Empirical Research Partners LLC

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Our research approach is primarily microeconomic, in that we build models designed to predict the behavior of individual stocks. These models are first and foremost based on our judgments about human nature, supported by empirical evidence. We use them to exploit anomalies and to establish a framework in which larger issues can be evaluated. We supplement these formal models with other wide ranging analyses, using industry and macroeconomic data. Our firm is called Empirical Research because we rely heavily on observation and data to inform decisions. We recognize that sometimes precedents are irrelevant, or even worse, misleading. Creativity and courage - the determinants of investing success - in the long run - are required. Countervailing forces are nearly always obscure at the outset, and intuition and instinct are the partners of facts, figures and formal models. Stephen Hawking, the renowned physicist, has described this as the century of complexity. Here complexity means something very specific, namely how the laws that govern matter fit together to explain how the universe works. The challenge is to form a unified theory that explains everything. We think Hawking's statement is an apt description of the future of investment research as well. Unlike physics there are no laws, but there are reasonably well-supported observations about human behavior. For example, investors underreact to current information but overvalue seemingly inexhaustible long-term trends...

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