Patrick O'Shaughnessy: belief

Transcript context

…We definitely got to put a pin on that and come back. O’Shaughnessy Capital Management, the core insight (as I understand) that your dad had was that there was academic research around quantitative methods for investing and for screening and identifying equities. I believe equities or maybe all types of assets to invest in. Is it fair to characterize it as a data-driven approach to the old Ben Graham style, Graham and Dodd value investing? Is that a fair way to characterize the insight that he had? Yeah. I think a common misconception about quants in general where I would count us is that we're value investors. We're not slaves to value. It just happens to be one of those things that have worked really well historically. There are other things that are very different from the value that works too. But the original work was shockingly simple and oftentimes—as I find this is the case—no one had just gone to look at data to see what kinds of stocks with what kinds of attributes tended to do well. The original version of the research was literally the Dogs of the Dow strategy, which is nothing more than taking off the 30 Dow stocks. The 10 stocks that have the highest dividend yield, buying them, holding them a year. Redoing that same rule several years later with a single trade. He was the first person to bring that research all the way back to the inception of the Dow 30. What he found was this arguably stupidly simple strategy did better than the Dow itself. And that the two pillars of that were the discipline with which it was implemented, so you never deviated from a very, very specific process or rule set, and just bought stuff for a lower price. That strategy—like any strategy that gets discovered—tends to fade in its significance, but not necessarily go away. That was the original research that kicked off our entire journey as a company way back in the '80s—with an incredibly simple, by hand microfiche collected data set going back to the 1920s. That's the first time microfiche has come up on Acquired.…

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