Point Loma Advisors

In a previous blog I touched upon factor-based investing, noting the factors of equity, size, value and profitability. I briefly mentioned “smart beta,” with a promise of more to come. According to Investopedia, “[b]eta represents the tendency of a security's returns to respond to swings in the market.” Marketeers have taken the term “beta”, dressed it up as “smart beta” and used it as a broad term for an investment style, often factor-based investing. There is no consensus

Here it is, the secret to investing like Warren Buffett. What does it mean? Basically it says that, all other things being equal, the stocks of more profitable firms should outperform the stocks of less profitable firms. The profitability factor is the Warren Buffett factor. To put this in context, what are factors? If you’re familiar with the Morningstar equity style box, you get the basic idea. The style box plots two factors, 1) size, and 2) value. Over the past few