 50% in the last eight years, but this reflects an increase in the number of seats for existing minority directors as much as a diversification of the director… Read more
Insights
Insight: A Practitioner’s Guide to Address Fat Tails and Downside Risk in Portfolio Construction
Vol. 21, No 2, 2023 by Eva A. Xu and Eric L. Tarkin Standard models of risk and return are known to underestimate the frequency of extreme events and cannot account for the observed phenomena of increasing correlations in times of stress. This was most salient during the global financial crisis. Despite all of this… Read more
Insight: Bias and Noise in Humans & AI: When to Trust Humans & Machines in Decision-Making .
Vol. 20, No. 4, 2022 Vasant Dhar When should we trust machine-based and human decisions in finance? In this article I answer this question by drawing on two sets of insights about decision error. I first draw on research of leading theorists on human decision-making and prediction, summarized through a set of articles and conversations… Read more
Insight: Interview with Dean Lebaron and Charley Ellis
Vol. 20, No. 3, 2022 As part of our twentieth anniversary of the JOIM, I have asked a few luminaries to share their sage thoughts in our “Insights” section. The following contribution is from Dean LeBaron who also enlisted comments from Charley Ellis in an interview which preceded our publication. My thanks to Dean and… Read more
In Memoriam—Louis A. Simpson
Vol. 20, No. 2, 2022 by Robert Korajczyk Louis A. Simpson December 23, 1936–January 8, 2022 View PDF… Read more
Toil and Trouble, Don’t Get Burned Shorting Bubbles
Vol. 20, No. 2, 2022 by Aaron Brown and Richard Dewey Bubbles are among the most puzzling and controversial phenomena of financial markets. Although rare, their cumulative impact on both investor returns and the broader economy can be great. One particular question that has motivated research is why shrewd short sellers don’t prevent excessive price… Read more
Financing Vaccines for Global Health Security
Vol. 20, No. 2, 2022 by Jonathan T. Vu, Benjamin K. Kaplan, Shomesh Chaudhuri, Monique K. Mansoura and Andrew W. Lo Recent outbreaks of infectious pathogens such as Zika, Ebola, and COVID-19 have underscored the need for the dependable availability of vaccines against emerging infectious diseases (EIDs). Prior to the COVID-19 pandemic, the cost and… Read more
Are We at the Inflection Point of Climate Investing?
Vol. 19, No. 4, 2021 Yu (Ben) Meng Just as the ongoing pandemic demonstrates our vulnerability to the invisible hand of the COVID-19 virus molecule, the extreme climate events are constant reminders of our vulnerability to another molecule, carbon dioxide. As a result, all walks of society are asking for solutions, especially ones that involve… Read more
Insight: Active Investing and the Efficiency of Security Markets
Vol. 19, No. 1, 2021 Russ Wermers This study investigates the impact of active investment management on the efficiency of public security markets. The scholarly literature indicates that active management contributes to market efficiency, thereby providing positive externalities for all investors, including investors in passively-managed funds. Contrary to popular interpretations of Sharpe’s (1991) “active arithmetic,”… Read more
Towards Replacing the Defined Benefit Plan: Assured Retirement Income Provided by a Liquid Investment Fund
Vol. 18, No. 4, 2020 Miguel Palacios, Hayne Leland and Sasha Karimi Traditional corporate defined benefit (DB) plans provided retirees with constant retirement income, butDB plans have now all but disappeared. While defined contribution (DC) plans now permit low-fee wealth accumulation, the conversion of wealth to predictable nominal or real income during retirement remains opaque… Read more