Rational Investing

The Subtleties of Asset Management

Hugues Langlois and Jacques Lussier

Columbia University Press

Rational Investing

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Pub Date: March 2017

ISBN: 9780231177344

240 Pages

Format: Hardcover

List Price: $40.00

Pub Date: March 2017

ISBN: 9780231543781

240 Pages

Format: E-book

List Price: $39.99

Rational Investing

The Subtleties of Asset Management

Hugues Langlois and Jacques Lussier

Columbia University Press

Many investors believe that success in investing is either luck or clairvoyance. In Rational Investing, finance professor Hugues Langlois and asset manager Jacques Lussier present the current state of asset management and clarify the conundrum of luck versus skill. The core of Rational Investing is a framework for smart investing built around three performance drivers: balancing exposure to risk factors, efficiently diversifying bad luck, and taking advantage of relative mispricings in financial markets. With clear examples from model multi-asset-class portfolios, Langlois and Lussier show how to implement performance drivers like institutional investors with access to extensive resources, as well as nonprofessional investors who are constrained to small-scale transactions. There are few investment products, whether traditional or alternative, discretionary or systematic, fundamental or quantitative, whose performance cannot be analyzed through this framework. Langlois and Lussier illuminate the structure of financial markets and the mechanics of sustainable investing so any investor can become a rational player, from the nonprofessional investor with a basic knowledge of statistics all the way to seasoned investment professionals wishing to challenge their understanding of the asset management industry.
This book takes a refreshing perspective: To excel at investment management, it is essential to identify the structural components of performance as well as the challenges of successfully executing on each component. This book should be required reading for any investor—whether institutional or individual. Campbell Harvey, Fuqua School of Business, Duke University
This wonderful book packs into two hundred pages the central elements you need for successful investing. Essentials include identifying long-run return sources you understand and can believe in, cost-effectively constructing well-diversified portfolios across them while respecting your constraints, and avoiding common behavioral pitfalls. You learn to appreciate the role of luck in realized returns and to look beyond luck by better understanding the systematic factors driving your portfolio—or any asset manager's portfolio. Read it! Antti Ilmanen, author, Expected Returns: An Investor's Guide to Harvesting Market Rewards
Strongly based on solid research and clearly written, this important book is a great way to invest a day in increasing your investment success. Charles D. Ellis, author, The Index Revolution and Winning the Loser's Game
Well-researched and grounded in academic literature, Hugues and Lussier's book asks the important question: What drives long-term investment performance? Professionals and portfolio managers will find many gems in this book. Anurag Sharma, University of Massachussetts–Amherst
1. The Subtleties of Asset Management
2. Understanding the Playing Field
3. Skill, Scale, and Luck in Active Fund Management
4. What May and Can Be Forecasted?
5. The Blueprint to Long-Term Performance
6. Building Better Portfolios
7. We Know Better, But...
Notes
Index

About the Author

Hugues Langlois is assistant professor of finance at HEC Paris and a cofounder of IPSOL Capital. Previously he was portfolio manager at Desjardins Asset Management. Jacques Lussier is president of IPSOL Capital. Before, he was chief investment strategist at Desjardins Asset Management. He is the author of Successful Investing is a Process (2012). He presided CFA Society Montreal and is a board member and president of the investment committee of Retraite Québec, the public pension plan.