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Friday 03 June 2016

Specialist, independent investment continuing education & certification for portfolio construction practitioners

Geo-politics back in the spotlight
Following last week's special feature on Professor Niall Ferguson's presentation at our Symposium 2016, this week we bring you Dr Keith Suter's top-rated presentation on geo-politics and investing. Keith is surprisingly upbeat!  BCA Research's Marko Papic then argues that while the Middle East gets most attention, simmering tensions in East Asia are of more concern to investors. Dr Bob Gay explains why central bankers could be accused of insanity (and the likely investment fallout) while Michael Furey explores the truth about the influence of equity exposures on portfolio risk (it's both more and less than you might think). Finally, SSGA's Dan Farley offers us 10 "gray swans" to keep in mind when building portfolios (to go with a very gray winter's day here in Sydney!).
the best for a great weekend's continuing education - Graham
P.S. Next stop... Africa! The New Zealand Initiative (led by one of our core Faculty, Dr Oliver Hartwich) is hosting Kiwi entrepreneur, Rich Lister and pioneer of capital markets in Central and Eastern Europe and Africa, Stephen Jennings, for a dinner lecture on Thursday 14 July. Whether or not you are a likely investor in Africa, it's a subject worth learning more about - so do join us!


Pay attention to geo-politics when making investment decisions
The world seems an increasingly dangerous place, driven by uncertainty and conflict. Yet on many measures, it is becoming safer. More than ever, investors need to filter out the noise and consider emerging geo-political developments shaping the world.
Dr Keith Suter, Global Directions  | 1 comment  |

East Asia tensions simmer
Investors are not accounting for the structural shifts taking place in East Asia that raise the probability of market-negative events. Asia- or EM-dedicated investors should hedge their risks by exposure to DM assets.
Marko Papic, BCA Research |
White Paper

Insanity is repeating the same mistakes and expecting different results. Central bankers seem intent on repeating their mistakes - especially when it comes to negative interest rates.
Dr Robert Gay, Fenwick Advisers |

How much risk do equities contribute to diversified strategies?
Many have spoken of the significant risks funds carry with Australian equities exposures. So I thought I'd check the evidence on the influence of equities on multi-asset portfolios.
Michael Furey, Delta Research & Advisory |

10 "Gray Swans"
By definition, Black Swans are unknowable - they should surprise us. But here are 10 "gray swans" complicating the outlook for markets and portfolio construction.
Dan Farley, State Street Global Advisors |

Member comments
Same problem with optimisers
Hear, hear Tim. And it is the exact same problem with using an optimization model. Users of the tool are often poor at estimating appropriate inputs; GIGO...
Rob Pereira, Victorian Funds Management Corp Comment

Evidence of decision-making bias
I think this is a great demonstration of a couple of major decision-making biases that can beset sophisticated investment decision-makers...
Simon Russell, Behavioural Finance Australia Comment

Information Tech
Will IT break down religious borders?
Murray Rutherford, JBWere Comment

Nailed it
Great summary of the issues and concerns Dom, but as PK noted, in the race of life always back self interest whether politicians, REIA or dare I say, the banks...
David Hyde, MC2 Wealth Comment


Secular stagnation or inflection point? The post-crisis world in historical perspective
With a growing number of central banks resorting to negative interest rates and the IMF acknowledging the risk of secular stagnation, investors could be forgiven for feeling nervous. Yet there is some evidence that the global economy may be at an inflection point.
Niall Ferguson, Harvard University |
Chapter 1: The global economy is at an inflection point
Chapter 2: Further evidence the secular stagnation thesis is wrong

Chapter 3: Five key risks that could derail the recovery

Chapter 4: Q&A Panel, featuring Dr Oliver Hartwich, Dr Keith Suter & Tim Farrelly
Chapter 5: Thanks featuring Andrew Mehrtens

The global recovery is here - but may yet be derailed
Economists and investors risk being blindsided by a global upswing that is already underway, financial historian Professor Niall Ferguson explained at Symposium 2016.
Will Jackson, PortfolioConstruction Forum |

Brexit now and we will only have to Breturn
The lesson of history is that British isolationism is a trigger for continental disintegration. A vote for Brexit will mean Britain will have to "Breturn" sooner or later, to sort out the ensuing mess.
Niall Ferguson, Harvard University |

The world will bounce back from the blues in the loos
But if Trump confounds my Republican friends by winning their party's nomination and then the presidency, all bets will be off.
Niall Ferguson, Harvard University |

The Great Degeneration
Filmed exclusively for PortfolioConstruction Forum, Professor Niall Ferguson describes the "institutional malaise" that is threatening 500 years of development in the West.
Niall Ferguson, Harvard University |

Member comments
Poor assumptions the problem, not Monte Carlo analysis
Totally agree with the premise that using past performance data in generating Monte Carlo projections is of very dubious value...
Tim Farrelly, farrelly's Comment

Investment grade credit - income without capital
The negative correlation between interest rates and credit spreads is a powerful combination in a portfolio context which helps reduce portfolio volatility...
Robert Mead, PIMCO Comment

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