Insightful Investor Podcast: Episode #109 — Josh Jones: The Three Circle Playbook
Host: Alex Shahidi | Guest: Josh Jones, Boston Partners | February 10, 2026

Episode Overview

This week on Insightful Investor, Alex Shahidi sits down with Josh Jones, a senior portfolio manager at Boston Partners, to explore the firm’s data-driven, value investing philosophy. At the heart of the discussion is the “Three Circle Playbook”—the integration of value, quality, and momentum into a resilient investment process. Josh Jones shares how Boston Partners rigorously blends quantitative modeling with fundamental research, sifting market noise to avoid behavioral pitfalls, prevent value traps, and capture durable alpha. Together, they dissect market inefficiencies, regime shifts, global macro influences, and how to construct resilient portfolios in a rapidly evolving global landscape.

Key Discussion Points

1. Josh Jones’ Early Investing Journey

• Background: A liberal arts graduate fascinated by public markets since the tech bubble (2000).
• Transition to Investing: Moved from consulting at Cambridge Associates to Boston Partners in 2006, drawn by the dynamic mix of economics, data, and human psychology.
• Quote:

  “Oftentimes the data doesn’t change, but the market’s interpretation of the data changes.” — Josh Jones (05:13)

2. Boston Partners’ Investment Philosophy

The Three Circle Playbook: Value, Quality, Momentum

• Core Belief: Start with price (value) but layer in business quality and business momentum to avoid value traps and capture persistent winners.
• Process: Blend quantitative (trend, anomalies, factor modeling) and fundamental (company analysis, management meetings) research.
• Quote:

  “There’s rarely a perfect three circle stock … everyone’s doing some kind of different shade of gray.” — Josh Jones (08:48)

Filtering Over Forecasting

• Discipline: Use quantitative screens to reduce confirmation bias; fundamental work investigates only after a data-driven signal.
• Value Traps: Prioritize business momentum (not just price momentum) to discern true improvement from a mere narrative.

3. Market Inefficiency and Behavioral Bias

• Persistence of Market Gaps:
  Human emotion and narrative drive mispricings, even in algorithmic markets.

  “As long as humans are making decisions, that kind of behavioral bias or emotional bias just comes into the market.” — Josh Jones (05:27)

• Role of Algorithms:

  “A lot of the computer programs are written to exploit kind of the historical behavior of the market … which is in some ways a human behavior effect.” — Josh Jones (05:45)

4. Timeless vs. Adaptive Elements in Investing

• Timeless: Always pay the right price for quality businesses.
• Adaptive: Factor weights, regime effects, and use of new data sources must evolve.
  • Example: The “idiosyncratic beta” signal detects when a stock’s trading pattern shifts, signaling possible fundamental change.
• Team Structure: Quantitative and fundamental analysts collaborate; quant model is rebuilt every four to five years to stay relevant.

5. The Power and Limits of Quantitative Modeling

• Filtering, Not Forecasting: Avoid story bias by letting the model flag candidates for further analysis, rather than chasing compelling narratives that might mask declining fundamentals.
• Alpha on Shorts: The quant model is especially efficient at identifying companies likely to fail, with a strong “alpha tail” (12:23–16:24).
• Quote:

  “On the short side, I actually take the quant model because it’s just so good at identifying failure.” — Josh Jones (15:42)

6. Why the Three Market Anomalies Persist

• Low Price (Value): Market typically over-discounts troubled companies and overpays for stable “darlings”; mean reversion over time drives the value anomaly.
• Quality: True long-duration, persistent high return on capital businesses are rare; most regress due to competitive dynamics.
• Momentum: Momentum helps investors bridge historical performance to current direction—especially business, not just price, momentum.
• Quote:

  “Growth is a component of value … The value anomaly works largely because I still think businesses are ultimately competitive over time.” — Josh Jones (16:37–17:23)

7. Portfolio Construction with the Three Circles

• No Perfect Stocks: Focus on value, but don’t demand all three attributes at the highest level.
• Process: Start positions in “two circle” value opportunities, increase size if/when business momentum or quality improves and thesis is confirmed.
• Risk Control: Cut losers quickly—don’t be stubborn with value traps.
• Quote:

  “It’s easy to identify value. It’s hard to find the value that’s going to work.” — Josh Jones (22:38)

8. Macro vs. Bottom-Up: Navigating Regime Changes

• Framework:
  1. Get stocks right, macro wrong — still make money.
  2. Get macro right, stocks wrong — underperform.
  3. Get both right — big returns.
• Focus: Letting company fundamentals lead, but layering on macro awareness as a risk sense-check.
• Examples: Rate trends, currency cycles, BOJ policy, and avoiding forced macro plays in portfolio (24:00–27:29).
• Quote:

  “You want to get your companies right … the macro is hard to get right, it’s hard to get the timing right.” — Josh Jones (26:00)

9. Quantitative & Qualitative Hand-Offs

• Weekly Model Updates: Quantitative team runs processes; analysts review flagged ideas, then conduct deep fundamental due diligence before potential investment.
• Workflow:

  “I can pretty quickly dig into the company and … hand it off to the fundamental analyst to do extremely thorough due diligence.” — Josh Jones (29:30)

10. Counterintuitive Insights & Avoiding Bias

• Business Momentum vs. Price Momentum:
  The true edge is identifying improving businesses even before the market recognizes them via price (31:13–32:40).
• Bias Gates: Constantly check compelling narratives against forward-looking, quant-backed numbers.
  • Quote:

    “If this is true, why are the numbers doing this?” — Josh Jones (33:23)

11. Exploiting Overreactions and Sector Insights

• Alpha from Dislocations:
  Focus on cyclicals (industrials, materials) when quality is high but the market overreacts to macro fear.
• Metals & Mining Case Study: Under-investment, supply chain issues, and geopolitical dynamics (especially China’s role) are building to a “mega-cycle” in metals.
• Gold as Store of Value:
  Demand surging as global interest in real assets accelerates, with monetary and geopolitical drivers (38:57–42:03).
• Quote:

  “It’s just setting up for being one of the biggest, the biggest metal cycles of all time, in my opinion.” — Josh Jones (38:49)

12. International vs. US Market Dynamics

• US Efficiency: US markets densest with analysts, generally most efficient, but distortions exist (e.g., Tesla).
• Mega Cap Influence: S&P 500 returns dominated by a handful of ‘Mag 6’ tech giants (44:14–48:19).
• Valuation Asymmetries: International stocks at significant discounts with comparable or better earnings growth.
• AI Cycle: Current spending may be unsustainable; digestion period likely (48:27–49:05).
• Quote:

  “All it would take would be Nvidia stumbles, that takes some wind out of the market … and you could see big changes.” — Josh Jones (47:20)

13. AI: Real Innovation vs. Hype

• Winners & Efficiency: The next phase differentiates between AI as a compelling narrative and as a true economic engine for business.
• Sector Opportunity: Healthcare as an area ripe for AI-driven efficiency, especially given its underperformance (50:44).

14. Navigating Geopolitics and Currency Regimes

• Supply Chains: Diligent analysis of business resilience given China risk and tariff fears.
• Currencies:
  • Developed market FX trades mainly off real rate differentials.
  • Dollar strength at extremes, likely to mean revert; international markets now deeply discounted (53:36–54:56).
• Quote:

  “Simply put, when you’ve got good valuations and good fundamentals abroad and that tailwind of a weaker dollar, it’s just really productive.” — Josh Jones (55:12)

15. Secular Trends and Cycle Inflection

• Interest Rates: Potential for a secular bear market in bonds; persistent capital flow changes could reinforce equity market stagnation (58:58–59:15).
• “The world’s always changed … but in some ways it’s not different. That’s what makes it fun.” — Josh Jones (59:15)

Memorable Quotes

• On inefficiency:

  “Oftentimes the data doesn’t change, but the market’s interpretation of the data changes.” (05:13)

• On process discipline:

  “Filtering over forecasting—let the data tell you where to go.” (12:23)

• On risk:

  “It’s easy to identify value. It’s hard to find the value that’s going to work.” (22:38)

• On secular market trends:

  “Bond markets are like 40 year cycles … We may be in the early innings of a really long kind of rising interest rate environment.” (59:15)

Notable Timestamps

• 00:38: Introduction of Josh Jones and Boston Partners
• 03:09: Investment philosophy foundations
• 08:43: Timeless vs. adaptive process
• 12:19: Filtering over forecasting explained
• 16:24: Discussing persistent market anomalies
• 23:48: Macro vs. micro portfolio construction
• 29:05: How quant and fundamental teams interact
• 31:05: Business momentum as a counterintuitive edge
• 34:19: Identifying and exploiting market overreactions
• 38:57: Deep dive into metals, mining, and hard assets
• 44:14: US vs. International market commentary
• 48:27: On the AI boom’s sustainability
• 53:36: Central bank policy divergence, currency, and global capital flows
• 58:58: Structural cycles and inflection points

Tone & Final Takeaways

The episode is richly analytical and grounded in data-driven realism, while still open to macro awareness and “human element” humility. Josh Jones comes across as disciplined, contrarian when necessary, and deeply skeptical of narratives unsupported by forward-looking business results. Practical, thoroughly researched, and globally aware, his approach is both rigorous and adaptive—a fitting model for sophisticated investors navigating uncertainty.

(Ads, intro/outro, and disclosures have been omitted for clarity and focus.)