Fodder kicks off with Tim Farrelly taking aim at the assertion that Australian banks have a huge vulnerability to a downturn in the residential property market.  Yale's Stephen Roach then serves central banks a bouquet (for getting on with normalisation) and brickbat (for the time they're planning to take). Ellerston Capital's Brett Gillespie explains how not to lose money while QE winds down. Michael Furey asks whether you know the impacts of the risk characteristics of your multi-manager portfolios, and explains how to guard against overdiversification. And finally, we feature the top 10-rated Strategies Conference presentation by Fidelity International's Kate Howitt on the six characteristics of world class companies.
- All the best for another great week's continuing education - Graham
P.S. CE accreditation for Strategies Conference 2017 is available in your Forum MyCE record. If you weren't there, you can still "attend" online and earn CE hours - go to http://ow.ly/DZLN30flhud)

QUOTE OF THE WEEK...

It is what we think we know already that often prevents us from learning. - Claude Bernard

LATEST...

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

RECENTLY...

Philosophy | Markets
Democratic politics & market economics are the axis of value
Public policy matters to performance at every level. Yet modern politics faces a crisis of ideas, relevance and trust. The trick is to let markets do their work.
Ruth Richardson, RRNZ | 0.50 CE | More

Markets
The mystery of the missing inflation
Since mid 2016, the global economy has been in a period of moderate expansion, with the growth rate accelerating gradually. What has not picked up, at least in the advanced economies, is inflation. The question is why.
Nouriel Roubini, Roubini Global Economics | More

Markets
Is the Fed behind the curve?
Many observers conclude that the Fed is behind the curve because a central bank supposedly should not persist with a negative real policy rate at full employment. That is correct - but the question remains "how much?"
Dr Robert Gay, Fenwick Advisers | More

Strategies
The ASX200 is too concentrated - reduce weights!
Simply observing the concentration inherent in the index and reducing Australian Equity weights is throwing the proverbial baby out with the bathwater. It’s nuts and you can clearly see it’s nuts.
Tim Farrelly, farrelly's | More

Investing | Finology
Research Review: Red is bad, green is good
Two recent studies provide evidence that issues unrelated to the fundamental operation of a firm impact their market valuation.
Prof Ron Bird, University of Technology Sydney | 1.00 CE | More

A few disagreements
...If we use those results to try and predict the future and it doesn't work out then it is not the method's fault but the interpreter's, because if its not clear by now that the past doesn't equal the future when it comes to performance...
Michael Furey, Delta Research & Advisory | More

Reply
...I have many times criticized the conclusions that finance research leaps to based on a misinterpretation of its mathematics, or shoddy mathematics, or misunderstanding of its own mathematics -- but never the mathematical methods themselves...
Michael Edesess, Compendium Finance & EDHEC-Risk Institute | More

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