Fodder begins with a Forum Backgrounder on the interplay of organisational culture on investment performance and the potentially significant implications for active investment managers. Then, 2013 Nobel laureate Professor Robert Shiller explains why this year’s winner of the Nobel Memorial Prize in Economic Sciences, Richard Thaler, is a controversial choice (but one he welcomes). Professor Ron Bird reviews two recent papers exploring new ground on two long-established investment strategies – portfolio insurance and momentum investing. We feature the recent Strategies Conference presentation by Platinum’s Andrew Clifford on the dangers of index obsession. And we end with Invesco’s Stephen Anness on why truly contrarian investors focus on valuations.
- All the best for another great week's continuing education - Graham
P.S. Mark your Diary – Portfolio Construction Forum Markets Summit 2017 – Changing Gears – Tuesday 13 February 2017

QUOTE OF THE WEEK...

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

LATEST...

Investing
Backgrounder: Culture and investment performance
The relationship between organisational culture and relative performance has significant implications for active asset managers, given their dependence on effective collaboration and decision making.
Will Jackson, Portfolio Construction Forum | More

Finology
Another Nobel Surprise for Economics
The winner of this year's Nobel Memorial Prize in Economic Sciences, Richard Thaler of the University of Chicago, is a controversial choice. For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.
Robert J. Shiller, Yale University | More

Investing
Research Review: Old chestnuts
Portfolio insurance - invented over 40 years ago - has experienced the renaissance that it very much deserves. Trend (momentum) investing dates back over 40 years, too - the success of which is traced back in this paper to over 100 years.
Ron Bird, University of Technology Sydney | 1.00 CE | More

Markets | Strategies
Index obsession is unhealthy and leads investors astray
Investing is simply deploying savings to generate returns, yet abstractions such as indices are creating unnecessary complexity. Nowhere in an effective investment process need there be any reference to the prospects for a market index.
Andrew Clifford, Platinum Asset Management | 0.50 CE | More

Markets | Investing
Valuation underpins the contrarian mindset
Many investors claim to follow a contrarian style. But it is important to distinguish between those who unthinkingly dismiss orthodox approaches, and those who meaningfully challenge them.
Stephen Anness, Invesco Perpetual | More

RECENTLY...

Markets
A perfect storm... in a teacup
Despite all the talk, the fact that Australian banks loan books are heavily concentrated in low risk residential mortgages should be a source of comfort, not fear.
Tim Farrelly, farrelly's | More

Markets
The courage to normalise monetary policy
The Fed will not achieve balance-sheet normalisation until 2022-2023 at earliest. With more than $6tn of excess liquidity still sloshing around global financial markets, that's asking for trouble.
Stephen Roach, Yale University | More

Markets
Protecting the medium-term view
As inflation re-emerges and central banks wind down their QE programs, yields will rise substantially. The key is not to lose money while medium-term ideas play out.
Brett Gillespie, Ellerston Capital | More

Investing
It all adds up... well, sometimes it doesn't
Do you know the impacts of the risk characteristics of your multi-manager portfolio? Better portfolio construction occurs when you don't diversify the risk you are trying to capture. Beware the benchmark hugger - it might be you?
Michael Furey, Delta Research & Advisory | More

Investing
World class companies run their own race
Six key factors differentiate exceptional companies from their peers. These all add up to a business that generates exceptional returns for extended periods of time.
Kate Howitt, Fidelity International | 0.25 CE | More

Default LifeStage Super
Some excellent material to consider here. It also throws some doubt on how many of the default super LifeStage funds are currently being allocated.
Steve Blizard, Roxburgh Securities | More

The value of land ?
... Has anyone read any useful reports or an analysis of how land value has increased over time?
Mark Hayden, Hayden Financial Services | More

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