Practical analysis for investment professionals
21 March 2014

Weekend Reads for Finance Pros: China, Daniel Kahneman on Luck, and Retirement

Posted In: Weekend Reads

Here in Asia, speculation continues to swirl about China, with headlines portending doom: “rout deepens”, “financial distress”, and “bear market”. Amid all of this, a Tibetan mastiff puppy reportedly sold in China for almost $2 million, prompting author and bubble watcher Vikram Mansharamani to tweet: “China bust coming?”

With the announcement of the second default in China’s debt markets, we asked CFA Institute Financial NewsBrief readers if the recent corporate-bond defaults in China reflect a burgeoning systemic risk. In case you missed the poll, the 781 respondents answered with a resounding “no.” Just 14% felt that these events pointed to the beginning stages of a systemic crisis. But as my colleague Ron Rimkus, CFA, pointed out: “The centrally planned nature of China’s economy and the widespread development of ‘ghost cities’ suggest that China may be lulled into a sense of complacency about its usage of debt. The issue, as always, isn’t just the size of the debt burden; it is also the quality of the projects financed by that debt. Only time will tell.”

Here is a small selection of articles about China, as well as a few other interesting reads.

China Chatter

 

Investing

  • Why Did the Stock Market Sell off Today?” (The Reformed Broker)
  • Ben Graham’s Value Investing ≠ Fama/French’s Factor Investing (25iq)
  • Interesting piece — and very relevant if you are a financial adviser — about a “small but growing industry that doesn’t manage any money but rather specializes in helping people with lots of money screen and select — and sometimes fire — the professionals who handle their investments.” According to the writer, these firms “are benefiting from investors’ increased distrust of financial advice and of the markets since the 2008 financial crisis. Many clients are more hands-on, particularly younger one.” See: “Consultants Help Clients Find, Fire Advisers.” (Wall Street Journal, tiered subscription)
  • “Individual investors who use technical analysis and trade options frequently make poor portfolio decisions, resulting in dramatically lower returns than other investors.” Such is the finding of a recent paper, “Technical Analysis and Individual Investors.” (SSRN)

Financial Literacy

  • Timothy Taylor (@TimothyTTaylor), blogger and managing editor of the Journal of Economic Perspectives, has written an incisive post on the perils of poor investment choices, in which he notes that “adding more fine print is not the superhighway to financial literacy” and “a lack of financial literacy has many costs.” (Conversable Economist)
  • But, as Jerry Kerns, editor-in-chief at Morningstar, points out in a tweet:

 

Behavioral Economics/Neuroscience

Retirement

Statistics

  • A helpful visual reminder that it is all too easy to confuse correlation with causation:

 

Leadership

And Now For Something Completely Different


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/JLGutierrez

About the Author(s)
Lauren Foster

Lauren Foster is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Previously, she worked as a freelance writer for Barron’s and the Financial Times. Prior to her freelance work, Foster spent nearly a decade on staff at the FT as a reporter and editor based in the New York bureau. Foster holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

Leave a Reply

Your email address will not be published. Required fields are marked *



By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close