Practical analysis for investment professionals
26 September 2014

Weekend Reads for Global Investors: Alibaba, Apple Pay, and Asset Allocation

Posted In: Weekend Reads

Alibaba and Apple were in fierce competition this past week . . . for the headlines.

The two tech giants picked the same day for their long-awaited events. Alibaba’s IPO went exceptionally well for the company and its bankers. Apple sold over 10 million sets of its new iPhone 6 in the first few days — an  astonishing record.

The Alibaba story is interesting in multiple ways. The company’s sheer size is almost mesmerizing. Its sales (and now market cap) are larger than those of Amazon. Its growth is faster than Google’s. Its margin is higher than Apple’s. So it’s no surprise that its IPO got all the attention you could imagine and then some. From there, the story then built on itself: the world’s largest IPO, the richest man in China, the number of gazillionaires it created, and so on and so forth. Despite the media frenzy, many did not lose sight of the company’s history.

As it happens, this is not the first time Alibaba has been around the block. It went public in Hong Kong in 2007 when the market was red-hot only to fold five years later, after the shareholders lost a significant chunk of their investments in the stock. It came back a year later seeking an IPO on the Hong Kong Stock Exchange, but eventually balked when their wish of having dual-class shares was not granted. My colleague Matt Orsagh, CFA, CIPM, voiced his concerns about the dual-class shares.

Amid all the fanfare surrounding the iPhone 6 launch, a little something called Apple Pay probably escaped most people’s notice. It’s basically a credit card embedded in your iPhone 6. At the reportedly 200,000 businesses accepting this new form of payment, all you need to do is touch your iPhone 6 screen next to the receiving device in the store and you’ll be all set. For details on how this works and much more, read Forbes contributor Michael Thomsen’s article “Apple Pay and How Computers Became the Cocaine of the 21st Century.”

In the slower-moving world of asset allocation, the California Public Employees’ Retirement System, or Calpers, quietly dropped a bomb recently by announcing that they are exiting hedge fund investmentsYale’s endowment, which is known for its exposures to private equity and hedge fund investments, continues to best its Ivy League rivals, however. So the jury is still out on which is a better way to go. While you ponder that question, feel free to glance over other readings I’ve listed below on asset allocation and other topics.


Apple Pay


Asset Allocation, Retirement

Wade D. Pfau, CFA, a professor at the American College of Financial Services, and Michael E. Kitces, of The Kitces Report and Nerd’s Eye View, ran some interesting tests on whether investors should adjust the asset allocation of their retirement portfolios based on market valuation at various stages. The authors each explained the article in a blog post recently as well. Below are links to both blog posts and the original article posted on the Social Science Research Network.

The two authors previously ran some similarly thought-provoking tests: instead of reducing equity allocation as we get older, what if we actually increase it? I have attached a link here as well.

Climate Change

And Now for Some Truly Weekend Readings . . .

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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.

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About the Author(s)
Larry Cao, CFA

Larry Cao, CFA, senior director of industry research, CFA Institute, conducts original research with a focus on the investment industry trends and investment expertise. His current research interests include multi-asset strategies and FinTech (including AI, big data, and blockchain). He has led the development of such popular publications as FinTech 2017: China, Asia and Beyond, FinTech 2018: The Asia Pacific Edition, Multi-Asset Strategies: The Future of Investment Management and AI Pioneers in Investment management. He is also a frequent speaker at industry conferences on these topics. During his time in Boston pursuing graduate studies at Harvard and as a visiting scholar at MIT, he also co-authored a research paper with Nobel laureate Franco Modigliani that was published in the Journal of Economic Literature by American Economic Association. Larry has more than 20 years of experience in the investment industry. Prior to joining CFA Institute, Larry worked at HSBC as senior manager for the Asia Pacific region. He started his career at the People’s Bank of China as a USD fixed-income portfolio manager. He also worked for US asset managers Munder Capital Management, managing US and international equity portfolios, and Morningstar/Ibbotson Associates, managing multi-asset investment programs for a global financial institution clientele. Larry has been interviewed by a wide range of business media, such as Bloomberg, CNN, the Financial Times, South China Morning Post and the Wall Street Journal.

2 thoughts on “Weekend Reads for Global Investors: Alibaba, Apple Pay, and Asset Allocation”

  1. Brad Case, PhD, CFA, CAIA says:

    Thanks, Larry. The glidepath research by Pfau and Kitces is similar in many respects to the “glidepath illusion” research advanced by Rob Arnott in and, and later picked up in

  2. Larry Cao, CFA says:

    Thanks for sharing, Brad.

    Warm regards,

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