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.

Ron Bird | 1.00 CE

However tempting it may be to focus our wishes on our own immediate desires, it is imperative this year that investors' wish lists take into account the big economic and policy picture.

The investment (as opposed to transaction) appeal of Bitcoins has grown and will grow. But we believe that Bitcoin will be very undesirable as an asset due to a very high degree of price volatility.

You know it's time to worry when the conservative Republican chairman of the Senate Committee on Foreign Relations warns openly that Trump could start World War III.

As some countries have shown, a market economy can take forms that temper the excesses of capitalism and globalisation, and deliver more sustainable growth and higher standards of living for most citizens.

Plenty of anecdotes suggest that baby boomers are spending their savings and will leave nothing for the next generation. Looking at the actual data, this is questionable.

The world has changed dramatically over the past three decades, but the analytical tools underpinning monetary policy haven't. The challenge is to develop new tools to fit the new world order.

In the last decade, investor interest in long-horizon outcomes was rare and when it prevailed, it was severely tested by events. The long-term was viewed as opaque and uncertain. It's amazing how attitudes change when new opportunities emerge.

It is tempting to ask whether markets have entered a period of "irrational exuberance" and are heading for a fall. The answer is probably no.

"If it is earned here, it should be taxed here" is the title of the ad about laws on multinationals transferring profits offshore. What is interesting is the closing claim in the ad.

There is evidence to suggest that the uptick in global growth and developments in Saudi Arabia will push the price of oil as high as $80 in the coming year.

What influence do personal values have on our behaviour, as individuals? And how do those values interact with professional standards and ethics?

Will Jackson | 1.50 CE

For the past two centuries, a "double bust" (in commodities and capital flows) has led to a spike in sovereign defaults. Yet they have risen only modestly since the peak in commodity prices and global capital flows around 2011.

During the past three months, a salient topic of debate has been whether the so-called Phillips Curve is relevant in today's disinflationary environment. The debate is important to investors.

A recent research paper that likens the three main retirement planning approaches to shapes provides an interesting way to think about three different retirement planning approaches. In the end, the best option may incorporate all three.

Two recent books indicate that a quiet revolution is challenging the foundations of economics, promising radical changes in how we view many aspects of organisations, public policy, and even social life.

A recent paper that addresses one of the most pressing issues facing the financial community - how to construct long-term investment portfolios to best fit the needs of those saving for retirement - questions the appropriateness of many commonly used techniques.

Ron Bird | 1.00 CE

With the appointment of Jerome Powell as the next Chair of the United States Federal Reserve Board, Donald Trump has made perhaps the most important single decision of his presidency.

The 2017 mid-year SPIVA report on fund manager performance came out recently. And, while we can expect to see the media dwell on the negatives, there are some big positives in the data.

Having built some satisfaction that their retirement savings balance is sufficient, clients ask "How much can I afford to spend?"

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.

President Xi Jinping's political report, delivered on the opening day of China's latest Communist Party congress, was a high-impact event. Three conclusions from Xi's address are particularly important.

The winner of this year's Nobel Memorial Prize in Economic Sciences, Richard Thaler of the University of Chicago, is a controversial choice. For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.

Portfolio insurance - invented over 40 years ago - has experienced the renaissance that it very much deserves. Trend (momentum) investing dates back over 40 years, too - the success of which is traced back in this paper to over 100 years.

Ron Bird | 1.00 CE

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.

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.

Two recent studies provide evidence that issues unrelated to the fundamental operation of a firm impact their market valuation.

Ron Bird | 1.00 CE

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?"

Since mid 2016, the global economy has been in a period of moderate expansion - yet inflation has not picked up. Why?

Research Roundtable helps identify quality investment solutions and their place in portfolios. This Resources Kit enables participants from the various Research Roundtable meetings to access the Strategy Reports that result from each meeting.

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.

The "anomalies" literature is the scientific foundation for quantitative asset management. But as three recent papers point out, "p-hacking" is only the beginning of anomalies research problems.

US President Donald Trump has once again raised the possibility of a trade conflict with China. Getting tough on China while ignoring the consequences could be a blunder of epic proportions.

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.

Magellan is innovating again, this time raising money for what's been called a "monster" closed-end listed investment trust (LIT) with features that dramatically raise the bar for the standard model of closed end listed investment vehicles.

The US has run chronic current-account deficits for almost two generations. Pointing the finger at surplus countries is getting old.

Where can practitioners take on the world’s best investors and win? Actually, in quite a lot of places.

Researchers propose a range of improvements to traditional time-based rebalancing, including threshold and cash flow strategies, designed to increase effectiveness and efficiency.

As some institutional investors build internal impact investing capabilities, the inclusion of impact investments in portfolios may be on the cusp of becoming mainstream.

The relationship between organisational culture and relative performance has significant implications for active asset managers, given their dependence on effective collaboration and decision making.

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?

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.

This paper explores the issues and challenges associated with longevity and sequencing risk, especially in the current market environment, and examines how alternative investments offer investors potential solutions for these risks.

Investors often shy from investing in “non-traditional” sources of Risk Premia, but to maximise the probability of achieving positive excess returns, a well-diversified and risk-controlled mix of Risk Premium strategies is essential.

Ensuring your investment process incorporates sustainability factors - climate change, global food shortages, water shortages, and poverty, as well as safety, management and governance scandals - adds up to better outcomes.

Two assumptions are under challenge - that the past offers a reliable guide to the future in terms of asset class returns; and, that traditional relative risk/return approaches can still deliver the returns investors need.

The outcome of selecting an active management strategy will likely be greater when both the creativity and predictability of the candidate are considered in equal measure.

Two recent studies shed light on retirement income planning. One proposes a framework to avoid the pitfalls of shortfall probabilities. The other finds biological age impacts spending rates.

Will Jackson | 1.00 CE

Culture is at the heart of competitive advantage today; this is particularly the case for investment firms where people and their judgments are the chief assets. A strong culture in investment management firms is a requirement for sustainable alpha-generation.

Using a Stage 4 investment analysis framework is a strong move towards a deeper understanding of portfolio risk drivers, and ensuring portfolios better reflect your investment philosophy.

Having grown strongly over the last 20 years, a new study shows infrastructure investment will continue over the next two decades. It is a secular trend with long-term opportunities.

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.

When it comes to the active versus passive investment debate, many investors believe the answer is black or white. But the issue is deeper than that.

While the use of a discount rate to compare strategies or choices that are dispersed or occur over time is useful, the proper discount rate is the investor's expected rate of return, means that the "right" discount rate will vary from one person to the next.

Michael Kitces | 1.00 CE

After six months, we can more confidently assess the prospects for the US economy under Trump's administration. Like his presidency, paradoxes abound.

Recently, Fed Chair Janet Yellen expressed dismay that inflation has remained persistently below the Fed's target of 2%. Will low inflation derail the Fed's exit strategy?

Forecasters find it difficult to resist superimposing the outcomes in major crisis-battered developed economies on China. It has been the wrong approach in the past; it is wrong again today.

The head of ASIC says that hybrids are a ridiculous investment for retail investors. Are they? Yes and no.

Two new studies provide widespread evidence of mispricings/irrationalities across world equity markets. One in particular provides valuable insight into managing risk in equity investing.

Ron Bird | 1.00 CE

This Guide aims to assist practitioners develop their investment policy framework, by providing a checklist of issues to consider, and publicly available examples from institutions in Australia and globally.

Next month will mark the tenth anniversary of the GFC. Why have so few of the policies that might have ameliorated economic conditions and alleviated public resentment been implemented since?

This year's G20 summit in Hamburg promises to be among the more interesting in recent years. The knee-jerk globalism that suffuses G20 meetings feeds into the populists' narrative.

It's become conventional wisdom that under-performance is due to the irrational investment behavior of individuals. It's time to question whether conventional wisdom has even a scintilla of meaning.

Discretion in setting monetary policy has had a checkered history. Ironically, the debate on rules vs discretion is heating up just as the FOMC sets a course for unwinding its extraordinary policy measures.

The classic view of cash when investing is that it's something to minimise. But a recent study found that we're just not content without a healthy allocation to cash. In fact, pushing investors to put all their cash to work increases their financial stress.

We ignore history at great peril. The latest disappointment for inflation-targeting central banks is really not a surprise after all.

Analysis of 5 international stock markets shows no correlation between stock returns and the political party in power.

Yes, rates are unusually low. But to describe that as unnatural shows a lack of understanding about how the world works and a refusal to accept that maybe the world has changed.

Fed officials must take the long view and hence tend to believe they can engineer a graceful exit. Their plan is somewhat akin to 'cap and trade' schemes for weaning the world of pollutants.

Literature from a variety of disciplines help highlight the qualities behind truly creative, contrarian thinking - qualities which can be applied to modern portfolio management.

Unlike other commonly used factors, very little research has been undertaken on the quality factor - which makes a newly released paper very interesting. Another new paper extends the usual momentum factor into "returns signal momentum".

Ron Bird | 1.00 CE

In the next year, a more robust and persistent global recovery will depend largely on whether policymakers avoid mistakes that could derail it.

Wharton's Jeremy Siegel and Yale's Robert Shiller squared off in a recent presentation about the outlook for equity returns.

When equity markets fall, the financial and emotional impacts can be lasting. By focusing on reducing downside, investors can have a smoother ride and still achieve the returns they seek.

Investing often creates moral dilemmas over goals. Should decent people put their money in emerging-market bond funds?

After the ratings failures of CDOs and other complex instruments in the GFC, many dismiss the work of the ratings agencies. But far from being hopeless, they do a wonderful job of assessing companies.

China is upping the ante on its connection to an increasingly integrated world, running against the grain of the populist anti-globalisation backlash that is brewing in many developed countries.

The number of indexes has exploded and now exceeds the number of stocks in the US. But overall, the US stock market is still dominated by active management. And 96% of index products are of insignificant size.

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.

Despite proliferating geopolitical risks, global financial markets have reached new heights. Markets have trouble pricing "black swan" events, the "unknown unknowns" that are unlikely, but extremely costly.

Factor investing has its foundation in the empirical studies of EMH. Via ETFs, we now live in a world where the possibility of factor investing is available to almost everyone. Three recent papers are useful in exploring further.

In a world of risk-on/risk-off investing, it is important for investors to know where true risks lie and where they do not lie. In fact, macroeconomic risk has decreased by well over 80% during the eight decades.

This paper presents evidence to suggest that an allocation to impact investments can contribute potential portfolio benefits from the risk-return profile and low correlation with other asset classes.

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.

The pendulum of world economic growth has swung - by 2018, the developing countries will have a greater share of world GDP (59%) than developed countries (41%). New? Absolutely. Normal? Not even close.

Opinions in the active-passive investment debate have drifted poles apart over recent years. This paper revisits this discussion finding that, unlike their stock counterparts, active bond mutual funds have largely outperformed their median passive peers over the sample period.

The centrist Emmanuel Macron's success in the first round of the French presidential election is likely to re-energise Europe.

The Fed's talk of a symmetrical inflation goal played well to markets when they were in the throes of the reflation trade. Markets are now flipping to the conclusion that transparency amounts to dovish policy.

The market is expecting a big pick-up in earnings from Trump's business friendly tax cuts, deregulation and an infrastructure spending boom. But will it be enough?

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.

Do professional investors do better when investing on their own behalf? What is the relationship between the remuneration of professional investors and performance? What role to gender and age play in the use of ETFs?

On Wednesday, Theresa May triggered the mechanism for UK to leave the EU. But the UK's relationship with the EU has already changed, says UK MP Peter Lilley.

PortfolioConstruction Forum has partnered with University of Technology Sydney (UTS) Business School, to support the newly formed Investment Management Research Program (the IMR Program), a research initiative in the areas of capital market operations, financial institutions/intermediaries and institutional investors.

Home ownership is of critical importance for retirees. But compulsory superannuation plays a major role in ensuring low-income earners never gain access to home ownership.

Another growth scare has come and gone for the Chinese economy. The near-term prognosis for the Chinese economy is far more encouraging than most had expected. China is actually making rapid progress on the road to rebalancing.

Research suggests we mentally account for income and assets with an intrinsic hierarchy of priorities - a "hierarchy of retirement needs". So retirement income strategies should be reframed to answer three questions.

Global ageing will have significant effects over the next few decades as it reduces the economic power and geopolitical influence of developed nations, in turn increasing the risk of social upheaval in the developing world.

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?

A more realistic view of the world is that price appreciation drives negative gearing - not the other way around. Abolish negative gearing and nothing much happens.

In thinking about the future of growth, and the opportunities that continued growth will open up for all of humanity, we should reflect on how far we have come.

Markets Summit 2017 delivered 20+ high conviction ideas on how the winds of change are affecting the outlook for economies and asset classes - and delegates were asked to convert the insights into four fundamental portfolio construction decisions.

What Donald Trump's rise to the US presidency portends requires unraveling three mysteries - because there are three versions of Trump.

History indicates a reasonably graceful exit from ultra-low interest rates is possible - and that investors can weather the storm with the right strategy. Let's sort out which risks are worth worrying about and which are not.

Finology Summit 2017 featured a stellar lineup of finology experts offering their best high conviction idea/thesis on how the winds of change are impacting how investors think and behave with respect to money, and how we can better relate with them (and help others who must do so).

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...

Finology Summit 2017 focused on how "The winds of change" are affecting how investors think and behave with respect to money, and how we can better to relate with them. Here are our key takeouts.

This paper revisits the relationship between economic growth and equity market returns. Much of the literature has focused on the US so this analysis includes Australia and the UK, too.

The US cannot "win" a trade war with China, and any victory will be Pyrrhic - leading to massive price increases in the low-cost stores on which many Americans rely.

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.

With the onward marching of computing power, our transition from being "knowledge workers" to "relationship workers" may be here sooner than we realise.

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In the end, it all comes down to people and values.

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.

The three main economies that will largely determine the health of the global economy remain the United States, the euro zone, and China. Each is at a different stage of its economic cycle and faces different challenges.

Four common behavioural problems make the journey of investing particularly challenging for many investors. An understanding of each help investors stay the course and meet their goals.

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.

The stage is set for an inevitable tightening in monetary conditions. The only questions are how soon, how much and with what consequences.

The retreat of advanced economies from the global economy could have far-reaching consequences.

Beware using risk tolerance assessment tools that blend risk tolerance and risk capacity into a single result. The two need to be measured separately.

America is living through a kind of Trumpian Genesis - seven days of high-speed political creation. No one yet knows how all this will pan out.

Should we just keep our heads down and treat political events as nothing more than noise? 2017 is going to be a year when politics does matter. In fact, it always has.

Senior secured loans offer a combination of strong current income with relatively low volatility given their defensive position in the capital structure and short duration.

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.

No doubt the liberal media will wage unrelenting war on Trump, as they did on Nixon nearly half a century ago. But this is not the 1970s.

How often should a portfolio be rebalanced? Rather than the conventional wisdom of rebalancing at fixed time intervals, a superior methodology is tolerance band rebalancing.

We've been drilled that rebalancing in portfolios results in improved returns and/or reduced risk. But the benefits of rebalancing are far smaller than we’ve been led to believe.

While rebalancing may be helpful as a risk management strategy, it may actually reduce long-term returns. But that isn't a reason to avoid it.