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PortfolioConstruction Forum

 

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 Friday 31 October 2014

The independent professional development service for investment portfolio construction practitioners

G'day

This week's Fodder features three of the giants of the investment industry. First up is renowned investment thinker, Dr Horace "Woody" Brock, a regular speaker at PortfolioConstruction Forum programs. Woody weighs in with his usual precise style of analysis - this time on Thomas Piketty's best selling "Capital in the Twenty First Century".  Uniquely for a 700-page tome on economics, it's No 1 on Amazon's bestseller list and has become a conversation piece among well-read people. But does inequality really matter to building better quality investment portfolios?  Read Woody's piece and you'll see why the answer is a resounding yes!  Mohamed El-Erian then picks up the cudgels with his views on why inequality is a major economic concern that impacts all portfolios. On a different note, we feature an interview with Bill Sharpe in which he outlines his current work in the field of retirement income planning (as dull as that sounds, it's anything but - he's incredibly engaging). And speaking of retirement planning - we should stop doing that, explains Michael Kitces (another of our Faculty) and talk instead with clients about "financial independence" (and while we're at it, replace "retirement income" with "cash flows"). On the communication front, we also feature the recent presentation by another Faculty member, Prof Jack Gray, in which he argues that we need to replace risk reports with risk rapports i.e. engaged conversations. And, finally, picking up on last week's theme on market

volatility, BlackRock's Russ Koesterich offers his four takeouts on the portfolio construction implications of higher market volatility.
All the best for some more great weekend learning - Graham
 

LATEST...

Capitalism, inequality, and Piketty
Thomas Piketty’s "Capital in the Twenty‐First Century" is certainly the economics book of the year. We have been asked numerous times to appraise his ideas.
Dr Woody Brock, SED
Research Paper

The inequality trifecta
Most countries face a trio of inequalities – of income, wealth, and opportunity. Beyond the moral, social, and political implications lies a serious economic concern.
Mohamed El-Erian, Allianz
Opinion  

Bill Sharpe on retirement income planning
One of the originators of CAPM, Sharpe (along with Markowitz and Miller) was awarded the 1990 Nobel Prize in economics. I sat down with him to discuss retirement income planning.
Robert Huebscher, Advisor Perspectives
Interview

Phrases that should be banished from retirement planning
The words we use and how we frame concepts have a powerful impact. Perhaps the most crucial change in our retirement planning language is simply to rename "retirement".
Michael Kitces, Pinnacle Advisory Group
Opinion

Risk rapporting
Formal reports redolent with data and analysis fail to communicate risks as people actually feel them. Reports need to be replaced by rapports, by engaged conversations.
Prof Jack Gray,
UTS Resources

Four takeaways from the recent volatility spike
Last week's volatility surprised many. How should portfolios be positioned? And what does this recent bout of volatility tell us about the economy and financial markets?
Russ Koesterich, BlackRock
Opinion

RECENTLY...

US rate signal may be broken
Relying on Fed tightening to predict the next serious sharemarket weakness may be very dangerous.
Dominic McCormick, Select Asset Management
Opinion

Torschlusspanik!
The German word for what we saw in markets this week is Torschlusspanik. Literally "gate-shut-panic", it describes the nasty crush when everyone rushes at once for an exit.
GaveKal
Opinion

Market volatility – has it turned?
Earlier this year, volatility across a whole range of key global assets reached major multi-year lows. But, equity volatility, we expect, has passed it's low for this cycle.
Chris Watling, Longview Economics
White Paper  

China’s Gordian Policy Knot
China has about five years to lay the groundwork for the transition to a new monetary policy framework with a currency that is sufficiently flexible. No other course is viable.
Dr Robert Gay, Fenwick Advisers
White Paper

Prepare to change course
Warning, there may be rocks ahead. Reconnecting risk and return must surely be the right focus - but thinking conventional tools will keep us out of trouble may be a big mistake.
Alan Brown, Schroders
Insight

Down the retirement risk zone with gun and camera
This is a particularly relevant review of literature on sequencing risk, considering as it does the impact of Australia's age pension on retirement spending strategies.
Angela Ashton, PortfolioConstruction Forum
Research

PLUS...

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