Abstract

http://ssrn.com/abstract=1958258
 
 

Citations (3)



 


 



Investing for the Long Run


Andrew Ang


Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Knut N. Kjaer


affiliation not provided to SSRN

November 11, 2011


Abstract:     
Long‐horizon investors have an edge. They can ride out short‐term fluctuations in risk premiums, profit from periods of elevated risk aversions and short‐term mispricing, and they can pursue illiquid investment opportunities. The turmoil we have seen in the capital markets over the last decade has increased the competitive advantage of a long investment horizon. Unfortunately, the two biggest mistakes of long‐horizon investors - procyclical investments and misalignments between asset owners and managers - negate the long‐horizon advantage. Long‐horizon investors should harvest many sources of factor risk premiums, be actively contrarian, and align all stakeholders so that long‐horizon strategies can be successfully implemented. Illiquid assets can, but do not necessarily, play a role for long-horizon investors, but investors should demand high premiums to compensate for bearing illiquidity risk and agency issues.

Number of Pages in PDF File: 15

Keywords: contrarian, countercyclical investing, agency problem, delegated portfolio management, illiquid investments

JEL Classification: G11, G12, G23, G34

working papers series


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Date posted: November 12, 2011  

Suggested Citation

Ang, Andrew and Kjaer, Knut N., Investing for the Long Run (November 11, 2011). Available at SSRN: http://ssrn.com/abstract=1958258 or http://dx.doi.org/10.2139/ssrn.1958258

Contact Information

Andrew Ang (Contact Author)
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Knut N. Kjaer
affiliation not provided to SSRN ( email )
Feedback to SSRN


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