Description
FUNDAMENTALS
November 2015
Endnotes
References
1.
Quoted in Levy (2006).
2.
Quoted in Reinhardt (1998).
3.
See Goldstein and Henry (2008).
DeMarzo, Peter M., Ron Kaniel, and Ilan Kremer. 2008. “Relative Wealth
Concerns and Financial Bubbles.” Review of Financial Studies, vol. 21, no.
1 (January):19–50. 4. Contrarian investing—trading against the crowd—is socially difficult. Meir Statman writes that investing has expressive as well as utilitarian and emotional benefits. “Expressive benefits convey to us and to others our values, tastes, and status. They answer the question, What does it say about me to others and to me?” Citing DeMarzo, Kaniel, and Kremer (2008), Statman further observes that status-conscious investors tend to inflate bubbles by crowding into similar investments for fear of falling behind the herd.
(Statman 2011, Introduction.) 5. Quoted in Wolf (1996). 6. Quoted by Apple CEO Tim Cook on Twitter (@tim_cook) on February 24, 2014. Goldstein, Matthew, and David Henry. 2008. “Lehman: One Big Derivatives Mess.” Bloomberg Business (October 7). Kalesnik, Vitali, Engin Kose, and Chris Brightman.
2015. “The Market for ‘Lemons’: A Lesson for Dividend Investors.” Research Affiliates (June). Levy, Steven. 2006.
“Good for the Soul.” Newsweek (October 16). Available at http:/ /allaboutstevejobs.com/sayings/stevejobsinterviews/newsweek06.php Reinhardt, Andy. 1998.
“Steve Jobs: ‘There’s Sanity Returning.” Business Week (May 25). Available at http:/ /www.businessweek.com/datedtoc/1998/980525.htm. Statman, Meir. 2011.
What Investors Really Want: Discover What Drives Investor Behavior and Make Smarter Financial Decisions. New York: McGraw-Hill. Wolf, Gary. 1996.
“Steve Jobs: The Next Insanely Great Thing.” Wired Magazine (February). Available at http:/ /archive.wired.com/wired/archive/4.02/jobs.html. Disclosures The material contained in this document is for general information purposes only. It is not intended as an offer or a solicitation for the purchase and/or sale of any security, derivative, commodity, or financial instrument, nor is it advice or a recommendation to enter into any transaction.
Research results relate only to a hypothetical model of past performance (i.e., a simulation) and not to an asset management product. No allowance has been made for trading costs or management fees, which would reduce investment performance. Actual results may differ.
Index returns represent back-tested performance based on rules used in the creation of the index, are not a guarantee of future performance, and are not indicative of any specific investment. Indexes are not managed investment products and cannot be invested in directly. This material is based on information that is considered to be reliable, but Research Affiliates™ and its related entities (collectively “Research Affiliates”) make this information available on an “as is” basis without a duty to update, make warranties, express or implied, regarding the accuracy of the information contained herein.
Research Affiliates is not responsible for any errors or omissions or for results obtained from the use of this information. Nothing contained in this material is intended to constitute legal, tax, securities, financial or investment advice, nor an opinion regarding the appropriateness of any investment. The information contained in this material should not be acted upon without obtaining advice from a licensed professional.
Research Affiliates, LLC, is an investment adviser registered under the Investment Advisors Act of 1940 with the U.S. Securities and Exchange Commission (SEC). Our registration as an investment adviser does not imply a certain level of skill or training. Investors should be aware of the risks associated with data sources and quantitative processes used in our investment management process.
Errors may exist in data acquired from third party vendors, the construction of model portfolios, and in coding related to the index and portfolio construction process. While Research Affiliates takes steps to identify data and process errors so as to minimize the potential impact of such errors on index and portfolio performance, we cannot guarantee that such errors will not occur. The trademarks Fundamental Index™, RAFI™, Research Affiliates Equity™, RAE™, and the Research Affiliates™ trademark and corporate name and all related logos are the exclusive intellectual property of Research Affiliates, LLC and in some cases are registered trademarks in the U.S. and other countries. Various features of the Fundamental Index™ methodology, including an accounting data-based non-capitalization data processing system and method for creating and weighting an index of securities, are protected by various patents, and patent-pending intellectual property of Research Affiliates, LLC. (See all applicable US Patents, Patent Publications, Patent Pending intellectual property and protected trademarks located at http:/ /www.researchaffiliates.com/ Pages/ legal.aspx#d, which are fully incorporated herein.) Any use of these trademarks, logos, patented or patent pending methodologies without the prior written permission of Research Affiliates, LLC, is expressly prohibited.
Research Affiliates, LLC, reserves the right to take any and all necessary action to preserve all of its rights, title, and interest in and to these marks, patents or pending patents. The views and opinions expressed are those of the author and not necessarily those of Research Affiliates, LLC. The opinions are subject to change without notice. ©2015 Research Affiliates, LLC. All rights reserved. 620 Newport Center Drive, Suite 900 | Newport Beach, CA 92660 | + 1 (949) 325 - 8700 | www.researchaffiliates.com Page 7 .
1 (January):19–50. 4. Contrarian investing—trading against the crowd—is socially difficult. Meir Statman writes that investing has expressive as well as utilitarian and emotional benefits. “Expressive benefits convey to us and to others our values, tastes, and status. They answer the question, What does it say about me to others and to me?” Citing DeMarzo, Kaniel, and Kremer (2008), Statman further observes that status-conscious investors tend to inflate bubbles by crowding into similar investments for fear of falling behind the herd.
(Statman 2011, Introduction.) 5. Quoted in Wolf (1996). 6. Quoted by Apple CEO Tim Cook on Twitter (@tim_cook) on February 24, 2014. Goldstein, Matthew, and David Henry. 2008. “Lehman: One Big Derivatives Mess.” Bloomberg Business (October 7). Kalesnik, Vitali, Engin Kose, and Chris Brightman.
2015. “The Market for ‘Lemons’: A Lesson for Dividend Investors.” Research Affiliates (June). Levy, Steven. 2006.
“Good for the Soul.” Newsweek (October 16). Available at http:/ /allaboutstevejobs.com/sayings/stevejobsinterviews/newsweek06.php Reinhardt, Andy. 1998.
“Steve Jobs: ‘There’s Sanity Returning.” Business Week (May 25). Available at http:/ /www.businessweek.com/datedtoc/1998/980525.htm. Statman, Meir. 2011.
What Investors Really Want: Discover What Drives Investor Behavior and Make Smarter Financial Decisions. New York: McGraw-Hill. Wolf, Gary. 1996.
“Steve Jobs: The Next Insanely Great Thing.” Wired Magazine (February). Available at http:/ /archive.wired.com/wired/archive/4.02/jobs.html. Disclosures The material contained in this document is for general information purposes only. It is not intended as an offer or a solicitation for the purchase and/or sale of any security, derivative, commodity, or financial instrument, nor is it advice or a recommendation to enter into any transaction.
Research results relate only to a hypothetical model of past performance (i.e., a simulation) and not to an asset management product. No allowance has been made for trading costs or management fees, which would reduce investment performance. Actual results may differ.
Index returns represent back-tested performance based on rules used in the creation of the index, are not a guarantee of future performance, and are not indicative of any specific investment. Indexes are not managed investment products and cannot be invested in directly. This material is based on information that is considered to be reliable, but Research Affiliates™ and its related entities (collectively “Research Affiliates”) make this information available on an “as is” basis without a duty to update, make warranties, express or implied, regarding the accuracy of the information contained herein.
Research Affiliates is not responsible for any errors or omissions or for results obtained from the use of this information. Nothing contained in this material is intended to constitute legal, tax, securities, financial or investment advice, nor an opinion regarding the appropriateness of any investment. The information contained in this material should not be acted upon without obtaining advice from a licensed professional.
Research Affiliates, LLC, is an investment adviser registered under the Investment Advisors Act of 1940 with the U.S. Securities and Exchange Commission (SEC). Our registration as an investment adviser does not imply a certain level of skill or training. Investors should be aware of the risks associated with data sources and quantitative processes used in our investment management process.
Errors may exist in data acquired from third party vendors, the construction of model portfolios, and in coding related to the index and portfolio construction process. While Research Affiliates takes steps to identify data and process errors so as to minimize the potential impact of such errors on index and portfolio performance, we cannot guarantee that such errors will not occur. The trademarks Fundamental Index™, RAFI™, Research Affiliates Equity™, RAE™, and the Research Affiliates™ trademark and corporate name and all related logos are the exclusive intellectual property of Research Affiliates, LLC and in some cases are registered trademarks in the U.S. and other countries. Various features of the Fundamental Index™ methodology, including an accounting data-based non-capitalization data processing system and method for creating and weighting an index of securities, are protected by various patents, and patent-pending intellectual property of Research Affiliates, LLC. (See all applicable US Patents, Patent Publications, Patent Pending intellectual property and protected trademarks located at http:/ /www.researchaffiliates.com/ Pages/ legal.aspx#d, which are fully incorporated herein.) Any use of these trademarks, logos, patented or patent pending methodologies without the prior written permission of Research Affiliates, LLC, is expressly prohibited.
Research Affiliates, LLC, reserves the right to take any and all necessary action to preserve all of its rights, title, and interest in and to these marks, patents or pending patents. The views and opinions expressed are those of the author and not necessarily those of Research Affiliates, LLC. The opinions are subject to change without notice. ©2015 Research Affiliates, LLC. All rights reserved. 620 Newport Center Drive, Suite 900 | Newport Beach, CA 92660 | + 1 (949) 325 - 8700 | www.researchaffiliates.com Page 7 .
