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

January 5, 2012

Netspar Discussion Paper No. 11/2011-104

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: 16

JEL Classification: -

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Date posted: December 24, 2011 ; Last revised: February 3, 2012

Suggested Citation

Ang, Andrew and Kjaer, Knut N., Investing for the Long Run (January 5, 2012). Netspar Discussion Paper No. 11/2011-104. Available at SSRN: http://ssrn.com/abstract=1976310 or http://dx.doi.org/10.2139/ssrn.1976310

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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