Robin Wigglesworth
Financial Times
Originally published 15 NOV 2021
Here is an excerpt:
Is investing suffering from something similar?
That is the incendiary argument of Campbell Harvey, professor of finance at Duke university. He reckons that at least half of the 400 supposedly market-beating strategies identified in top financial journals over the years are bogus. Worse, he worries that many fellow academics are in denial about this.
“It’s a huge issue,” he says. “Step one in dealing with the replication crisis in finance is to accept that there is a crisis. And right now, many of my colleagues are not there yet.”
Harvey is not some obscure outsider or performative contrarian attempting to gain attention through needless controversy. He is the former editor of the Journal of Finance, a former president of the American Finance Association, and an adviser to investment firms like Research Affiliates and Man Group.
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Obviously, the stakes of the replication crisis are much higher in medicine, where lives can be in play. But it is not something that remains confined to the ivory towers of business schools, as investment groups often smell an opportunity to sell products based on apparently market-beating factors, Harvey argues. “It filters into the real world,” he says. “It definitely makes it into people’s portfolios.”
