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  • Equal- vs. Market Cap-Weighted Portfolios in Stock Market Crashes

    Equal- vs. Market Cap-Weighted Portfolios in Stock Market Crashes

    Introduction Diversify, reduce fees, avoid active trading, and keep it simple. Most investors would be well-served by following the above framework. But while easy to recommend, this rubric is rather difficult to implement. For example, how does an investor diversify in 2021? Over the last 40 years, a simple equity and bond portfolio did a […] More

  • Perpetual Debt Is Already Here

    Perpetual Debt Is Already Here

    “Be still indebted to somebody or other, that there may be somebody always to pray for you, [. . .] fearing, if fortune should deal crossly with you, that it might be his chance to come short of being paid by you.” — François Rabelais, Gargantua and Pantagruel, Book III Pundits worldwide are debating what […] More

  • Revisiting Beta: How Well Has Beta Predicted Returns?

    Revisiting Beta: How Well Has Beta Predicted Returns?

    After the capital asset pricing model (CAPM) was developed in the 1960s and 1970s, financial researchers started to test how well this theoretical model actually worked in the real world. Amid expanding computing power and greater data access, the 1980s became a critical era for gauging CAPM’s validity as analysts explored beta’s effectiveness in anticipating […] More

  • Concentration Risk on the Buy-Side of Credit Markets: The Causes

    Concentration Risk on the Buy-Side of Credit Markets: The Causes

    Central banks took a huge leap on the road to direct market intervention in 2020. All developed market central banks added direct purchases of corporate bonds to their quantitative easing (QE) programs. As of 31 December 2020, the European Central Bank (ECB) and the US Federal Reserve held €250 billion and €46 billion in corporate […] More

  • “Alpha-Flation”: A Private Market Syndrome

    “Alpha-Flation”: A Private Market Syndrome

    In private equity (PE), there are more ways to calculate the alpha of a portfolio or fund than any other asset class. And in no sector other than private markets does investing in the average fund seem to go so poorly. Should it be this way? Is the average private market fund a bad fund […] More

  • Book Review: Warren Buffett | CFA Institute Enterprising Investor

    Book Review: Warren Buffett | CFA Institute Enterprising Investor

    Warren Buffett: Inside the Ultimate Money Mind. 2021. Robert G. Hagstrom, CFA. Wiley & Sons. Over the past two decades, Robert G. Hagstrom, CFA, has written several books about Warren Buffett. This new book, however, is unique in its focus on the investment thought process. Many books, videos, discussions, and articles about Buffett attempt to […] More

  • ESG Asset Managers: Define the Why

    ESG Asset Managers: Define the Why

    How does an organization attract and engage its various stakeholders? An inspiring purpose articulated in a mission statement may be one of the most effective methods. The author Simon Sinek presents an even simpler concept in his book Start with Why. Sinek believes that what differentiates great leaders, companies, and movements is that they make […] More

  • Vineer Bhansali: Negative-Yielding Bonds and Options

    Vineer Bhansali: Negative-Yielding Bonds and Options

    In the first installment of my interview with Vineer Bhansali, the author of The Incredible Upside-Down Fixed-Income Market from the CFA Institute Research Foundation, we addressed the underlying implications of negative-yielding bonds, whether they constituted a net negative or positive. While Bhansali, who is also CIO of LongTail Alpha, eschewed any moral judgments — negative-yielding […] More

  • Eric Sim, CFA: The Diversified Career Portfolio

    Eric Sim, CFA: The Diversified Career Portfolio

    Eric Sim, CFA, does not have a “neat” career trajectory. His professional path has had more than its share of forks, pivots, failures, and rebirths. And that idiosyncratic track may in part explain why he occupies such a singular place in finance today. Former UBS managing director, finance professor, author, the most-followed CFA charterholder on […] More

  • Inflation Will Fall, But Not Far Enough

    Inflation Will Fall, But Not Far Enough

    US inflation has risen rapidly amid pandemic-related lockdowns, supply chain difficulties, and speculation. This jump should ease out gradually as these disruptions diminish over time. Nevertheless, this reduced inflation may still be too high to shield those consumers who have been adversely affected by coronavirus-inspired economic disruptions. Pre-Pandemic Inflation Before COVID-19, in 2019, inflation held […] More

  • Book Review: Algo Bots and the Law

    Book Review: Algo Bots and the Law

    Algo Bots and the Law: Technology, Automation, and the Regulation of Futures and Other Derivatives. 2020. Gregory Scopino. Cambridge University Press. Derivative trading technology has exploded in sophistication since the Great Financial Crisis, thanks to algorithms and electronic execution. The futures open outcry market is becoming a distant memory, but whether we have a regulatory […] More

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