Factor Investing
The handful of persistent return drivers that explain most of what works.
Lessons
- What Are Factors?Systematic traits — like cheapness or momentum — that have paid investors across decades and markets.
- The Value FactorBuying cheap and selling dear, systematically. Why it works, and why it can hurt for years.
- The Momentum FactorWinners keep winning — the most robust anomaly in finance, and its crash risk.
- The Quality FactorProfitable, stable, low-debt businesses tend to outperform. Defining "quality" with numbers.
- Low-Volatility & SizeTwo more factors — boring stocks beating racy ones, and small beating large. The nuance behind both.
- Combining FactorsFactors zig and zag at different times — blending them smooths the ride. The intuition behind multi-factor.