Fodder kicks off with the top-rated presentation by Berkeley's Professor Terry Odean from our recent Finology Summit, in which he explains how our behavioural biases distort our perceptions and lead us to take investment risks we just don’t see.  Harvard's Professor Ken Rogoff then argues that advances in artificial intelligence could drive a significant pickup in productivity growth over the next five years. Michael Furey takes us back to the origins of research on diversification, and reminds us of what it really is. Then, in his top-three rated presentation from last month's Markets Summit, Munro Partners' Nick Griffin argues that far from dumping growth equities in a rising rate environment, now is precisely the time to be investing. Finally, Ellerston Capital's Brett Gillespie warns that US stimulus has significantly raised the chance of sharper interest rate rises ahead.
- All the best for another week's continuing education - Graham
P.S. Join us for IMR Workshop 2018 (2-6pm Thu 12 April) - "Advancing investment management research". Earn 4.00 CE hours. Register now

QUOTE OF THE WEEK...

He who learns but does not think, is lost! He who thinks but does not learn is in great danger. - Confucius

LATEST...

Finology
Behavioural biases lead to unrecognised risk-taking
Behavioural biases - substitution, aggregation, and feedback risks, overconfidence, and limited attention and availability bias - distort money managers' perceptions and lead them to take risks they don’t see.
Terrance Odean, University of California, Berkeley | 0.50 CE | More

Markets
Economists vs scientists on long-term growth
Neither policymakers nor markets should be betting on the slow growth of the past decade carrying over to the next. The best bet is that AI and other new technologies will eventually come to have a much larger impact on growth than they have up to now.
Kenneth Rogoff, Harvard University | More

Philosophy | Strategies | Investing
Diversification - what it is and is not
The concept of diversification may seem to be second nature. However, some of its fundamentals are often misused and sometimes misrepresented.
Michael Furey, Delta Research & Advisory | More

Markets | Investing
Investors need growth equities as change accelerates
Structural change and the resulting earnings growth will always outrun interest rates in the long run, so as change continues to accelerate, investors need growth equities in their portfolio.
Nick Griffin, Munro Partners | 0.50 CE | More

Markets
Latest US stimulus is a red flag
There is now a 50% chance that the US Federal Reserve will hike interest rates more sharply than markets expect, leading to a recession in the next one to two years.
Brett Gillespie, Ellerston Capital | More

Efficiency argument misses some important elements
The characterisation of blockchain as being about technological efficiency is not a sufficient way to think about it...
Julian McCormack, Platinum Asset Management | More

Crypto...
I'd love to know how the 33.3% intend to do that???
Glynn Phillips, Falconer Advisers | More

RECENTLY...

Markets
The blockchain pipe dream
It is high time to end the hype. Bitcoin is a slow, energy-inefficient dinosaur. Most of the coins are little different from railway stocks in the 1840s, which went bust when that bubble – like most bubbles – burst.
Nouriel Roubini, Roubini Global Economics | 1 comment | More

Markets | Investing
Cryptoassets is an emerging asset class with huge potential
Technological revolutions often spawn financial booms and busts - but the value proposition of blockchain is profound, and the technology has given rise to cryptoassets. Practitioners will increasingly be required to understand them.
Catherine Wood, Ark Invest | 1 comment | More

Markets
Ignore the exit ramp, better conditions ahead
The US might have three to five years of additional growth ahead. Global synchronised growth is likely to drive earnings growth to a higher gear that warrants current elevated valuations.
Ron Temple, Lazard Asset Management | 0.25 CE | More

Markets
Beware the Bond-cano!
The peddlers of the Bond-cano narrative give very different recommendations. Even if we buy the story, it's just not clear what to do - all of which suggests that it is just a wonderful narrative.
Tim Farrelly, farrelly's | More

Finology
The finologist of the future is a cyborg
The combination of man and machine - tech-augmented humans or "cyborgs" - can be more effective than either alone, posing the greatest opportunity to human financial advisers in the long run.
Michael Kitces, Nerd's Eye View | 0.50 CE | More

Markets
Working toward the next economic paradigm
It should come as no surprise that enthusiasm for economic and financial globalisation has faltered. Building consensus around a revised unifying paradigm will not be easy.
Mohamed El-Erian, Allianz | More

Markets
Rational irrational exuberance?
In my opinion, the asset-price volatility we have been seeing has little or nothing to do with changes in fundamentals. And the widespread use of machine-driven trading is likely making all of this worse.
Andrés Velasco | More

Investing
Research Review: Everything you need to know and a bit more
In nine pages, this paper says all that needs to be said on the ability of any of us to estimate the true value of financial assets. The next two papers produce conflicting findings on the impact of index investing on markets.
Prof Ron Bird, UTS | 1.00 CE | More

Finology
The trust mandate is how asset managers win and keep clients
Trust – the belief that those to whom we are vulnerable are both willing and able to act in our interests – is the no.1 factor in the decision to select and retain an asset manager.
Herman Brodie, Prospecta | 1.00 CE | More

Finology
Is it relevant? Is it understandable? We can all do much better…
Too much of our communication with end investors is either irrelevant, unintelligible to the average investor - or worse still, both.
Tim Farrelly, farrelly's | 0.50 CE | More

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