- Much of the fortune earned by The Oracle (BRK.A, BRK.B) is thanks to his exploiting two market mistakes, writes James Mackintosh - the tendency for quality companies and low-risk stocks to outperform.
- There are many ways to measures these anomalies, and Kraft Heinz (NASDAQ:KHC) and Unilever (UN, UL) fit all of them - whether predictable earnings, strong cash flow, lower-than-normal share price volatility, or low beta.
- One can argue about why the anomalies exist, but the real question is whether they can continue after a strong period of outperformance, and now with massive amounts of cash (outside of Buffett) chasing the same strategy.
- “It’s something to worry about,” says one professor who has studied the issue. “I think as awareness of these effects increases that could certainly diminish the returns.”
- Low-vol ETFs: SPLV, USMV, HDLV, XMLV, XSLV, SMLV, LGLV, CFA, CDC, CFO, XRLV, LVHD, CSF, FDLO, ONEV, OVLC, SMMV