Practical analysis for investment professionals

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22 Posts

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Knowing the World: Intuition, Theories, Models, and Data

The new buzzword nowadays is big data, the fashionable term for capturing and analyzing the vast collections of information that people reveal about themselves when shopping online at Amazon.com and Travelocity or when writing about themselves on Facebook and Twitter. Big data involves a mix of computer science, information technology, mathematics, and applied statistics. It is increasingly used to sell us products or to persuade us to vote for politicians by tailoring the products’ or politicians’ images to our particular data-generated personas. Some talking heads like to say that computer-aided analysis of patterns will soon replace our traditional methods of discovering the truth in many fields, including medicine, the social sciences, and physics.

Blurred Effect: Former St. Louis Fed CEO Poole on the Great Central Bank Unwind

The US Federal Reserve's QE3 program has indeed had a stimulative effect — but not, says former St. Louis Fed president and CEO William Poole, in the way that most people think.

Confronting Ethical Dilemmas at Work: Why Do Good People Do Bad Things?

Ethics can be dangerous to your career. The danger may come not from your own ethics but from the ethics of people around you and the organization of which you are a part. At work, you may be called upon to do things that turn out to be unethical or even illegal. What should you do if that occurs?

Financial Reform: Investment Managers Need a Seat at the Table

Distinctions between investment banking and investment management are lost on the layman. And the layman’s elected representatives too often look to global investment bankers as spokesmen for the whole of the financial sector, says Robert Jenkins, former policy maker at the Bank of England.

Fixing the “Loser’s Game”: What It Will Take

Over the past two decades, the story of the Ontario Teachers’ Pension Plan has spawned a growing number of investment institutions explicitly based on Peter Drucker’s design principles. These institutions, according to Keith Ambachtsheer, are our best hope for articulating and implementing the truly long-horizon, wealth-creating investment programs that workers everywhere will rely on for their future prosperity.

What to Do about High-Frequency Trading

Like powerful tools or drugs, high-frequency trading (HFT) is both extraordinarily valuable and incredibly dangerous. Although HFT greatly reduces average trading costs for investors, it also poses systemic risks to the markets, hurts investors through front running, and decreases investor confidence.

Fewer, Richer, Greener: The End of the Population Explosion and the Future for Investors

The population explosion is almost over, with fertility below the replacement rate in many advanced countries and rapidly declining in most developing countries. In the next half century, economic growth will be robust, especially in developing countries, and will increase world wealth dramatically. These factors will make it easier, not harder, to preserve the natural environment and avoid resource shortages. Investors should focus on natural resources and other industries that will benefit from these trends.

Household Alpha and Social Security

Jason S. Scott examines the value a U.S. household can extract from better Social Security decisions and compares that value with the potential gains from traditional investment alpha.

El-Erian and Spence on Systemic Risk, Multiple Equilibriums, and Market Dynamics

In an article from the upcoming issue of the Financial Analysts Journal, Mohamed A. El-Erian and Michael Spence use an array of real-life examples — including the current sovereign debt crisis in the eurozone — to analyze the underlying dynamics of the periodic bouts of systemic path dependence that affect not only financial markets but also investment strategy itself.

Negative Real Interest Rates: The Conundrum for Investment and Spending Policies

Can anyone reasonably expect to earn a 5% real return with acceptable risk in today’s economic environment?



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