Oct 14, 2020
This week on Grow Money Business we dive into factor investing. Factor investing is a strategy that focuses on selecting securities based on attributes that are linked to higher returns. Throughout this episode, Grant covers what factor investing is, how you may implement it in your investment efforts, and some of the things you should keep in mind when engaging in factor investing. Stay tuned until the end of the episode, where Grant shares some valuable tips for minimizing your risks.
[01:00] Background – The history of index investing, how it works, and how index investing evolved over the years.
[08:40] Factor Investing – How the concept of trying to identify companies that would outperform evolved into factor investing.
[14:09] Factors – Grant explains some of the most important factors that contribute to the performance of stocks. He also reviews the Three-Factor model developed by Nobel Laureate Eugene Fama and distinguished financial researcher Kenneth French.
[20:58] Factor Investing In-depth - Factor investing has some unique characteristics that differentiate it from traditional index investing. Grant explains what these characteristics are and what they mean for the investors.
[24:21] Value & Growth Stocks – Grant shares his take on how the performance of value and growth stocks varied throughout the last decade and what trends may emerge in the near future.
[27:14] Adapting to Market Trends – How to be mindful about changing market conditions and what you should keep in mind when working with a professional.
[33:28] Making Wise Investment Decisions – How to improve your investment decisions using factor investment strategy.
[37:33] Who is a Good Candidate for Factor Investing? – Grant shares his take on things you should consider when deciding whether factor investing is a suitable strategy for you.
Resources:
Bloodletting and Evidence-Based Investing:
abovethecanopy.us/bloodletting-and-evidence-based-investing/
Episode 44: Using Asset Location to Improve Investment
Returns:
growmoneybusiness.com/podcast/x9ykf9576e352jd-xs3l5-l355n-pc3nj-4l3tz-fsye7-g9gha-tdcyt-b7r9a-wja6y