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Alternative Thinking
Hold the Dip
December 1, 2025
We examine the popular “Buy the Dip” strategy and find it consistently underperforms a simple buy-and-hold approach. Our research shows that investors seeking to time markets may find greater success following trends rather than fighting them.
White Paper
Active Extension
November 24, 2025
This paper explores how Active Extension (AE)—a long-short framework—may enhance portfolio performance. By allowing skilled managers to short unattractive stocks and overweight more attractive ones, AE offers a liquid, capital-efficient path to improved active returns and long-term wealth outcomes.
Tax Matters
Food for Thought: Tracking Error
October 15, 2025
This piece challenges the notion that all tracking error is bad, comparing it to the idea that all calories are unhealthy. It explains how “rewarded” tracking error—taken in pursuit of alpha—differs from “unrewarded” tracking error, helping investors understand when taking on tracking error can be beneficial for achieving long-term goals.
Perspective
There Ain’t No Such Thing as a Free Lunch
August 11, 2025
Our latest piece on Buffer Funds appears in the current issue of the Journal of Portfolio Management. Once again, and with more analysis (and co-authors) than our two previous posts on the topic, we find these products don’t hold up to scrutiny, either empirically or theoretically. Buffer funds by and large have sold investors the promise of comfort, cloaked in complexity, at the cost of risk-adjusted returns. Our paper shows there are simpler, less expensive, and more effective ways to deal with the risk of equity markets.
Journal Article
Rebuffed: An Empirical Review of Buffer Funds
August 11, 2025
Equity investing is hard: volatility can be high, returns are unpredictable, and drawdowns can be painful. “Defined outcome” strategies such as buffer funds are the latest in a decades-long lineage of products promising equity-like returns with less downside risk. Like their predecessors, a closer look at these strategies reveals they fall short both empirically and theoretically.
Alternative Thinking
The Hidden Value of Streaky Returns in Stock Portfolios
June 3, 2025
Streaky return streams - ones that that can perform well or poorly for extended periods - are challenging for investors to comprehend and stick with. Yet, this very "complexity risk” may be what earns investors an additional risk premium, leading to above average risk-adjusted returns.
Perspective
Buffer Madness
May 8, 2025
Last month, we posted a short piece critical of options-based strategies such as “defined outcome funds” and “buffered ETFs”. It showed that the vast majority of them failed to deliver either better returns or less-severe drawdowns than a simple combination of passive equities + cash. Since then, we’ve gotten quite a bit of—let’s call it—feedback. My partner Dan, who wrote the original, now writes the devastating response to his predictable critics. My only criticism is he is too kind.
Perspective
Rebuffed: A Closer Look at Options-Based Strategies
March 21, 2025
Options-based strategies, often labeled with words like “Buffered,” “Overlay,” and “Defined Outcome” have amassed a sizeable chunk of investors’ money, lured by the promise of market-like returns with less risk. These strategies use options to capture the upside or downside of an asset’s returns, and managers who employ a mix of options can tailor an asset’s risk/return profile to align with an investor’s goals. But can they actually deliver?
Perspective
In Praise of High-Volatility Alternatives
September 4, 2024
This note argues that good higher-volatility alternative investments, that are indeed often very hard to stick with, can be important tools in constructing the best overall portfolio. I think if (a big if) investors can stick with them, they are often a more effective tool than their lower-volatility cousins. Basically, I think they are underutilized
Journal Article
Fact, Fiction, and Factor Investing: Practical Applications
September 1, 2023
This piece distills the central concepts and practical takeaways of our Fact, Fiction, and Factor Investing article, which examined many claims about factor investing, referencing an extensive academic literature and performing simple, yet powerful, analysis to address those claims.