I don’t know the peer review process well so I will not argue with your conclusion on that dimension. I will say that finance and business theory are not good at predicting or at offering solutions in the real world. No amount of data and research will change that. With larger data sets it may be mitigated a little but only a little. For some reason, people seem to think AI will “solve” this - it won’t.
The problem is that finance is insisting that all returns can be boiled down to “factors” and that a portfolio is just a collection of those factors. What this paper shows is that the entire approach is wrongheaded. I’m slightly surprised that the paper got published actually—it’s the type of research that tends to get rejected in finance journals.
I don’t know the peer review process well so I will not argue with your conclusion on that dimension. I will say that finance and business theory are not good at predicting or at offering solutions in the real world. No amount of data and research will change that. With larger data sets it may be mitigated a little but only a little. For some reason, people seem to think AI will “solve” this - it won’t.
The problem is that finance is insisting that all returns can be boiled down to “factors” and that a portfolio is just a collection of those factors. What this paper shows is that the entire approach is wrongheaded. I’m slightly surprised that the paper got published actually—it’s the type of research that tends to get rejected in finance journals.
Agreed - outside of the accepted paradigm for financial research. Maybe a good sign that it got through!
Thanks for the article. Really good takeaways, Samir…stick to strengths and stay consistent with who you are. It resonates well.