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Legacy, fiscal policy, geopolitics, & Monte-Carlo
analysis
This week, Fodder
features Professor Jack Gray's top-10 rated
Conference presentation about the wealth management
industry's current legacy (which leaves a lot to be
desired, he argues). Nouriel Roubini and Stephen
Roach take different paths to the conclusion that
monetary policy is tapped out and fiscal stimulus is
needed now to raise global growth. Princeton
professor, Stephen Kotkin, explains that the
geopolitical risk that investors should worry about most
is a China/US clash and what might spark that
(supporting Marko Papic's argument in last week's
Fodder). And Wade Pfau and David Blanchett explain
the limits of Monte-Carlo simulation to estimate the
range of likely outcomes for portfolios.
All the best for a great weekend's continuing
education - Graham
P.S.
You can catch all the presentations from Conference
2016 "The long and short of it" and earn up to 17 CE
hours via the online
Conference 2016 Resources Kit.
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LATEST... |
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Philosophy
We must change our legacy for the better
The financial system that we (banks, portfolio
managers, researchers, advisers...) bequeath is
unstable, un-trusted and built on inappropriate
theory with mis-aligned incentives.
Prof Jack Gray, UTS
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0.50
CE |
Resources
* Rated
in the top 10 presentations by Conference 2016
delegates
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Markets
The return of fiscal policy
Central banks have been driven to adopt increasingly
unconventional monetary policies - yet most
economies are far from where they need to be. We
should begin activating fiscal policy.
Nouriel Roubini, Roubini Global Economics
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Opinion
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Markets
Desperate central bankers
The lack of response at the zero bound of policy
interest rates is hardly surprising. In fact, it is
strikingly reminiscent of the so-called liquidity
trap of the 1930s. What is particularly
disconcerting is that central bankers remain largely
in denial.
Stephen Roach, Yale Univesity
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Opinion
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Markets/Strategies
Geopolitics and the consequences of choice
The gravest geopolitical challenge is not terrorism,
the Middle East, or Brexit, but an eruption between
China and the US, the world's two largest economies
and militaries. It is always when the most powerful
countries clash that the world is altered
fundamentally.
Stephen Kotkin, Princeton University
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Opinion
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Strategies
The power and limitations of Monte-Carlo simulations
Predicting the future raises a significant number of
issues when creating an investment plan. Monte Carlo
simulations will illuminate the nature of that
uncertainty, but only if those using them understand
how it should be applied – and its limitations.
David Blanchett & Wade Pfau
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Opinion
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No rebalancing and risk tolerance
Is this just saying that an unrebalanced portfolio
will often outperform a rebalanced portfolio because
the exposure to the higher returning assets
(probably equities) will increase over time?
Tim Farrelly, farrelly's
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Comment
The failure to understand rebalancing
It certainly wouldn't be surprising for a client's
risk tolerance to increase as the value of the
client's portfolio increases...
Michael Edesess, EDHEC-Risk Institute
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Comment
Currency is the ultimate alternative
It's a good point that it is difficult (but not
impossible) to predict a given currency level on a
given day. The dynamic hedging decision, though,
isn't just about the NZD...
Dori Levanoni, First Quadrant
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Comment
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RECENTLY... |
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Markets/Strategies
Geopolitical risk? Ignore terrorism, focus on East
Asia
Geopolitical tensions between China, the US, and
countries of South East Asia are growing. Most
investors dismiss the region as a risk. But we are
at a precipice of a left-tail risk event.
Marko Papic, BCA Research
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0.25
CE |
Resources
* Rated
in the top 5 presentations by Conference 2016
delegates
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Markets/Strategies
Unfavourable candidates can be favourable for the US
economy
There has never been a more divisive US election
season than the one we are witnessing right now.
While the rhetoric and opinion polls are captivating
on a weekly basis, the long game is what matters.
Libby Cantrill, PIMCO
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0.50
CE
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Resources
* Rated
in the top 5 presentations by Conference 2016
delegates
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Markets/Strategies
Headlines battle facts, but fundamentals will
prevail
As an investor, allowing yourself to be distracted
by quick interpretation of market dynamics will lead
to poor allocation decisions. Ultimately,
fundamentals will win out for long-term investors.
James Swanson, MFS Investment Management
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0.50
CE
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Resources
* Rated
in the top 5 presentations by Conference 2016
delegates
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Investing
Tracking error causes short termism
Tracking error constraints on active management
focus on short-term outcomes and don’t align with
most investor goals, which are longer term. So how
else can portfolios be designed?
Olivia Engel, State Street Global Advisors
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0.50
CE
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Resources
* Rated
in the top 5 presentations by Conference 2016
delegates
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Investing
Infrastructure provides reliable earnings
irrespective of crises
Provided investors define infrastructure in a
disciplined manner, investment in infrastructure
will continue to deliver investors reliable earnings
over time.
Gerald Stack, Magellan Asset Management
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0.50
CE
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Resources
* Rated
in the top 5 presentations by Conference 2016
delegates
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Philosophy/Markets/Strategy/Investing/Finology
Backgrounder: The long and short of it
Managing the fundamental friction between short-term
and long-term investing imperatives is a key
challenge when building portfolios.
PortfolioConstruction Forum
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White Paper
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Currency is the ultimate alternative
Central banks (and other event risks...elections,
wars, etc.) all do create volatility... and not just
in the currency markets!
Dori Levanoni, First Quadrant
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Comment
Long-term forecasting vs Short-term forecasting
While making the broad statement that long-term
investing is a fools paradise the discussion seems
centred on stock selection rather than the full
gamut of long-term investing. Moving away from stock
picking, other pieces of the investment puzzle
really do lend themselves to a long-term point of
view...
Tim Farrelly, farrelly's |
Comment
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