NAAIM 2013 Wagner Award Competition deadline to receive papers is February 28!
Three bear markets in 10 years and the investment media is full of articles on how to “time” the market and avoid the next bear. But do these methods really work? Is there a way to profitably use active management with a portfolio of mutual funds, Exchange Traded Funds, stock baskets or other investment vehicles? The National Association of Active Investment Managers (NAAIM) says yes, and has issued its fifth $10,000 challenge to academics, financial professionals and analysts to test the viability and use of active management.
The Wagner award offers $10,000 for the best paper covering an innovative topic in the area of active investing. Second and third place papers receive $3,000 and $1,000 respectively. In addition, the grand prizewinner will be invited to present his / her paper at the NAAIM annual conference: “NAAIM Uncommon Knowledge 2013,” April 28 – May 1, 2013 at The Westin Denver Downtown in Denver, Colorado. Free conference attendance, U.S. air travel and lodging will be provided.
The competition is open to all investment practitioners, academic faculty and doctoral candidates in the field. Submitted papers should cover an innovative topic in the area of active investing, which NAAIM broadly defines as investment strategies and techniques that improve upon the risk-adjusted return obtainable from a passive, buy-and-hold investment strategy.
Submissions should be up to 30 pages in length with a required 750-1000 word abstract and must be submitted electronically to: email@example.com by February 28, 2013 to qualify for the competition. Awards will be announced by March 31, 2013.
“Active, or as I prefer to say, ‘tactical’ investment management, can generally avoid severe loss of capital and is what investors need more than the ‘beat the market,’ investment approaches,” explained Greg Morris, chief technical analyst and chairman of the investment committee at Stadion Money Management and chairman of the 2013 Wagner Award Committee.
The goal of the Wagner Award is to provide academic substantiation of the viability of active management and to provide evidence of the validity of active investing.
“Most investment approaches today are based on Modern Portfolio Theory,” said Morris. “What many people don’t realize is the MPT is no more modern than a 1952 Buick sedan, which sold for $2,280 the same year Harry Markowitz published Portfolio Selection and launched MPT.”
Since 1952, MPT has proved to be a flawed approach to investing. The financial market itself has invalidated the four main principles of MPT demonstrating that (1) Markets are NOT efficient, (2) Investors are NOT uniformly rational, (3) Returns are NOT random, (4) NOR are they normally distributed, said Morris. Perhaps most significant is that MPT totally ignores systemic or market risk which contributes to serious loss of capital in bear markets.
As a judge of the 2010, 2011 and 2012 Wagner Awards, Morris’ advice to authors of Wagner Award submissions is to keep in mind Occam’s Razor (Simply said, Occam stated that the simpler of two theories was probably the better theory) and the words of Albert Einstein, “In my view, such more complicated systems and their combinations should be considered only if there exist physical-empirical reasons to do so.”
“In my experience, complexity brings risk and higher probability of failure,” he explained.