Three recent research papers continue to grow our understanding of how behavioural traits impact on markets. The first provides insights into Warren Buffett's success; the other two examine the markets' response to earnings information.
While some still firmly believe that values and ethics have no part to play in investing, the tide is turning. Values play a vital role in investment and business decisions - and, increasingly, investors care about more than just financial returns.
Human beings are subject to behavioural biases, which negatively affect their ability to make rational choices. These behavioural biases create market inefficiencies that active investment managers can exploit to generate alpha.
Since President Xi Jinping's update at the National Congress of the CCP this month, commentators have furiously debated the theme of "China rising" and Xi's concentration of power in his own hands. They are missing the point.
Twenty years ago, I predicted that the Digital Revolution would cause productivity growth to accelerate and inflation and interest rates to fall for a very long period. We now believe this trend will continue for at least another 10 and probably 20 years.
To outperform the market you have to invest in something different. Investment returns are best captured through the exploitation of anomalies – the truly different mispriced opportunities.
For a portfolio’s position to add up robustly, it must reflect future risks and respond to how these change through time.
Investment managers around the world believe their style is the holy grail of generating returns ahead of the market. But you can’t beat the market using a simple rules-based strategy.
Xi Jinping would like to oversee China’s rise to regional dominance - but the US, Japan and India will not allow China alone to dominate the region.
Introducing an active global credit investment into portfolios adds to an investor's opportunity set, and can offer alpha opportunities.
Managing carbon risk within portfolios is increasingly a decision integral to risk management and the pursuit of superior long-term risk-adjusted returns.
Portfolio construction must stay relevant. While traditional country and sector allocations may have worked in the past, today's new environment requires a global and flexible approach.
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.
In a world where 0.6%pa is top quartile, winning is difficult and losing is easy. There are big gains to be made in surprising places. Even 1%pa adds up to a huge difference over time.
The number of publicly listed companies in the US has roughly halved since 1996, a phenomenon which spans other regions. The trend is likely to persist, and it has significant implications for investors.
Ensuring your investment process has the flexibility to incorporate sustainability factors all adds up to improved longer term portfolio performance outcomes.
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.
Loss avoidance and simplicity are highly attractive to the human mind. However, uncertainty is often the source of superior returns and creativity can be a key source of alpha, delivering idiosyncratic outcomes.
In a developed world full of challenges, a consistently applied process that focuses on both the cyclical and secular outlook is something that every investor can apply.
Shifts in economic and trade regimes and turning points in markets provide asset managers the opportunity to capitalise on short-term distortions in asset prices and to invest in companies that could be winners in the long term.
With US unemployment at a 15-year low, the US Federal Reserve has greater scope to begin shrinking its balance sheet. Investors should set aside their fears, and remember that the Fed’s balance sheet provides little indication about what will happen to longer term interest rates.
The growing belief that the US has entered an era of permanently low economic growth, due in large measure to an alleged 50% reduction in productivity growth, is wrong. Both real growth and productivity growth have been strong, not weak.
Masterclass NZ is a post-graduate extension program focused on contemporary issues that are fundamental to building better quality portfolios. The one-day program is comprised of five research-based, active learning sessions:
Overall stock market risk has declined modestly in the last 80 years, but the nature of risk has changed greatly. The risk stemming from market mistakes and, possibly, from irrationality has risen significantly.
Despite increasing global political risk, the probability of outright war is paradoxically lower than it might have been at any previous period in history.
In a century of Federal Reserve tightening cycles, typically, the Fed has tightened too much and/or for too long. The current tightening cycle will not end any differently.
Trump is learning that he is hemmed in by the same constraints as Obama's administration. As with Obama, the agent of change is turning out to be an agent of continuity.
Trump promised a raft of sweeping economic-policy changes - but has quickly discovered that the US political system is designed to prevent rapid, large-scale change. So what will an impatient president do?
Markets Summit 2017 featured a stellar lineup of international and local experts offering their best high conviction idea/thesis on the opportunities and risks ahead as the winds of change sweep through economies and asset classes - and the implications for portfolios.
A recent, widely circulated article suggested the major Australian banks are overpriced. But including the effect of imputation and a view on interest rates makes a huge difference...
Markets Summit 2017 delivered 20+ high conviction ideas on how the winds of change are affecting the outlook for economies and asset classes - and the implications for portfolios. Here are our key takeouts.
Bond-sensitive stocks now form a record 60% of the ASX's market cap. Australian equity investors should hold a greater proportion in real-asset stocks and reduce exposure to artificially inflated financial stocks.
As 2017 began, there was (once again) an air of optimism that interest rates are about to return to normal. This optimism dismisses the significant structural headwinds that are prevalent.
When positioning a multi-asset, portfolio for the medium-term, there are four fundamental decisions we must make now. They are, in some cases, interdependent.
There is a significant opportunity for actively managed Australian government bonds to continue to provide positive returns, while protecting against the storms of uncertainty.
Bond investors have enjoyed a multi-decade bull run in yields, fuelled by unsustainable post-GFC stimulus, but "the times they are a-changing".
It's time to rotate into loans!
For the foreseeable future, earnings of the infrastructure assets asset class, if defined in a disciplined manner, should continue to be reliable.
Investors should focus on asymmetric opportunities with a margin of safety and multiple ways of winning. Developed Asia and Europe offer these in abundance.
2017 will be a year of two halves: the first - trial and error, volatility and more setbacks than successes for Trump's economic policies; the second - a shift to less confrontation, more cooperation and a win-win for the US and the world.
With Trump, Brexit, Italy's "No" and China's currency woes, the world economy and markets have embarked on a journey into the unknown. Investors should aim for capital preservation until the veil of uncertainty over future policies starts to lift.
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.
There is no subject of more importance to investors than what Donald J. Trump will do with the powers of the US presidency. There are pluses and minuses of Trumponomics.
In 2002, we embarked on a quest to identify the secular forces which would substantially influence markets over the coming decade. We proposed five megatrends - which still drive portfolio construction today.
The biggest event for global financial markets in 2017 is likely to have taken place on 20 January. How the Trump Presidency unfolds will clearly have a significant impact not just on the US but on global markets in 2017 and beyond.
Put 10 senior Australian fund analysts on an eight-day CE program to the west coast of the USA? Inevitably, the group debated their views on many issues.
Like all presidents, Trump will be judged by how far he makes good on his pledges. It is important to distinguish between the real and the imaginary obstacles Trump faces.