Statistical Anomalies | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

In the fascinating world of statistics, anomalies hold a unique allure for enthusiasts like Jonathan Satovsky. These deviations from the norm, often overlooked, can offer profound insights and opportunities for investors. 


Anomalies. Statistical anomalies.

I happen to love statistics. Love it. Just happen to really enjoy it. I know most people don’t. I do.

But what are statistical anomalies?

They’re observations that aren’t part of a norm. They aren’t part of the statistical bell curve.

Jim Simons passed away recently, the founder of one of the most successful investment firms in the last 30 years called Renaissance Technologies, and he didn’t hire anyone with a finance background. All PhDs, all mathematicians, all statisticians—and the goal was to mix and match anomalies, statistical anomalies, and find ways to profit from these statistical anomalies.

The most commonly known anomalies could be equities over bonds, or small companies over large companies, or value over growth, or cheap over profitable, or momentum as a factor. There are a lot of factors that people can exploit, and many factors may not have the sustainability and persistence to work all the time. They might work over time, but they won’t work all the time.

And so, the frequency of people being able to stick to a factor, you know, Buffett has stuck to the idea of value investing for 50 years and has done quite well.

So you got to know the game you’re playing. What statistical factors are you trying to exploit, and can you do it persistently and behaviorally enough with enough persistence and longevity that you can succeed and your ecosystem can too?

Think about that as you look for your own statistical anomalies.

Have a great day.

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Video Recorded May 13, 2024
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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