The slow growth, disinflationary economic environment subsequent to the Global Financial Crisis has left investors under-invested in inflation-sensitive asset classes such as commodities. However, as this Bloomberg article points out, the investment community is beginning to take note.Commodities provide several notable benefits to portfolios:Should perform well during an inflationary cycleShould perform well during periods of…
Tag: finance
The (Mis) Behaviour of Markets
As any investor will know, there are no defined set of rules in financial markets; investment management is a far cry from a hard science where normal distributions and other statistical methods work well. While it’s common knowledge that many concepts in modern finance have massive shortcomings (e.g. Markowitz’s modern portfolio theory and the efficient…
Cutting Through the Noise of Financial Media
Given the recent bout of volatility in equity prices, there has been an abundance of financial pundits forecasting the next global recession is surely upon us. Trade war tensions heating up, global economic activity slowing, and yield curves around the globe inverting are the fodder for click-bait style headlines forecasting a sharp decline in equity…
The Moral Animal – Why We Are The Way We Are
For those interested in human psychology and how evolutionary forces can influence the way individuals make decisions, The Moral Animal – Why We Are The Way We Are by Robert Wright is a fascinating read. It explores the science of evolutionary psychology, examining the historical context around how the theory of natural selection was conceptualized…
Will Value Stocks Rebound?
Last week in Sagacious we featured an opinion piece on the challenges involved in sticking with an investment strategy that has recently been underperforming. This week, the Wall Street Journal published an article that examined the extremely long period of underperformance value stocks have experienced relative to growth stocks. The investment strategy of buying “cheap”…
Are Backtested Results Effective?
One of the key factors influencing the success of raising capital for a new investment strategy is what is known as a “backtest.” When an investment strategy has little to no auditable track record (i.e. the strategy is new or hasn’t launched yet), firms looking to raise capital for an algorithmic or quantitative strategy tend…
The Role of ESG In Investment
Even though it is still too early to determine whether a framework for making investments based on environmental, social, and governance (ESG) considerations is accretive to portfolio performance from purely a return perspective, there is no arguing that ESG policies are becoming an integral part of the investment management process for asset allocators. This article…
What Finance Can Learn from Computer Scientists
The realization that economics is not a hard science because it is unable to describe the real-world economy, is not a new claim. Presenting an “economically rational” world has failed to describe the real-world economy, and therefore has been under attack by behavioural economists for quite some time. In an interview, Frank Fabozzi opines that…
The Case for a Universal Fiduciary Standard in Finance
A topic of discussion that often comes up in the investment management industry is whether or not there should be a blanket fiduciary duty imposed on investment advisors that deal with the public. Currently, there are many different categories of registration for investment advisors in Canada, some which impose a fiduciary duty and others which…
The Challenges of Modern Investment Management
Victor Haghani from Elm Partners (previously founding partner of Long Term Capital Management) sat down with NYU Stern School of Business professor Aswath Damodaran to discuss a myriad of hotly debated topics that are at the forefront of present-day investment management. Embedded in this view is how he believes that even investment managers that qualify…