Much of current economic and markets thinking is rooted in the post-GFC era. Practitioners need to let go of that history and embrace the fact that four trends are fundamentally changing the long-term outlook for markets.
This paper provides a comprehensive review of the psychology of attention and its relationship to key economic concepts (utility, risk-taking, social preferences, and learning), and the emerging role of AI in the modern economy.
Contrary to wide opinion, globalisation is not "history" but is being reinvented. For investors, a less interconnected world has significant implications for corporate capital expenditure and country allocation.
I was amazed several years ago to learn that the class I was teching believed that 90% of a fund's returns are due to asset allocation. Having once been a major promoter of this myth, it is important I contribute to its eradication.
What a difference a year makes. In February 2023, investors were preoccupied by the risks of rising inflation, monetary tightening and recession. This year, the focus is on disinflation, monetary easing and economic growth.
Around this time a year ago, about 85% of economists and market analysts (including me) expected the US and global economy would suffer a recession. But the opposite mostly happened. One must approach any 2024 forecast with humility.
It's in the spirit of thinking differently and embracing uncertainty that I offer you this year's set of global developments to watch over the next five years.