PortfolioConstruction Forum

 Friday 01 August 2014

The independent professional development service for investment portfolio construction practitioners

G'day

This week's Fodder is very market focused - and it's not all negative! Anatole Kaletsky (the "Kal" in research house, Gavekal) makes the case that the equity market gains of 2009-13 may be a prelude to a longer term upswing in equities.  On the flip side of the coin, Robert Shiller argues that some financial market experts (an increasing number of whom) warn of grave dangers if speculative price increases are allowed to continue unimpeded are right to do so, even if they can't prove there is cause for concern.  On a related note, we feature a great thought piece from quant guru, Cliff Asness, talking about ways to bridge "the returns gap" as he terms it - i.e. how to make up for what many expect will be lower long-term returns. (FYI - Cliff's speaking at Conference in a few weeks' time.) Still on a market's theme, Australian quant Michael Furey explains why it's so tough for bond managers to outperform a market cap-weighted benchmark.  And finally, we feature Jeremy Grantham's annual

"Summer Essays" in which he touches on four issues - including the key investment lessons he's learned (from his mistakes) over 47 years of investing.  It's fascinating!
All the best for some great weekend learning - Graham
 

LATEST...

The 5% solution
Going forward, instead of 5% real, traditional stocks and bonds will offer about 2.5%. But there are many things you can do to bridge the gap.
Cliff Asness, AQR Capital Management | Opinion

The case for a structural equity bull market
Are equities at the end of a five-year cyclical bounce or are they at the start of a 15-year structural breakout? History suggests two directly contradictory answers.
Anatole Kaletsky, GaveKal | Opinion

Booming until it hurts?
Those who warn of grave dangers if speculative price increases are allowed to continue unimpeded are right to do so, even if they cannot prove there is cause for concern.
Robert J. Shiller, Yale University | Opinion

Summer essays
Investing is serious. It can and often is intellectually compelling. But it should not be driven by excitement, as it is for many individuals, and when treated that way will almost always end badly.
Jeremy Grantham, GMO | Opinion

Market cap-weighted bond indices - always tough to beat
It is not surprising that bond managers have significant difficulty in outperforming a market cap-weighted benchmark.
Michael Furey, Delta Research & Advisory | Opinion

Clients don't want an adviser - they want a planner
New research found 78% of consumers care about being comfortable in the future - that alone tells us where the future is for advisers.
Tony Vidler, Strictly Business | Opinion

RECENTLY...

Invest in communicating about investing
As investment professionals, we live investing every day. We spend excessive time reporting and not enough 'rapporting.'
Prof Jack Gray, UTS | Opinion

Where investing meets investors
Three critical and interrelated aspects of practically managing client portfolios: constructing portfolios using buckets; diversifying human vs financial capital; and, the Withdrawal Policy Statement.
Michael Kitces, Pinnacle Advisory Group | Resources

Behavioural finance vs standard finance
This paper is a great introduction to why behavioural finance is quickly becoming recognised as a field that can add real value to the wealth management industry.
Angela Ashton, PortfolioConstruction Forum | Opinion

Using social proof to help clients make better decisions
If we're explaining a "norm" to clients that embeds a social proof, we should be using norms that show what is successful, not describing the commonality of failure!
Michael Kitces, Pinnacle Advisory Group | Opinion

PLUS...

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