Fodder starts with two very different perspectives on interest rates. First, Tim Farrelly debunks the myth that central banks are holding interest rates at unnaturally low levels, arguing Central Banks should be applauded. Then, Yale's Stephen Roach argues that today's central banks are even more impotent than they were in the 1930s. Michael Kitces highlights a new research study that debunks the belief that holding cash is something to avoid - in fact, pushing investors to put all their cash to work increases their financial stress. Rob Arnott et al debunk the myth that there is a correlation between stock returns and the political party in power. And, finally we feature the top-10 rated presentation by Colonial First State Global Asset Management's Stephen Halmarick at Markets Summit 2017 on Trump the game changer.
- All the best for another great week's continuing education - Graham
P.S. Registration is now open for PortfolioConstruction Forum Strategies Conference 2017 (23-24 August) - It all adds up!

QUOTE OF THE WEEK...

Human history becomes more and more a race between education and catastrophe. - H.G. Wells

LATEST...

Markets
Interest rates are artificially low?
Yes, rates are unusually low. But to describe that as unnatural shows a lack of understanding about how the world works and a refusal to accept that maybe the world has changed.
Tim Farrelly, farrelly's  | More

Markets
Another lesson from Japan
We ignore history at great peril. The latest disappointment for inflation-targeting central banks is really not a surprise after all.
Stephen Roach, Yale University | More

Strategies | Finology
Buying happiness and satisfaction with greater cash reserves
The classic view of cash in the world of investing is that it's something to minimise. But a recent study found that we're just not content without a healthy allocation to cash.
Michael Kitces, Nerd's Eye View | More

Markets
Politics and stock returns
Analysis of five international stock markets shows no correlation between stock returns and the political party in power.
Rob Arnott, Research Affiliates | More

Markets | Strategies
Trump the game changer - the only certainty now is uncertainty
2017 will present many risks and opportunities, as the winds of change sweep through the global economy and markets. Geopolitics will dominate. The only certainty for 2017 is uncertainty.
Stephen Halmarick, Colonial First State Global Asset Management | More

Are assets overvalued?
...Surely, if interest rates are low, it is because future growth expectations are also low, begging the question, why would you pay more for equities (a growth asset) in such a low growth environment?
James Waggett, Waggett Wealth Advice | More

Does low growth mean low returns from growth assets?
Not necessarily. Since the GFC, the Australian economy has grown faster than that of the US but EPS have grown much more slowly in Australia than in the US...
Tim Farrelly, farrelly's | More

RECENTLY...

Markets
The global recovery's downside risks
In the next year, a more robust and persistent global recovery will depend largely on whether policymakers avoid mistakes that could derail it.
Nouriel Roubini, Roubini Global Economics | More

Markets
Capping QE
Fed officials must take the long view and hence tend to believe they can engineer a graceful exit. Their plan is somewhat akin to 'cap and trade' schemes for weaning the world of pollutants.
Dr Robert Gay, Fenwick Advisers | More

Markets
Into the unknown: Ignore left tail risks at your peril
The world has now fully arrived in the radically uncertain, "stable but not secure" predicament. The only certainty is that the tails of the distribution of potential macro outcomes have become fatter.
Joachim Fels, PIMCO | 0.25 CE | More
* Rated in the top 10 presentations by Markets Summit 2017 delegates

Investing
Research Review: Quality and momentum investing
Unlike other commonly used factors, very little research has been undertaken on the quality factor - which makes a newly released paper very interesting. Another new paper extends the usual momentum factor into "returns signal momentum".
Prof Ron Bird, UTS | 1.00 CE | More

Philosophy | Investing
Daring to be different - the benefits of contrarian investing
Literature from a variety of disciplines help highlight the qualities behind truly creative, contrarian thinking - qualities which can be applied to modern portfolio management.
Stephen Anness & Andy Hall, Invesco Perpetual | More

Are assets overvalued?
Hi Tim Are interest rates unnaturally low? If I represent the yes argument I then hypothesize that economies (& employment) are “propped up” by these rates...
Mark Hayden, Hayden Financial Services | More

Asset allocation critical
Asset allocation is all about picking where the value lies in the asset hierarchy...
Chris Farley, Farley Financial | More

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