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G'day
In this week's Forum Fodder, Nouriel Roubini argues that
the global economy is flying on a single engine (US growth) while
the "pilots" navigate menacing storm clouds. A la Woody and Mohammed in
last week's Fodder, Nouriel picks up on rising inequality as a serious
challenge, not on moral grounds, but rather because it is
redistributing income to those with a high propensity to save (the rich
and corporations), thus further constraining economic growth. Oliver Hartwich
(one of the most popular
speakers at our Markets Summit earlier this year) highlights that
for the first time,
negative interest rates have leaked through to the retail banking client
in Europe, which supports Nouriel's contention that Europe is one of three engines that
has failed. But it's not all doom and gloom, as GaveKal's Charles Gave
writes,
you can position portfolios to benefit from deflation. Michael Furey
then explains the low beta anomaly in terms us non-quants
can understand, arguing
the logic of why it should exist.
And, last, but not least, we highlight Michael Kitces' presentation from
our recent Conference, in which Michael
did such a good job of explaining risk parity portfolios that Cliff
Asness (one of the inventors of risk parity) said it was the best
explanation he's heard. |
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All the best for some more great weekend learning - Graham
P.S.
PortfolioConstruction Forum Academy
kicks off for the 2014/15 year
in a few weeks. A post grad extension
program to our other professional development programs, Academy is
open to a select group of just 60 senior portfolio
construction practitioners -
if that sounds like you, just email us and we'll send you more info.
Or,
watch this Academy video to see for yourself why it will advance
your portfolio construction knowledge and wisdom.
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LATEST...
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The single-engine global economy
The global economy is like a jetliner that needs all of its engines
operational to take off. Unfortunately, only one of its four engines is
functioning properly.
Nouriel Roubini, Roubini Global Economics
| Opinion
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Taking a gamble with negative interest rates
The taboo that savers must be compensated for handing money to a
financial institution has been broken, with the ECB's negative rates
finally being passed on to retail clients.
Oliver Hartwich, The New Zealand Initiative
| Opinion
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Deflation: Boom or bust?
It has been my contention for a while that capitalism is returning to
its 19th century deflationary roots. Indeed, the evidence has become
overwhelming.
Charles Gave, GaveKal
| Opinion
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Low beta anomaly - mispricing or risk?
I don't dispute that low volatility stocks outperform highly volatile
stocks (and this is common across many markets). But volatility does not
explain all of an asset's risk.
Michael Furey, Delta Research & Advisory
| Opinion
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Risk parity portfolios - fad or the future of portfolio construction?
Is risk parity's outperformance in the past decade sustainable or just a
quirk of the unusual markets?
Michael Kitces, Pinnacle Advisory Group
| Resources
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RECENTLY...
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Capitalism, inequality, and Piketty
Thomas Piketty’s "Capital in the Twenty‐First Century" is certainly the
economics book of the year. We have been asked numerous times to
appraise his ideas.
Dr Woody Brock, SED
| Research
Paper
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The inequality trifecta
Most countries face a trio of inequalities – of income, wealth, and
opportunity. Beyond the moral, social, and political implications lies a
serious economic concern.
Mohamed El-Erian, Allianz
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comment
| Opinion
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Bill Sharpe on retirement income planning
One of the originators of CAPM, Sharpe (along with Markowitz and Miller)
was awarded the 1990 Nobel Prize in economics. I sat down with him to
discuss retirement income planning.
Robert Huebscher, Advisor Perspectives
| Interview
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Phrases that should be banished from retirement planning
The words we use and how we frame concepts have a powerful impact.
Perhaps the most crucial change in our retirement planning language is
simply to rename "retirement".
Michael Kitces, Pinnacle Advisory Group
| Opinion
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Risk rapporting
Formal reports redolent with data and analysis fail to communicate risks
as people actually feel them. Reports need to be replaced by rapports,
by engaged conversations.
Prof Jack Gray,
UTS
| Resources
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Four takeaways from the recent volatility spike
Last week's volatility surprised many. How should portfolios be
positioned? And what does this recent bout of volatility tell us about
the economy and financial markets?
Russ Koesterich, BlackRock
| Opinion
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PLUS...
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