Research Foundation Webcasts and Podcasts Presentation Recorded 25 Mar 2019
Popularity: A Bridge between Classical and Behavioral Finance - Video Synopsis
While popularity is usually a good thing, buying what other investors are avoiding has a long history with the experts, from Graham and Dodd to Warren Buffett. When it comes to investing, popularity offers a framework for understanding and predicting factors and the underlying preferences that set asset prices.
In classical finance, investors are risk averse with premiums seen as payoffs for that risk. Alternatively, in behavioral finance, investors may have preferences that go beyond rational behavior.
In the CFA Institute Research Foundation monograph, Popularity: A Bridge between Classical and Behavioral Finance, the authors identify some characteristics likely to be popular and then compare the performance of stocks that should be popular with those that should be unpopular.
About the Speaker(s)
Roger G. Ibbotson is Professor in the Practice Emeritus of Finance at Yale School of Management and chairman of Zebra Capital Management, LLC, a global equity investment and hedge fund manager. He is founder and former chairman of Ibbotson Associates. Dr. Ibbotson conducts research on a broad range of financial topics, including popularity, liquidity, investment returns, mutual funds, international markets, portfolio management, and valuation. He has written numerous books and articles, including Stocks, Bonds, Bills, and Inflation (coauthored by Rex Sinquefield), which is updated annually and serves as a standard reference for information and capital market returns. Dr. Ibbotson’s other books include The Equity Risk Premium, Lifetime Financial Advice, and, most recently, Popularity: A Bridge between Classical and Behavioral Finance. He is a regular contributor to and an editorial board member of both trade and academic journals. Dr. Ibbotson serves on numerous boards and frequently speaks at universities, conferences, and other forums. He received his bachelor’s degree in mathematics from Purdue University, his MBA from Indiana University, and his PhD from the University of Chicago, where he also taught for more than 10 years and served as executive director of the Center for Research in Security Prices.
Thomas M. Idzorek, CFA, is chief investment officer, retirement, for Morningstar Investment Management LLC. He also serves as a member of Morningstar’s 401(k) committee and Public Policy Council, chair of Morningstar’s overall Research Council, and as a member on the editorial boards of the CFA Institute Financial Analysts Journal and Morningstar magazine. Idzorek was formerly president of Morningstar’s global investment management division, where he oversaw the firm’s global investment advice, consulting, retirement solutions, broker/dealer, index, and financial wellness businesses. Additionally, he has served as president of Ibbotson Associates, president of Morningstar Associates, board member/responsible officer for a number of Morningstar Investment Management subsidiaries, global chief investment officer for Morningstar Investment Management, chief investment officer for Ibbotson Associates, and director of research and product development for Ibbotson. Most recently, Idzorek served as head of investment methodology and economic research for Morningstar. Before joining Ibbotson, he was a senior quantitative researcher for Zephyr Associates. Idzorek has written numerous articles for academic and industry journals and collaborated on papers that have won a Financial Analysts Journal Graham & Dodd Scroll Award. He is an expert on multiasset class strategic asset allocation, the Black–Litterman model, target date funds, retirement income solutions, fund-of-funds optimization, risk budgeting, and performance analysis. Idzorek is the key methodological creator of Morningstar’s target date and retirement managed account (robo-advice) solution. He holds a bachelor’s degree in marketing from Arizona State University and a master’s degree in business administration from Thunderbird School of Global Management.
Paul D. Kaplan, CFA, is director of research for Morningstar Canada and is a senior member of Morningstar’s global research team. He led the development of many of the quantitative methodologies behind Morningstar’s fund analysis, indexes, adviser tools, and other services. Kaplan conducts research on asset allocation, retirement income planning, portfolio construction, index methodologies, and other investment topics. Many of his research papers have been published in professional books and publications, such as the Financial Analysts Journal and the Journal of Portfolio Management, and he has served on the editorial board of the Financial Analysts Journal. Kaplan has received a Graham & Dodd Top Award and a Graham & Dodd Award of Excellence. Many of his works appear in his book Frontiers of Modern Asset Allocation. Previously, he has served as quantitative research director for Morningstar Europe in London, director of quantitative research in the United States, and chief investment officer of Morningstar Associates, LLC, where he developed and managed the investment methodology for Morningstar’s retirement planning and advice services. Previously, Kaplan was a vice president of Ibbotson Associates and served as the firm’s chief economist and director of research. Prior to that, he served on the economics faculty of Northwestern University, where he taught international finance and statistics. Kaplan holds a bachelor’s degree in mathematics, economics, and computer science from New York University and a master’s degree and doctorate in economics from Northwestern University.
James X. Xiong, CFA, is head of scientific investment management research at Morningstar Investment Management. He leads research and develops new methodologies and algorithms on the time-varying capital markets model, tail risk management, portfolio optimization, asset allocation, dynamic portfolio choice, insurance product allocation, mutual fund selection, alternative asset class investments, Monte Carlo simulations, and other investment and financial planning areas. Xiong’s work has been published in the Financial Analysts Journal, Journal of Investment Management, Journal of Portfolio Management, Journal of Risk Management in Financial Institutions, and Journal of Financial Planning, among other publications. His co-authored “Liquidity Style of Mutual Funds” was awarded with a Graham & Dodd Scroll, and his co-authored “Momentum, Acceleration and Reversal” won a Harry M. Markowitz Award. Xiong has published more than 15 papers in scientific journals, including Physical Review Letters, a prestigious world journal in physics. He holds a bachelor’s degree in physics from Wuhan University in China and a doctorate in physics from the University of Houston.