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Establishing the Wealth of Knowledge

Much of the early research that led to the Bassi Model was conducted in conjunction with the American Society for Training & Development (ASTD) by Laurie Bassi and Daniel McMurrer, both now officers at Bassi Investments. This research used a subset of research data gathered by ASTD on the training investments of publicly traded companies in the United States. Early findings (initially reported publicly in May 1998) uncovered tantalizing evidence of an apparent relationship between companies’ per capita training investments and various measures of their financial performance and stock market valuation.

As additional years of data on companies’ training investments and market returns became available, Bassi Investments researchers were able to examine the training/financial performance relationship more rigorously, through the use of more advanced statistical and analytical techniques (including multivariate regression). These rounds of research showed that:

Companies that invest more money in training perform better on the stock market than companies that invest less.

The nature of the relationship between training investments and stock market performance is particularly strong for companies above a certain level of training investment.

For these companies, training investment serves as a powerful predictor of future market performance, with its predictive ability strengthened by including a small number of additional traditional financial measures in the statistical model.

As part of the research, a hypothetical back-tested portfolio of firms with high training expenditures was developed. The portfolio significantly outperformed the market during the period of testing (from 1997 to 2001).

The Bassi Investments research team also carefully examined, and ultimately ruled out, a variety of alternative explanations for the observed relationship. Among these rejected hypotheses were the following:
(a) that the relationship was simply the result of more successful companies having additional money available to invest in training and learning; (b) that training investments were serving as a proxy for another publicly-available variable; (c) that the relationship was caused by disproportionate representation in the data sample of particular industries, and (d) that the relationship was in some way merely a product of the bull market of 1997 to 1999.

NOTES: This page includes discussion of past research results involving the performance of a HYPOTHETICAL set of portfolio recommendations. They represent the back-tested performance of a series of annual portfolios selected based on Bassi Investments’ proprietary model. There are limitations inherent in model results, including the fact that the results do not represent actual trading and may not reflect the impact of material economic and market factors on the advisor's qualitative decisions when managing client assets. The hypothetical results include the performance of securities and classes of securities that are not included in Bassi Investments’ current portfolio recommendations. The model is frequently revised, and such revisions may affect future results. Actual and hypothetical Bassi Investments performance include dividend reinvestment and are reported after deducting all fees (management, brokerage, and custodial). This hypothetical performance is not a guarantee of future results and is not indicative of actual results for any past or present clients. Your actual performance may vary.