Technical Analysis

By way of background, I became interested in the stock market during high school when my grandpa showed me how he invested in stocks; he was an engineer and only looked at stocks from a technical perspective. I ended up spending a few years backtesting and overfitting every technical indicator I could get my hands on. I personally created a number of indicators that analyzed the velocity and acceleration of price action and derivatives of price action, but eventually came to the conclusion that there is not a “holy grail” of technical indicators. In the future, I will touch on what the academic literature has to say about technical analysis.

Factor Investing

During college, I took class called Financial Analytics, in which I had to backtest a multi-factor portfolio (using CRSP and Compustat), and write a white paper on the results. At the time I did not understand factor premiums, but picked dividend yield, momentum, and low volatility as my underlying factors. I did well in the class but barely completed the project correctly.

This eventually led me to investors that take an academic and quantitative approach to investing, such as Wes Gray and Jack Vogel at Alpha Architect, Tobias Carlisle at the Acquirers Funds, Patrick O’Shaughnessy at O’Shaughnessy Asset Management, and Meb Faber at Cambria Asset Management. I read every book they published and became obsessed with factor investing. Quantitative Value by Wes Gray and Tobias Carlisle was my favorite because it laid the ground work for an evidence based approach to systematic value investing. Unfortunate for quantitative value investors, momentum and growth investing has fared much better over the past several years.

To this day I find quantitative value strategies pleasing because they follow a systematic process which has worked well historically. However, I struggle to justify whether they will generate excess risk-adjusted returns in the future given the current interest rate environment, lack of private companies going public, increased visibility on a company’s financials, and so on.

Security Analysis

This leads me to today as I pursue the CFA designation. Similar to my grandpa, my brain is wired to be very logical and quantitative, making it difficult to think abstractly about the future. That said, the objective of this website is to help myself take a flexible approach to analyzing a business and thinking about what it could look like many years from now.