Practical analysis for investment professionals
01 December 2015

Top Five Articles from November: (Un)Passive Management, the TPP, and Inflation

Posted In: Best Of

1. Alpha Wounds: Passive Management Is Not Passive

Passive investing is not actually passive. When looked at this way, it means there are important lessons for active investors. Examples include the hidden story behind market capitalization and the importance of low turnover. This also opens passive investing up to criticism regarding the free passes given to it in terms of risk, cost, and momentum.

2. Three Reasons Why It Is Still a Good Time to Talk about Inflation

Is it time to put conversations about inflation risk on the back burner? Questions like this illustrate a major flaw in the way many investors approach protecting their portfolios against inflation risk: Discussion starts only after rising inflation is already a problem and inflation hedges are expensive.

3. The Effects of FX!

Ronald G. Layard-Liesching outlined a startling and complex thesis at the recent 2015 CFA Institute Fixed-Income Management Conference in Boston. Could currency market structure, quantitative easing (QE), and other factors cause a flash crash?

4. Dumb Alpha: Are Your Forecasts Better Than a Random Walk?

Research confirms a “wisdom of the crowds” effect insofar as only a few analysts seem able to consistently outperform the consensus forecast compiled from many different analysts, says Joachim Klement, CFA.

5. Understanding the TPP: Recommended Reading

The 12 Trans-Pacific Partnership (TPP) member countries jointly produce 40% of global GDP and represent about 800 million consumers. How will the agreement affect your business? What will be the impact on the companies you invest in? Larry Cao, CFA, put together a primer to help you develop a framework for analysis and zoom in on some of the key issues.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©iStockphoto.com/retrorocket

About the Author(s)
Paul McCaffrey

Paul McCaffrey is the editor of Enterprising Investor at CFA Institute. Previously, he served as an editor at the H.W. Wilson Company. His writing has appeared in Financial Planning and DailyFinance, among other publications. He holds a BA in English from Vassar College and an MA in journalism from the City University of New York (CUNY) Graduate School of Journalism.

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