Javier Estrada | CFA Institute

Personal Details

Bio

Javier Estrada is a Professor of Finance at IESE Business School in Barcelona, Spain. He is also a partner and financial advisor at Sports Global Consulting Investments, a company that specializes in providing wealth management advice to professional athletes.

Prof. Estrada holds an M.S. in Finance and a Ph.D. in Economics from the University of Illinois at Urbana-Champaign (USA), and a B.A. in Economics from the National University of La Plata (Buenos Aires, Argentina). His areas of specialization are wealth management, portfolio management, investments, and law & economics.

Prof. Estrada held positions at both the Economics Department and the Finance Department at Carlos III University (Madrid, Spain). He is also a regular visiting professor at HANKEN (Helsinki, Finland), IPADE (Mexico City, Mexico), Torcuato Di Tella University (Buenos Aires, Argentina), and the University of Montevideo (Montevideo, Uruguay), and has lectured to executives, graduates, and undergraduates around the world.

Prof. Estrada is the author of Finance in a Nutshell (FT Prentice Hall, 2005), originally written in English and subsequently translated into Spanish, Italian, and Chinese; a second edition of this book was published in 2011, is entitled The FT Guide to Understanding Finance, and was translated into Korean. He is also the author of The Essential Financial Toolkit – Everything You Always Wanted To Know About Finance But Were Afraid To Ask (Palgrave Macmillan, 2011).

Prof. Estrada has done extensive research on the areas of portfolio management, investment strategies, and risk with a special focus on downside risk. He has also done research on emerging markets and insider trading. His articles have been published in the Journal of Portfolio Management, the Journal of Investing, the Journal of Asset Management, and the Journal of Wealth Management, among other journals. He was also the founding editor of the Emerging Markets Review, the leading journal on emerging markets, and was editor of the journal between inception in 2000 and 2006. He is also in the advisory board of several other academic journals.

Prof. Estrada is a member of the CFA Institute’s Speaker Retainer Program; teaches an open-enrollment program and several courses on personal finance and wealth management in different programs; and was a tennis instructor.

Current position (2)

Professor of Finance

IESE Business School Barcelona, Spain)

Partner and Financial Advisor

Sport Global Consulting Investments

Degrees (1)

Ph.D. Economics / M.S. Finance

University of Illinois at Urbana-Champaign

1988 to 1993

Presentations

Presentations (8)

A Simple and Effective Framework to Manage Your Savings

We are all investors, even those that accumulate their savings in a bank account, those that fully entrust their portfolio to an advisor, and those that buy stocks or funds recommended by colleagues or friends. Truth is, all those are investment decisions and they are all bad. This session will raise your awareness of many important issues you may not even think about when making investment decisions, but that are critical to consider if you want to sensibly and successfully manage your savings. These issues include, among others, the importance of asset allocation, the critical role of costs, the futility of forecasting returns, and a proper diversification across three dimensions.

Active Management, Passive Management, and the Big Migration

The last few years have shown a clear trend away from active management and into passive management. This session discusses the reasons for this migration by focusing on the two main factors, namely, underperformance and costs. It is no secret that active managers consistently fail to outperform their benchmarks, being at the same time far more expensive that passive managers, who typically achieve their tracking goals. This session discusses these two issues with comprehensive and current evidence.

Smart Beta – The Middle Road

In the last few years a middle road between active and passive management, typically referred to as smart (or strategic) beta, has been growing very aggressively. Fund management companies are eager to launch products in this space and investors demand them aggressively. This session discusses the origins, rationale, current situation, and perspectives of smart beta products.

Behavioral Finance – A Primer

The insights of behavioral finance are quickly becoming mainstream. What are these insights? What are the most typical behavioral biases exhibited by investors? What is their impact on investors’ portfolios? What can investors do about it? This session discusses these questions, at the same time providing a primer on behavioral finance, some of its key insights and main lessons; and it does so from a very practical perspective by discussing research and experiments, as well as their results and implications.

Risk in the Short Term and the Long Term

There is ample disagreement about how to assess risk, with different investors doing it in widely different ways. This session discusses the importance of the holding period and the critical distinction between short-term risk and long-term risk; it also discusses some risk measures for both periods; Warren Buffett’s view of risk; and the evidence on the subject based on a sample of over 20 countries and over 11 decades.

Forecasting Returns – What We Know and What We Don’t

Most investors are obsessed with forecasting short-term returns, and yet the evidence on our ability to do so is damning. At the same time, most investors seem to show little interest in forecasting medium/long-term returns, and yet the evidence shows that we can rather successfully do so. This session discusses the evidence on the forecasting ability of multiples, focusing on D/P, P/E, and specially on CAPE.

Blinded by Growth

Investors love growth stories. They like to invest in China, Brazil, Apple, Google, you name it. But, regardless of whether it refers to an economy or to a company’s earnings, the impact of growth on stock returns is overrated and misunderstood. In this session we will discuss growth from two different perspectives, economic growth and earnings growth, and how they relate to the stock returns investors ultimately obtain. The evidence shows that it is perfectly possible for investors to obtain low returns in high-growth environments, and high returns in low-growth environments. We will discuss the reasons for this, the role that valuation plays in this story, and the advantages of value investing over growth investing.

Forecasting Long-Term Returns: The Return Decomposition Model

Finance professional and investors have, according to a massive amount of evidence, a terrible record when predicting returns. However, under some specific conditions, forecasting returns is not that impossible. The return decomposition model (RDM) decomposes the sources of returns in a simple expression that can be used both to forecast returns and to evaluate the plausibility of forecasts made by others. In this session we will discuss this model and use it to forecast the medium/long-term returns of international equity markets.

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Expertise (7)

Business