Tag Archives: Rob Arnott

Can Investors Time the Market By Going Against the Flow?

Yale professor Roger Ibbotson and Research Affiliates founder Rob Arnott debated the challenges and opportunities of timing the market at the 2015 Schwab IMPACT conference.  As reported by Financial Advisor, the two speakers generally agreed that “the stocks that are the most popular will do the worst, as Ibbotson said, or, as Arnott put it, “you just have to find the flows and do the opposite.” But Arnott argued for focusing on underlying valuation and that “we should weigh companies based on their macroeconomic footprint. . . Use the size of a business to contratrade against the markets’ bets.” While Ibbotson didn’t necessarily disagree, he added a major caveat: “If you go against what everybody else is doing, you can do well . . . [but] people can’t really follow that kind of advice.”

Why Good Investors Like Bad “Vacation Spots”

If you’re looking for good vacation ideas, you should look for places with positive reviews on any number of websites that offer ratings on hotels, restaurants, and activities. If you want to make money in stocks, however, Validea CEO John Reese says to seek out some unloved “one-star” locales.

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Arnott: “You Don’t Get Bargains In The Absence Of Fear”

Fundamental indexing guru Rob Arnott says that to get bargains, you have to invest in places where fears are high. Right now, he says that means to look in places like emerging markets and Europe.
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Arnott Talks Indexing, And Why Wall Street Hates Math

In an interview with Bloomberg View’s Barry Ritholtz, Research Affiliates’ Rob Arnott recently talked about the fundamental indexing approach that he pioneered.
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Arnott Sees Value in EMs

Emerging markets have been scaring a lot of investors lately — and that makes them just the sort of play that top strategist Rob Arnott likes. Read more

Arnott Still Sees Low Returns Ahead

While stocks have been climbing higher, fundamental indexing guru Rob Arnott of Research Affiliates hasn’t changed his outlook for the coming decade — and it’s not an optimistic one.

In a recent column for MarketWatch, Mark Hulbert looks at a forecasting model Arnott uses that has been highly accurate over the past century-plus. The model forecasts stock market returns by adding together just two factors: dividend yield and real growth in earnings and dividends. “Even if we generously assume that this latter growth rate will be just as high as in the past, despite the anemic economy, we only get a projected nominal return of between 5% and 6% annualized over the next decade [using the model] — about half stocks’ long-term average,” Hulbert writes.

According to the model, for stocks to post “anything close to [their] long-term average return, earnings and dividends will have to grow at more than double their historical average,” Hulbert says.

But Arnott actually thinks growth will be lower in the future than in the past, because of “demographic headwinds.” He thinks that could reduce GDP by 2% annually. Hulbert writes.

Arnott: Time To Take Risk Off Table

Top fund manager Rob Arnott says that it’s becoming “embarrassing” to admit you’re a bear lately, and that means it’s time to be cautious. “If you look at advisor sentiment surveys, you find that right now there are fewer bears than have been seen in these surveys except at extreme major market tops, such as in early 2000,” he tells Yahoo! Finance’s Breakout. “When it gets to be downright embarrassing to be a bear, doesn’t that make for a wonderful time to take some risk off the table?” Arnott says “we’re definitely in a slowdown relative to last year … and quite possibly already in recession.” But, he adds, there’s always something interesting to invest in. Right now, he likes emerging market debt and emerging market stocks.

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