Spanning the divide between academia and practice...

SMART INVESTING, FOCUSED ON AN EVER-CHANGING ECONOMIC LANDSCAPE.

Recent Insights


August 3, 2020

      The standard method of determining what industry a company is in is by looking at its underlying business.  By that standard, Tesla is clearly in the auto

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July 27, 2020

 Using criteria based on environmental, social and governance (ESG) considerations has become an increasingly important aspect of investment decision making, particularly for high profile institutional investors.  As of 2019, sustainable

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July 20, 2020

              Charlie Munger is famous for stressing the role of moats in successful investing.  He argues that only strong moats allow a business to

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July 13, 2020

      The current earnings reports that begin rolling out this week will be among the most important since the financial crisis, if not even before that.  To explain

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July 8, 2020

         In a clever and useful analysis, Ronen Israel, Kristoffer Laursen, and Scott Richardson of AQR use the residual income approach to break down how the value

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Featured Publication


 Using criteria based on environmental, social and governance (ESG) considerations has become an increasingly important aspect of investment decision making, particularly for high profile institutional investors.  As of 2019, sustainable assets under management were estimated to be $30 trillion worldwide.  The claim here is that the enthusiasm for ESG investing has been exaggerated for three reasons.  First, it is not clear what constitutes an ESG investment in the context of a complex, integrated economy.  Second, the impact on investment performance of a preference for ESG investments has not been sufficiently recognized outside academic circles.  Finally, many leading practitioners have stated that the importance of ESG considerations implies the corporate objective of maximizing shareholder value, which lies at the core of much of finance theory, is outdated and needs to be replaced by a more comprehensive stakeholder model.  The conclusion is that both the benefits of the traditional model and the dangers of a broader stakeholder model have not be adequately appreciated.         

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