Letters to Our Clients
Robert C. Merton, Nobel Prize Winner, Shares Some Common Sense Advice for Index Investors and Robo-advisers
Over the years I have been quite disappointed with investment research provided by academia. The majority of this research mines some data, wraps it with some pretty mathematics and presents it to the world in a format that very few can understand. One group of people who can understand this research refer to themselves as “financial engineers.” It is this group that takes a look at the research, determines if the research has some marketing qualities and, if it does, creates or engineers a product that can be sold to us, the investors. Most of these products have little chance of creating long-term wealth for us, but they can easily give a short term boost to the profits of the sponsors of these engineered products.
Kendall J. Anderson, CFA