Insights

In investment practice, industry rotation remains a core strategy for capital allocation and stock selection. As the economic cycle evolves, capital often shifts from leading sectors to lagging ones, creating a structural rotation across industries. For example, in the early stages of economic recovery, cyclical sectors like shipping and steel tend to react first. As the economy expands and corporate capital expenditures rise, growth-oriented sectors such as semiconductors and technology often take the lead. While this rotation logic is widely referenced in macroeconomic analysis, accurately identifying the starting and ending points of such trends requires support from quantitative tools and empirical data. This article analyzes historical data from various industry indices and applies statistical tools such as Transfer Entropy and rolling correlation coefficients to examine whether stable lead-lag relationships exist between sectors. It also explores the potential role of economic indicators, such as business cycle signal lights, in shaping inter-sector dynamics.

In the investment world, small-cap growth stocks have long attracted the attention of professional investors and fund managers due to their high growth potential and price flexibility. At the core of Gardiner’s strategy is the identification of companies with relatively small market capitalizations, strong earnings growth, and solid fundamentals. He focuses on potential stocks with a price-to-earnings growth (PEG) ratio below 1. To test the applicability of this strategy in the Taiwanese stock market, this study adopts Gardiner’s screening principles to develop a set of quantifiable selection criteria, conducts backtesting on Taiwan equities, and further explores the empirical performance of small-cap growth investing in the local market.

Peter Lynch is a legendary figure in the American mutual fund industry. He is widely regarded as one of the most successful fund managers in history. Beyond his remarkable performance, Lynch is also known for his accessible investment philosophy, which has inspired countless individual and professional investors. Lynch advocates the principle of “invest in what you know,” believing that individual investors have the advantage of observing the world around them and can often identify promising companies before their fundamentals are reflected in stock prices. Using indicators such as the price-to-earnings (P/E) ratio and earnings per share (EPS) growth, Lynch aimed to uncover “undervalued growth stocks.”

In the field of growth investing, Derwood S. Chase Jr. is undeniably a legendary and representative figure. In 1958, he founded Chase Investment Counsel Corporation, a firm focused on managing corporate pension funds, trust funds, and individual retirement plans, deliberately avoiding any banking-related business. From 1990 to 2001, its institutional large-cap growth portfolio achieved an impressive annualized return of 16.38%. Through a strategy that combined growth and stability, Chase established a long-term return model that could endure across market cycles, providing a benchmark for investors navigating volatile markets.

Discover how TEJ’s ex-dividend event data and financial indicators help forecast stock rebound probability. Learn to identify high-yield Taiwan stocks with stronger post-dividend performance using TEJ’s point-in-time quantitative datasets.

Rothman's core investment philosophy is to “buy right and hold tight” or “buy strong and hold long.” He emphasizes selecting financially sound companies with stable and growing earnings, purchasing them at the right price, and holding them patiently for the long term. Without frequent portfolio adjustments, investors can achieve strong long-term returns. This simple yet resolute investment approach reflects Rothman’s practical wisdom and provides a clear, historically validated foundation for the strategy tested in this study.

Building on the statistical foundation presented in Part 1, this article explores how Idiosyncratic Volatility (IVOL) can be effectively applied in investment strategy design. We present two categories of approaches: a single-factor sorting model and a set of filter-enhanced momentum strategies. Through robust backtesting across two decades of Taiwan stock market data, we demonstrate how IVOL can improve risk-adjusted performance when used as a portfolio filter—especially when combined with momentum or dividend-based signals.

In recent years, the low-volatility anomaly has gained widespread attention for challenging traditional asset pricing theory. This article takes a closer look at one key driver behind the anomaly—Idiosyncratic Volatility (IVOL)—through a comprehensive analysis of the Taiwan stock market. Using point-in-time data from the TEJ Factor Library, we investigate the statistical behavior of IVOL, its relationship with stock characteristics, and its implications for cross-sectional return prediction. 

With the rapid development of the high-tech industry, technology stocks have increasingly become the focus of the market. While these stocks offer significant growth potential, they also come with high volatility and substantial investment risk. Investors seeking high returns may face major losses if they fail to properly assess the associated risks. Therefore, effectively measuring and managing the downside risk of high-tech stocks has become a crucial component of sound investment decision-making.

In the field of investing, business cycles have always served as an important reference. Whether it's fluctuations in the macroeconomy or the ups and downs of corporate earnings, these cycles play a crucial role. Charles Brandes, a distinguished disciple of Benjamin Graham, founded Brandes Investment Partners in 1974 and has since grown its assets under management from $130 million to over $75 billion. The firm’s Brandes Global Equity Fund achieved an impressive 20-year annualized return of 17.91%, significantly outperforming the MSCI World Index, and has received Morningstar's five-star rating along with numerous international awards. Another flagship product, the AGF International Value Fund, has also demonstrated outstanding long-term performance. Brandes himself has been repeatedly ranked among the world’s top fund managers.