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The Best Offense: When Defensive Strategies Win

  Author: Fei Mei Chan, Craig J. Lazzara
 March, 2015
  Price: 0.00

Abstract:

In some sports, coaches are fond of the maxim that the best offense is a good defense.

The rationale, of course, is that even if a team’s offense is having a bad day, good defense can keep the score close.                  

There’s an analogous argument in the investment world, since defensive strategies have often turned out to produce above average returns in the long run. For example, Fama and French famously identified value as a return-generating factor, and more recently, the so-called “low volatility anomaly” has generated considerable interest. If value and low volatility strategies produce long run excess returns, they could be good examples of how investors might win by playing defense—or, as some practitioners are fond of saying, how they might win by not losing.

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