This lecture instructs IMAC candidates on the history of global capital markets and the key principals of capital market valuation.

This lecture instructs IMAC candidates on the fundamentals of applied economics with an Australian perspective.

This lecture instructs IMAC candidates on the principals and applications of behavioural finance theory.

This lecture instructs IMAC candidates on the theory and application of the Efficient Market Hypothesis.

Welcome to the farrelly's Dynamic Asset Allocation NZ subscriber-only area...

Welcome to the farrelly's Dynamic Asset Allocation Australian subscriber only area...

The quarterly Dynamic Asset Allocation is published electronically, and emailed to subscribers in early March, June, September, and December. It features farrelly's Editorial; long-term outlook for markets; Forecast in Focus; and three different approaches to Implementation...

The farrelly's Dynamic Asset Allocation Handbook features editorial exploring investment strategy "hot topics", farrelly's long-term forecasts for asset classes, a detailed review of the long-term forecasts for an individual asset class (rotating across asset classes each quarter) and three asset allocation models to assist with implementation...

This lecture instructs IMAC candidates on the theoretical and empirical underpinnings of portfolio management, specifically in relation to how portfolios are designed and measured.

The dollar's recent slide is one in a series of readily explicable fluctuations. Indeed, the most striking takeaway is its resiliency. The explanation is "TINA" - There Is No Alternative.

These two research papers present insights into how advisers can better assess and guide how clients think about and structure goals - including savings goals.

Rob Hamshar | 2 comments | 1.00 CE

In April, I argued equity markets might continue to rally despite the collapse of the world economy. And so they have. But in my 40 years of observing and participating in financial markets, I've learned that August is always a month to watch.

In the last two weeks, very important data on the US economy and corporate earnings have been released. These depressing data are as we had predicted. It remains true that the S&P 500 should drop by 35% from its 1 January level.

One of the most important tasks for any decision-maker is to continuously stress-test assumptions and mark-to-market their hypotheses as to how the future will unfold. Let's "nowcast" a little.

This lecture instructs IMAC candidates on the statistics used to describe and analyse the risk and return characteristics of securities and portfolios.

In February, I warned any number of foreseeable crises - "white swans" - including Covid-19, could trigger a massive global disturbance in 2020. Many are now in play. Why are financial markets ignoring these risks?

Humans categorise and form stories about their world - including their financial lives. Two recent papers emphasise the implications of mental accounting, particularly for any investment professional in a client-facing role.

Rob Hamshar | 1.00 CE

Regardless of how QSuper justifies their focus on limited advice, they cannot justify calling it advice. It is a product recommendation.

The Investment Management Analyst Certificate (IMAC) advances investment management analyst knowledge, skill and expertise in a definitive set of competencies necessary for building and/or advising on quality multi-manager portfolios. It is both a structured post-graduate certificate course in its own right, and the Australian-based Registered Education Program for the global Certified Investment Management Analyst® (CIMA®) program.

Two research papers exploring regret can help us improve how investment decision-making and outcomes are framed with clients and offer deeper insight into clients' personal and financial goals and priorities.

Rob Hamshar | 1.00 CE

Much of the new push for industrial policy in the US and Europe is motivated by the perceived Chinese "threat". But economic considerations suggest this is the wrong focus.

The performance of stock markets during the coronavirus pandemic seems to defy logic - until one considers possible explanations based on crowd psychology.

We make automatic assumptions on a daily basis. A critical assumption is that our pre-crisis investment management toolkit will remain relevant in the future.

Early in the Covid-19 crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy.

The endowment effect is the tendency for people who own a good to value it more than people who do not. Its economic impact is consequential. Two recent papers offer important and very useful insights for investment professionals.

Rob Hamshar | 1.00 CE

We are at the half way mark for 2020, and every fibre of my being tells me that the next six months will see many more extraordinary events. Covid-19 can be seen as the great accelerant, or amplifier.

The impact of Covid-19 and the resulting massive worldwide government fiscal response to the crisis has sparked new discussion about the risk of an upsurge in inflation - or deflation. This is not a trivial debate.

No matter how big an economy, it is likely to be influenced by US economic growth, international financial stability, and monetary policy spillovers. The challenge for other countries now is to reduce America's "execution risk".

I foresee a 35% drop in the broad dollar index over the next two to three years. Covid-19 may have spread from China, but the Covid currency shock looks like it will be made in America.

The line between "error" and "reasonable human functioning" is remarkably vague. This Research Review focuses on a widely-cited paper that thoroughly unpacks the various concepts under the umbrella of confirmation bias.

Rob Hamshar | 1.00 CE

Despite difficult times in recent years, momentum has been the factor that has generated the highest returns over the past 50 years. Three new papers on the topic take us into largely new territory and improve our understanding on how markets operate.

Ron Bird | 1.00 CE

The risk today of a debilitating 1930s-style overshoot in deglobalisation is massive, particularly if the US-China relationship continues to fray. And it is folly to think a retreat from globalisation will not introduce more, vastly more serious, problems.

The US jobs report this past week was euphoric and propelled the stock market to even higher levels. But after the easy gains over the next two or three years from reopening the service sector, the US economy faces a slow nine-year recovery. US equities remain overvalued.

One of the touted benefits of hedge funds is that they provide returns that are largely uncorrelated with other risky assets. In practice, hedge funds returns are highly correlated to equity markets during downturns - when it matters.

Governments are responding forcefully to the COVID-19 crisis with a combined fiscal and monetary response that has already reached 10% of global GDP. The key now is to increase incentives to spend.

Memory is far from being a repository of neutral, reliable information and accounts of past events. This Research Review focuses on a seminal paper published in 1999 on "the seven sins of memory", and a recent 2019 paper on how memory errors impact investment decisions.

Rob Hamshar | 1.00 CE

According to a new World Bank report, China’s total income has now surpassed the US’s on a PPP-basis. But on a GDP basis, the US economy is still far ahead of China’s. Both measures have distinct implications for geopolitics, so must be considered separately.

In most emerging and developing countries, COVID-19 is causing an economic hurricane, the worst crisis the Bretton Woods institutions have experienced in 76 years. Their response so far has been both admirably fast and utterly inadequate.

This Research Roundtable focused on the UBS CBRE Global Real Assets strategy, with 10 senior practitioners deciding, after briefings, Q&A and debate, their individual rating for the strategy and whether to include it on a hypothetical APL and/or multi-manager portfolios. Afterwards, the meeting is truncated and published for on-demand viewing by all members.

1.00 CE

As ESG investing has leapt into the investment mainstream, it has become the focus of much academic research. Recent findings show that despite the many positive ramifications of ESG investing, it reduces the efficiency of markets and can introduce risk exposures in portfolios.

Ron Bird | 1.00 CE

The 2020s must be a "decade of action". By harnessing the disruptive potential of fintech, we can create a fairer, more inclusive financial system that propels sustainable development everywhere.

The global economy will be shaped in the years ahead by three trends. While COVID-19 reinforces and entrenches them, it is not the primary force driving them. All three predate the pandemic. The fate of the world economy hinges not on what the virus does, but on how we choose to respond.

The COVID-19 crisis augurs three watersheds: the end of Europe’s integration project; the end of a united, functional America; and, the end of the implicit social compact between the Chinese state and its citizens.

For those who viewed negative interest rates as a bridge too far for central banks, it might be time to think again. Emergency implementation of deeply negative interest rates would not solve all of today's problems. But it would be a start.

The funds management industry has spawned a lot of gurus. This research paper looks at whether market forecasters are any good at what they do.

Ron Bird | 1.00 CE

Ten risks, already looming large before COVID-19 struck, now threaten to fuel a perfect storm that sweeps the entire global economy into a decade of despair.

If on 1 Jan 2020, I’d thought we’d see US unemployment head to 20%, China’s first quarter real GDP growth at -10% and the global economy shut down, I wouldn't have picked the S&P PE Ratio would now be above its long-term average since the GFC.

Europe needs about €1 trillion to fight the COVID-19 pandemic. Financing the EU Recovery Fund with perpetual bonds is the easiest, fastest, and least costly way to establish it.

The impact fixed income market is becoming more diverse in terms of currencies, issuers and ratings, delivering mainstream returns but with impact.

This lecture argues that a diversified portfolio of core fixed income securities is an essential component of an optimal multi-asset portfolio. What's your philosophy?

To paraphrase Churchill, will those who can end a pandemic well also allow a good recovery? It depends on their understanding of history.

As the COVID-19 virus spreads globally, many emerging and developing economies will stop paying their debts. The world needs to get in front of the problem.

Even with all-out efforts by central banks and fiscal authorities to soften the blow, a deep economic slump and financial crisis are unavoidable. The key questions now are how bad the COVID-19 recession will be and how long it will last.

The move to compulsory superannuation placed huge responsibility on individuals to manage their portfolios. A regular response is to educate people to a higher level of financial literacy.

Ron Bird | 1.00 CE

We are feeling the anxiety effects of not one pandemic but two - the COVID-19 pandemic and a pandemic of anxiety about its economic consequences. The two are different, but inseparable.

On Monday, the US central bank acted with stunning shock and awe. Then, government after government announced the biggest fiscal support packages ever seen in history. All of which begs the billion dollar question - sorry, multi, multi trillion dollar question. Are we out of the woods?

While pandemics are comparatively rare, and severe ones rarer still, I am not aware of a historical episode that can provide any insight as to the likely economic consequences of the unfolding global coronavirus crisis. This time truly is different.

This is a time to be buying not selling. Question marks remain as to how far this market will fall before it bottoms out. But what we do know is that valuations are attractive. The chances of long-term investors earning returns well in excess of Term Deposits over the next five to 10 years are very, very high.

COVID-19 threatens both medical and economic disaster. While it may be too late to avert a public-health crisis, unlike the medical effects of the virus, the economic impact is easy to predict and overcome.

Two weeks ago as the coronavirus crisis began to unfold, I warned that the market could soon drop to 17,500 on the Dow. One very important form of investor ignorance today concerns the market's view that it is prospects for corporate earnings that will matter most. This is wrong.

The market has now woken up to the size of the traumatic shock to the global economy, which just hit a massive air pocket. In the next few weeks, financial markets and the broad capital markets will come under severe stress. How does this end?

The G7 has vowed to use "all appropriate policy tools" to contain the economic threat posed by the COVID-19 coronavirus. That should include those wielded by medical practitioners and epidemiologists.

The new virus is an "unknowable unknown" of the first order. Should the virus turn into an epidemic, all Americans will alter their behavior, such that an outright recession could result.

The world economy was weak, and getting weaker, when COVID-19 struck - and it has brought the Chinese economy to a virtual standstill. China's sneeze may prove to be especially vexing for long-complacent financial markets.

If there's one common refrain from financial advisers about the field of finology, it's that the research and concepts are fascinating, but it's hard to know exactly how to apply them in the financial advice process. There are so many finology concepts, how does an adviser sort the most important ones to focus on? What can advisers do to ensure their own unconscious beliefs and biases don't undermine the client relationship and investment outcomes? What specific actions can advisers take to systematically apply finology insights to improve the advice experience and outcomes for clients? This workshop will focus on insights from the inaugural Finology Benchmarking Indices (FBI) and facilitate self-reflection and scenario-based exercises to help you form a personalised action plan to embed finology concepts into your practice.

Since the 1980s, the efficient markets hypothesis has come under attack. Market anomalies were initially attributed to the actions of noise traders, who were believed to hold irrational beliefs and standard preferences. There was an expectation that such actors would lose their wealth over the long run via arbitrage, albeit that the effectiveness of arbitrageurs was restricted by various risks and costs. In the 1990s, psychologists identified additional limits to arbitrage which are tied to human nature. This workshop will explore these additional limits, namely: bounded rationality; the need for well-being; and, self-control problems.

Giving Voice to Values (GVV) is an innovative approach to values-driven leadership development in business education and the workplace. GVV is not about persuading people to be more ethical. Rather, it starts from the premise that most of us already want to act on our values, but that we also want to feel that we have a reasonable chance of doing so effectively and successfully. To raise those odds, rather than a focus on ethical analysis, GVV focuses on ethical implementation and asks: "What if I were going to act on my values? What would I say and do? How could I be most effective?"

Working with clients takes more than just modelling financial outcomes. Better results are gained when investment advisers really understand their clients and truly connect with them. This workshop provides training in key counselling techniques and skills such as: reflective listening; managing resistance; and, empathic responding. You will learn how to apply counselling skills, incorporating a range of typical examples (e.g. dealing with grief, managing redundancy and planning for retirement), how to manage resistance and motivate clients using counselling skills and professional ethics during the interviewing process.

New research shows that media sources generate emotions that transmit to individuals and so influence their investment decisions, resulting in a departure from so-called efficient markets.

Ron Bird | 0.25 CE

Over shorter periods of time, there are market inefficiencies due to well researched behavioural biases. Knowledge of these can help improve our own investment decision making and that of our clients.

Dan Farley | 0.25 CE

Finology is an interesting and unique mix of behavioural finance (“fin”) and investor psychology (“ology”) as it relates to giving investment advice to individual investors. Finology is where investing meets investors™. The finology discipline focuses on identifying investing biases, beliefs and behaviours and the investment outcomes. To achieve this, finology connects behavioural finance and investor psychology - encompassing "know the markets", "know yourself" and "know your clients". Finology knowledge and skills help us better identify and understand how our own and other people's different investing biases, beliefs and behaviours impact investment markets and portfolio construction practices - and therefore, investment outcomes - to enable better quality investor portfolios.

Markets Summit 2020 facilitated debate on the key drivers of and outlook for the markets (on a three- to five-year view) - with particular emphasis on being alert to the high VUCA risks and opportunities ahead - to aid your search for return, and to help you build better quality investor portfolios.

It must be something about Davos. High profile names again spoke out about the attractiveness of the equity market. But the economic cycle is not over. Boom/bust has not been banished.

Chris Watling | 0.25 CE

After a blockbuster 2019 for bond returns, investors should moderate their return expectations while watching for VUCA events and tail risks, especially trade, Brexit and the US elections.

Bob Michele | 0.25 CE

The current VUCA environment creates opportunities for investors to increase diversification and income in their diversified portfolios, using carefully selected, higher yielding parts of the credit market.

As the old certainties break down, the response from policy makers has been to stimulate economies. The liquidity provided is particularly evident in longer dated growth assets. In the context of the Australian market, Australian mid caps is the sweet spot.

John Guadagnuolo | 0.25 CE

With an ageing demographic seeking more stable outcomes, many investors have been steadily increasing allocations to infrastructure securities, to capture the attractive relative income and low volatility.

Charles Hamieh | 0.25 CE

The world has checked into Hotel California – interest rates are failing to stimulate demand and monetary policy is less effective. Successful adaptation will require a re-think of traditional strategic asset allocation approaches.

Justin Tyler | 0.25 CE

Trade Wars, the US Election, Brexit 3.0, natural disasters and pandemic risks are causing fear and uncertainty in Australian equity investors. The key to capturing opportunities is to focus on what matters to long-term returns.

Patrick Hodgens | 0.25 CE

Investors are facing a "Code REDD" with reflation, election, duration and disruption all key themes. The reflation theme is favouring a rotation into more cyclical sectors, lower duration assets and lower rating bonds.

Thomas Poullaouec | 0.25 CE

High household debt places Australia in a fragile position for further disinflation, implying that bond yields will remain lower for longer. Investors should look to accumulate bonds and ensure portfolios have an appropriate defensive allocation in anticipation of the next downturn.

Dean Stewart | 0.25 CE

The US-China trade deal was supposed to settle global trade uncertainty in 2020. Nothing could be further from the truth. Diversified supply chains are vital to minimising VUCA risks into the 2020s.

Chris Rogers | 0.25 CE

Many of the discussions at Davos this year revealed that global elites are struggling to respond to important economic and environmental challenges, in a highly volatile, uncertain, complex and ambiguous world.

Dambisa Moyo | 1 comment | 0.25 CE

Financial decisions are among the most important life-shaping decisions we make. Two recent research papers provide further evidence as to how practitioners can help improve clients' financial decisions.

Ron Bird | 1.00 CE

The world economy is operating dangerously close to stall speed. Ever-present shocks and a sharply diminished trade cushion raise serious questions about financial markets' optimistic view of global economic prospects.

Ten risks could cause the most economic and financial trouble in 2020. But these are not predictions - continuing global expansion is more probable than any combination of these setbacks.

I believe time allows signals to surface amidst the ubiquitous noise. In the spirit of the hit Fleetwood Mac song "Don't Stop" that urges a future focus, I offer this year's set of five-year-forward global predictions.

Central banks have proved willing and able to keep stock and bond prices elevated. For long-term economic well-being and financial stability, a policy response is needed that extends well beyond their traditional remit.